85% of Fast Moving Consumer Goods Companies Have Had a Negative Influencer Experience

Nearly half of brand and marketing managers at fast-moving consumer goods (FMCG) companies will spend up to 50% of their marketing budget on social media influencers post-COVID-19.

Globally, a third of marketers at FMCG companies said their most successful influencer campaign increased sales by $250,000-$500,000.

London – According to a report released today by Duff & Phelps, the world’s premier provider of governance, risk and transparency solutions, and Kroll, a division of Duff & Phelps, nearly a quarter of companies have suffered a $100,000-$250,000 loss from a negative influencer experience. The Face Value Report highlights results of a survey of over 900 marketing and brand managers within the FMCG sector and provides insights into the value of influencer marketing, as well as the financial and reputational impact of negative influencer experiences.

Consumer devotion to digital devices during the pandemic has supercharged the influencer industry. During lockdown, two-thirds of respondents have either maintained their influencer spending at pre-COVID-19 levels or increased it slightly, while nearly a fifth (19%) increased it significantly. 

By 2021, almost half of respondents (46%) are expected to spend 31-50% of their total marketing budget on influencers—up more than 20% compared to the average spent between 2018-2020—while nearly one in 10 (8%) will spend more than 70%. 

Clear winners across countries emerge when comparing how much companies make from their influencer campaigns against what they spend running them. The average amount spent per influencer among marketers at FMCG companies is $22,151 per year. However, marketers at FMCG companies in the UK spend on average $18,415 and reported above average sales increase from their best influencer experience at $891,131, compared to the global average of $813,262.

Brand and marketing managers at FMCG companies will typically spread their spending across dozens of influencers; 45% of respondents stated they usually work with 51-100 at a time and 16% said they work with 101-200 influencers at any given time on their product range. This figure could rise as the influencer method of marketing becomes more entrenched. UK marketers at FMCG companies appear to use the fewest number of influencers than other countries at around 66, compared to the global average of 81. 

Michael Weaver, Managing Director Valuation Advisory Services at Duff & Phelps, said: “Marketing teams once relied on securing the most expensive celebrity they could afford for a television campaign or billboard, but this strategy is increasingly obsolete in the digital age. Marketers at FMCG companies are satisfied with the return on investment from influencers and are diverting marketing spend away from other traditional advertising and marketing tactics to keep the momentum going. We can’t deny that the lockdown and subsequent restriction measures have also played a part in boosting the industry. But regardless, we don’t expect influencer marketing to slow down post-COVID-19 either.”

Influencer marketing also comes with certain risks—85% of FMCG companies have had their brand negatively impacted due to an association with an influencer, with almost a quarter (24%) of these companies claiming to have been adversely affected multiple times. Shockingly, almost a quarter of FMCG companies report losses between $100,00-$250,000 from a negative influencer experience.

The survey found that more than two-thirds (70%) of marketers at FMCG companies had doubted an influencer’s follower count on one or multiple occasions compared to just a quarter (26%) who had never had any concerns. It is noteworthy that in the UK, where just over half of respondents (51%) had never had such doubts about followers, the use of third-party influencer verification specialists was among the highest at 32%, compared to the global average of 27%.

Benedict Hamilton, Managing Director in Kroll’s Business Intelligence and Investigations practice, said: “Companies spend years creating brands built on trust and loyalty, characteristics which are hard-won but can be quickly lost, and are difficult to regain. When a negative incident with an influencer occurs, the reputational damage that follows can have long-term commercial impacts. Companies need to do their due diligence and not just take an influencer at “face value.” We are seeing increasing demand from brands to investigate influencers’ online activity and identify potentially sensitive issues, including those posted many years ago, to allow brands to establish whether or not an influencer’s values match their own, and ensure they are making informed decisions about their influencer programmes.”  

Notes to the Editor

Methodology
Duff & Phelps and Kroll commissioned a survey of 917 marketing/brand managers working in fast moving consumer goods (FMCG) businesses across the UK, US, France, Germany, Ireland, Netherlands, Spain, Italy and the United Arab Emirates, to assess the current state of influencer marketing for FMCG brands and establish whether the COVID-19 pandemic had an impact on marketing spend. The research was conducted via an anonymous survey in June 2020.

About Duff & Phelps 
Duff & Phelps is the world’s premier provider of governance, risk and transparency solutions. We work with clients across diverse sectors in the areas of valuation, corporate finance, disputes and investigations, cyber security, claims administration and regulatory compliance. With Kroll, the leading global provider of risk solutions, and Prime Clerk, the leader in complex business services and claims administration, our firm has nearly 4,000 professionals in 25 countries around the world. For more information, visit www.duffandphelps.com

About Kroll, a division of Duff & Phelps
Kroll is the leading global provider of risk solutions. For more than 45 years, Kroll has helped clients make confident risk management decisions about people, assets, operations and security through a wide range of investigations, cyber security, due diligence and compliance, physical and operational security, and data and information management services. For more information, visit www.kroll.com.
 
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