FV-112 | Becoming Aware of Influential Power
Research Topic
During the last two decades, obtaining endorsements by influencers has become increasingly popular in business practice, namely due to the increasing banner blindness and use of ad blockers, which limits the access to consumers. This form of communication is distinct from online ads and focuses on mostly paid endorsements by individuals such as Kylie Jenner—with a reach of well over 400 million people on social media—who are assumed to have an immense impact on potential buyers. Success stories like Jenner’s are enabled and facilitated by the rapid rise of user-generated content platforms (e.g., Instagram), and findings from the literature support the importance of seeding such highly connected influencers. It is therefore no surprise that the global market for paid influencer endorsement is skyrocketing, currently estimated to reach $21.1 billion in 2023. At the same time, the soaring interest in influencer marketing triggered a cost explosion such that the monetary compensation for endorsements may now exceed most companies’ means. Kylie Jenner, at the high end of the spectrum, charges close to $2 million to share exclusive branded content with her community. Another major development is that such macro influencers are not willing or not capable of accepting every endorsement request due to conflicts such as contractual agreements with similar firms. These limitations pose a new high barrier or may even render it infeasible for many firms, especially SMEs, to engage in effective influencer seeding. Therefore, an evolving research stream focuses on micro influencers instead, that is, individuals who are at an early stage of their (influencer-)lifecycle.
Description of the Problem
Such micro influencers––who are at an early stage of their lifecycle–have the advantage of being much more responsive (Goldenberg et al. 2023; Lanz et al. 2019) and cost-effective (Beichert et al. 2023), partly because they are more influential and can be locked into a relatively low rate (managers can even profit from their growing follower base by buying future endorsements from them, i.e., in analogy to futures in finance; Lanz et al. 2023). Along these lines, imagine if managers focus on the very beginning of this early stage and buy the first endorsement, essentially making individuals aware of their influential power. What is the effect of making individuals aware of their influential power, and is it an opportunity for firms? Firms either contact individuals directly, or they go through influencer-marketing platforms (e.g., Reachbird), which facilitate the match-making. Both firms (when contacting individuals) and influencer-marketing platforms (when listing them) can make individuals aware of their (firm-relevant) influential power. Upon realizing that they can capitalize on their follower base and make money through paid endorsements, behaviors of individuals may change.
Objectives
In this research with Sagit Bar-Gill, Neta Livneh, and Gal Oestreicher-Singer (Senior Editor at the Management Information Systems Quarterly (MISQ)), we want to (1) investigate the behavioral change and (2) the opportunity for firms.
Importance, Usefulness and Novelty of the Project
During the last two decades, obtaining endorsements by influencers has become increasingly popular in business practice, yet academic research is lagging behind. Funding this project will generate insights that benefit managers and their seeding efforts, particularly the influencer selection. Given the dream of the youth to become influencers, it will also help build an understanding how they deal with sudden power.