The Rising Trend of Influencer Marketing in India: Key Insights and Strategies

Influencer marketing has emerged as a new and impactful phenomenon in the Indian advertising space. In the evolving digitalisation era, brands are increasing their focus on popular influencers which have a great command on drawing attention of the online audience. This upcoming trend is a dramatic shift on how brands connect with consumers in the digital era.

This in return leads the Indian influencer marketing space towards rapid growth, impact, and future trajectory. A shift in consumer behaviour and technological advancements are some of the main reasons for the current state of influencer marketing being a powerhouse in the advertising industry.

Growth of influencer marketing in India

In today’s world, influencer marketing has emerged as an impactful tool for brands to connect with their audience authentically. Instagram, YouTube, TikTok, and other social media platforms have enabled influencers to reach and influence their followers. To build rapport and credibility with the audience, brands are collaborating with influencers to enhance the market position of their products or services.

One of the primary causes for change in the dynamics of consumer interaction and advertising is a significant increase in influencer marketing in recent years. With the emergence of short video platforms and having a user base of 65% of non-metropolitan areas, consumption of content has taken a new route of expansion. The rise of affordable smartphones and data plans has made access to social media easy, helping individuals from various backgrounds to build an influence online.

India’s influencer marketing industry is estimated to reach Rs. 3,375 crore (US$ 404.82 million) by 2026, expanding at a CAGR of 18% over 2022-26, as per a report from Ernst and Young (EY).

Source: EY State of influencer marketing in India report 2023

Influencer marketing is poised to reach US$ 404.8 million by 2026. With ~50% of the mobile usage directed towards social media platforms, influencer marketing has turned out to be a key communication strategy for marketers. With considerable potential for brands, marketers and influencers, these growth figures highlight the ongoing growth trajectory and significant opportunities in the influencer marketing space.

The impact of influencer marketing in India

By offering a personalised and authentic approach towards brand promotion, the impact of influencer marketing has exceeded the traditional advertising routes. Influencers are known for possessing a forte or a distinct personality, which aids them to connect with their audience at a much higher level. This results in building trust and credibility as the endorsements are genuine recommendations.

As per EY, more than 2% has been invested towards influencer marketing by more than 56% of Indian brands to enhance their audience reach. Additionally, more than 70% of the brands are opting to keep their influence marketing budget the same or raise it by ~10%.

Three out of four brand strategies included influencer marketing as a component.

Source: EY State of influencer marketing in India report 2023

Instagram and YouTube are the most popular and preferred platforms to access influence content that ultimately draws attention of a vast and diverse audience. With their visually attractive formats and extensive reach, these platforms serve as primary hubs for influencer engagement in various categories.

Specific purposes or niche audiences are better targeted as the influencer industry in India is dynamic, with several platforms like Twitter, Instagram, and other emerging platforms such as Clubhouse gaining traction. Each platform offers multiple opportunities for influencers to connect with their followers and deliver an impactful message, for example, Instagram with its visually rich content, the vivid storytelling on YouTube or the highly relatable conversations on Twitter. Adaptability and innovation are key to engaging with various sets of audiences and that is reflected in the multi-platform approach.

Key strategies for influencer marketing success in India

It is vital that the brands take a calculated approach towards utilising influencer marketing in India. Mentioned below are some of the important strategies to consider:

• Knowing the diversity

With India being a diverse country comprising various languages, cultures and traditions, the influencer strategy should be to collaborate with influencers who relate with different demographics and regions.

• Choosing an impactful platform

Instagram is currently the most popular platform globally for influencer marketing. Platforms such as YouTube and TikTok (now replaced by apps like Chingari and Moj) are highly influential as well.

• Generating authentic content

Encouraging influencers to create authentic and relatable content that connects with the target audience is a key startegy in the Indian market. A simple yet effective approach is to avoid promotional messaging or scripted content and instead use storytelling that seamlessly integrates with the brand message as well as promoting through the experience of the influencer about the product or service.

• Measuring performance through data-driven approach

Using analytics as a tool to track the performance of the influencer is important and a distinguishing characteristic from celebrity endorsements. Key metrics must be tracked, such as engagement, reach and conversions rates, to understand the effectiveness of the campaign and tailor future efforts based on the results.

• Engaging micro-influencers

While macro-influencers have their own impact, micro-influencers have the advantage of having a more engaged and loyal audience. Affordability plays a huge role in opting for a micro-influencer, making them a great pick for targeted campaigns and niche segments.

• Forming long-term partnerships

Building a long-term partnership with influencers can be more beneficial as opposed to a one-off campaign. As a firm, this not only helps build trust but also translates into more credibility with the audience over time.

Due to the complexities of a diverse and culturally rich market in India, strategies for success in influencer marketing are essential. It is important to understand the audience’s language, culture, and preferences for brands to identify the most relevant influencers to effectively engage a specific group of population. Strategies prioritising authenticity, platform relevance and cultural sensitivity help gain a competitive edge that fosters trust, engagement, and brand loyalty.

Insights into the future of influencer marketing in India

Lifestyle, fashion, and beauty are the sectors that will be driving the growth of influencer marketing in India, as per EY. Due to the increasing interest in relatable content on social media, these industries are gaining importance. To drive sales and increase target audience reach, brands in lifestyle, fashion and beauty are utilising influencers to achieve maximum gains. The influencer marketing trend is evolving beyond the typical sponsored posts to include more immersive and interactive content formats, resulting in deeper connection with consumers and enabling innovation in influencer marketing.

Source: EY State of influencer marketing in India report 2023

Automobile, e-commerce and FMCG are key sectors to boost spending on influencer marketing.

Source: EY State of influencer marketing in India report 2023

With the continuous evolution of the digital age, these sectors are the most impacted sectors to recognise the potential of influencer partnerships that enhance brand visibility, engagement and ultimately sales.

The automobile sector is leveraging influencers to highlight their latest models, turn the spotlight on innovative features and raise the excitement for product launches. On a similar note, e-commerce brands are utilising the power of influencers to enhance their product offerings, announce discounts/sales, and increase customer acquisition and retention. In the FMCG sector, influencers help to endorse products, share user experiences, and influence consumer preferences. It is anticipated to see more innovative campaigns, creative collaborations, and deeper consumer engagement in the digital landscape.

Conclusion

As we step into the future of digitalisation, the growth trajectory of influencer marketing in India seems to be promising yet evolving. With artificial intelligence and data analytics gaining traction, brands can expect greater sophistication in influencer shortlisting and campaign optimisation. The use of machine learning algorithms helps to analyse large data sets to aid with identifying the most suitable influencers based on the demographics of the audience, interests, and engagement metrics. The rising trend of influencer marketing in India also signifies the fundamental shift in the way brands engage with consumers. Brands must adapt and embrace the shift towards influencer marketing to shape consumer preferences.