Influencer Marketing – The Evolution of Media, Advertising and Risk

Influencer marketing is an increasingly popular marketing tool used by brands to reach and engage with their consumers. By partnering with social media influencers, businesses can tap into the influencer’s following and ‘trust’ factor to promote their own products or services. While it’s an appealing option for many big brands, it is not without its share of risks to the integrity of the brand if the influencer’s reputation or behaviour takes a hit.

An example is the worldwide sensation, the US-based zero-sugar beverage, Prime Hydration (Prime) that exploded on the internet after being promoted by YouTube content creators, Logan Paul and KSI; with local consumers willing to pay hundreds of Rands to get their hands on a bottle.

“There is no denying the fact that influencer marketing can be outrageously successful when the right product or service meets the perfect influencer. It has the potential to increase the visibility of the brand and improve its credibility. It is also highly targeted as the brand would be exposed to a very specific market, creating direct engagement, especially in the socially savvy Gen Z space,” explains Phillip Cronje, Business Unit Manager in Aon’s Sports, Recreation and Entertainment division.

But as glamorous as it sounds, influencer marketing can be a serious reputational hazard when executed incorrectly – some of these risks include:
Lack of control: When working with influencers, companies have less control over the content and messaging being shared. This can result in negative consequences if the influencer’s content does not align with the company’s identity or brand values.
Misalignment with brand values: If an influencer’s values don’t align with a brand’s values, it can lead to negative associations and backlash from customers.
Difficult to measure success: It can be difficult to measure the success of influencer marketing campaigns, making it challenging to determine the return on investment.
Brand reputation risk: Partnering with the wrong influencer can harm a brand’s reputation, particularly if the influencer has a controversial image or history.

How to manage the risk of influencer marketing
“Death, disability and disgrace insurance is a way that sponsoring companies can protect their brand financially when an influencer marketing campaign goes wrong and the brand decides to distance their association with it. Additionally, this cover also protects the brand if tragedy strikes and the influencer is unable to deliver on their social media platform, either through death or disability,” explains Philip.

A prime example of influencer marketing gone wrong is the infamous Fyre Festival, that never was. The organisers of the ‘luxury music festival’ enlisted the aid of 63 of the biggest influencers in the world, to promote the festival that turned out to be a fraudulent nightmare. Streaming platform Netflix even went as far as making a reality docuseries based on the disaster that ensued.

“Disgrace is a very subjective matter with certain brands having a higher tolerance to certain indiscretions than others; but in the above example, it was not only sponsors that got burned but also the influencers that opened their platforms to the event. In instances such as these where the premise of influencer marketing is in direct opposition to the ethos and values of a brand, it is advisable to swiftly and publicly withdraw support. There may even be positive public sentiment derived in being seen as taking a stance against an important societal issue,” Phillip explains.

The risks and impact include:

– Distancing the brand from the influencer: Companies may be required to remove advertising materials featuring the influencer, resulting in a loss of time and money. In many instances the brand will need to recreate its entire campaign, even the products on shelves if the packaging or merchandise bears their influencer’s image or endorsement, costing millions in lost production, merchandise and packaging costs, as well as any remedial action required to protect the brand’s reputation.

– Loss of income: If an influencer’s death or disgrace results in negative public relations, the company may lose income as a result of decreased sales or the company’s investor relations being affected negatively.

– Damage to brand reputation: The negative publicity associated with an influencer’s death or disgrace can fundamentally damage a brand’s reputation and adversely affect customer trust. The primary reputational risk is that the negative connotation is seen by the public as a direct reflection of the brand’s values and sentiments. This is why such cases demand swift and strategic action on the part of the brand to firstly distance themselves from the influencer, but also to publicly make a statement about what their values are and limit further damage by association.

– Legal issues: There is also the risk of legal ramifications following influencer marketing claims, such as instances where influencers make false or misleading claims about products or services, which could pose a direct legal risk from a Consumer Protection Act point of view.

– Difficulty finding a replacement: Finding a suitable replacement for an influencer who is no longer available can be time-consuming, challenging and costly, often delaying the marketing campaign.

“When contemplating influencer marketing, it’s highly advisable for brand owners to consult with a specialist risk advisor who can guide them through the process of assessing all the potential risks. This involves analysing every conceivable “what if” scenario, assessing the financial and reputational ramifications and the costs of any required remedial actions, assessing what risks can be avoided contractually (if at all possible), which ones should be insured and which ones should be retained.

Demand for death, disability and disgrace cover has increased, driven by recent high-profile cases as well as the fact that organisations are becoming more sensitive about managing their reputations in the age of the internet and social media. Properly scoped insurance covers guided by the professional advice and risk mitigation skills of an experienced broker are essential to ensure that when influencer marketing goes wrong, associated brands can recover and return to normal business operations and building their invaluable reputation, as soon as possible,” Phillip concludes.