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'Canadian companies are jumping in': Inside the rise of influencer marketing

(Yahoo Finance Canada)

The death of the retail industry may have been greatly exaggerated – but that doesn't mean the industry isn't currently going through major disruptive and fundamental changes. For this special series, Yahoo Finance Canada will look at how the retail scene is developing, what companies are doing to adapt, and what could come next. Click the image above to see our full coverage of what the future holds for the Canadian and global retail scene.

In 2017, Mel Hwang found herself torn between two spots in two similar worlds – her full time job as a client solutions manager at Facebook, and her personal blog and Instagram account that were gaining followers by the day.

“I just didn’t have the time to do both to the best of my abilities,” Hwang said in an interview with Yahoo Finance Canada.

“One of the two was always being sacrificed for the other. And I just came to the realization that while I loved my career in advertising, the community and the content I had been creating since I was a teenager wasn’t something I was ready to abandon yet.”

And so Hwang – also known as Mel Inspired, or @melhwang – made the decision to ditch her job and dedicate herself full-time to her personal social media account. With her nearly 50,000 Instagram followers behind her, 19,000 more on YouTube, plus those clicking on her blog, Hwang has managed to turn herself into a social media influencer. And even though she doesn’t have the following other so-called influencers have – think Hailey Bieber or Gigi and Bella Hadid or any one of the Kardashian-Jenners – she is supporting herself through her personal-content marketing.

And she’s not alone.

Influencers – loosely defined as social media personalities – are playing an increasingly significant role when it comes to marketing, especially in the retail industry, offering companies a new and direct way to reach customers. Retailers in a range of categories – from apparel to technology manufacturers – cite influencers on quarterly conference calls and credit them for successful marketing campaigns.

Just last month, Aritzia’s chief executive Brian Hill said in an interview with Yahoo Finance Canada that influencers have been an important part of pushing specific products to consumers. A campaign with Kendall Jenner promoting the $250 Super Puff coat stirred an online frenzy, and helped boost sales for Aritzia.

“I think being in the fashion business, you have to be looking at influencers,” Hill said.

It’s unclear the exact size and scope of the influencer social media marketing industry is in Canada, but a survey by IZEA Canada – a company that connects marketers with content creators – found that nearly 20 per cent of companies surveyed have a budget of between $1 million and $2.99 million for these kinds of promotions. In fact, IZEA Canada said 75 per cent of Canadian companies have dedicated budgets for influencer marketing.

The Aritzia store where Meghan Markle shopped according to local media is pictured in Toronto, Ontario, Canada, May 11, 2018. REUTERS/Carlo Allegri

Still, Canadian companies have been slower to turn to influencer-based marketing compared to those in the United States, says Tom Yawney, a partner and director of business development at the Influence Agency, a company that connects brands with influencers for campaigns.

But he’s seen demand in Canada for the influencer marketing – as well as for intermediary companies like the Influence Agency – explode over the last two years.

“When we first started out in 2017, there were a lot of big companies dipping their toes in the water, still unsure if this was something that they wanted to commit to,” Yawney said in an interview.

“But what’s happened over the last two years is that our business has blown up... Canadian companies are jumping in, because working with influencers is providing additional value in a lot of areas.”

So how does the influencer world work?

Compensation depends on the brand, the influencer and the scope of the agreement reached between the two. When the influencer has fewer followers, companies will often simply offer a product for free in exchange for promotion. Things can get slightly more complicated when the influencer is more popular. Contracts are often involved that can include stipulations such as engagement targets and details of ownership rights.

Yawney gives an example of a grocery store looking to promote its new location. A campaign with an influencer with 7,000 followers may include a post about the company’s meal prep program, in exchange for free product. But a campaign involving someone with around 40,000 followers could begin with a compensation of $500 per post, plus additional fees if the brand can own the content for a longer time or repost it in the future.

The fees can be enough for more people like Hwang to dedicate themselves to social media full-time. In some cases, it can be lucrative. (Gossip magazines wrote that Aritzia paid Jenner $1 million to share the two posts about the Super Puff coat to her 100 million followers, although that figure has not been confirmed by the company.)

Hwang herself has worked with a range of companies, from Nespresso to Hudson’s Bay to Best Buy. While she doesn’t disclose how much she charges for sponsored posts, Hwang says she treats her various social media feeds as her own personal publications, charging for advertising and brand endorsements.

It can be a fine line for influencers and brands when it comes to maintaining authenticity and ensuring your audience stays engaged and interested. Too many sponsored posts can feel disingenuous and insincere. Overly edited and filtered photos are falling out of fashion.

Hwang says she only works with brands and products that she fully endorses and that can relate to her audience, which she frequently refers to as a tight-knit community.

“Your audience is key, because if you don’t have your supply, you won’t have demand,” she said.

“Leave the brand deals aside. Just focus on your content and your audience.”

It’s part of the reason why companies like the Influencer Agency have popped up in recent years, acting as the middle-man between brands searching for social media stars that can spur interest in their products, and the influencers themselves.

“That’s why a lot of these programs are really valuable to brands nowadays,” Yawney says.

“Historically, you would have had to pay a production company to make something, and then you would need to find a distribution network to share that content. Social media influencers produce the production, they distribute to their communities, and their communities engage with it.”

But Yawney warns that not everyone can gain tens of thousands of followers on Instagram and translate that into a full-time job. He says the influencers that are able to succeed are the ones making smart business decisions and treating their account as an individual production company.

“They’re not just content creators, but they choose the brands they work with wisely and they don’t oversaturate their feed with anybody that offers them some money,” he says.

“They tend to be the more shrewd business people.”

When Carly Bright first got her dog Dean four years ago, she was posting so many photos of the basset hound that she decided to create an Instagram account solely dedicated to her new puppy. There wasn’t a single post or moment that led to @DeantheBasset acquiring so many followers, but pretty soon the account racked up more than 250,000 fans on Instagram, including celebrities like Ariana Grande (who, unfortunately for Dean, has since unfollowed).

Today, the @DeantheBasset account – run by Bright and her partner Nathan Sidon – remains popular. According to a press kit the couple has prepared, Dean’s Instagram videos typically reach between 30,000 and 200,000 views, with the most popular videos reaching 2.3 million views. More than 40 per cent of the account’s audience is between the ages of 25 and 34, and more than 75 per cent reside in the United States.

As a result, brands have been keen to take advantage of Dean’s popularity. The account has partnered with a range of brands, including Volkwagen, Mercedes, Nordstrom, Best Buy and Dyson. Last month, Dyson paid to have Dean promote the company’s vacuum cleaners and their booth at Toronto’s Woofstock event with several Instagram story posts.

“We’re seeing quite a bit of pickup from this,” Dyson’s brand manager Julie Poirier said at the Woofstock event. “It’s something we know works and it’s great to have the data to accompany that.”

While the couple charges significantly less for Instagram story posts, Sidon said sponsored static posts are typically several thousands of dollars per post.

The account has become so popular and time consuming that Bright decided to scale back to four days a week at her graphic design job in order to focus more time on the Dean account.

“I couldn’t handle it anymore and the account suffered,” Bright said.

“I could certainly dedicate all five days a week to this account, but it’s not monetarily feasible right now. But one day that would be fantastic.”

The couple doesn’t only make money from sponsored posts – they also sell Dean-related merchandise. More than 10,000 items – including wall calendars and t-shirts sold at Nordstrom’s flagship stores in the U.S. and Canada – have been sold so far.

But both Bright and Sidon continually stress that people should not be starting an Instagram account – particularly a pet one – solely for the purpose of making money.

“If you have a pet and want to start an Instagram, then by all means that’s great,” Sidon said. “You definitely shouldn’t get a pet for the purpose of trying to make money... This was a happy accident for us.”

This week, Hwang posted photos from a recent trip to the Netherlands. One post is a video of her walking through a field of bright yellow tulips in Amsterdam, spinning every now and then, her arms stretch out.

“I wanted to share how incredible this moment was (in real life),” Hwang wrote in the caption.

Below that caption, a hashtag stands out: #ad.

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