The Surprising ROI of Small Online Influencers

Sparkling water brand LaCroix has been available in the U.S. since 1981, but it took off to become a go-to drink for millennials about 10 years ago. Its creative flavors and candy-colored packaging were part of the reason, but so, too, was the company’s strategy of working with a large number of relatively small social media influencers who talked up the brand to their audiences.

In 2016, Inc. noted that “while some brands pay thousands of dollars for Instagram users with large followings to feature their products, LaCroix has adopted a reverse approach to finding and rewarding influencers”: looking for people who tagged LaCroix online, engaging with them, and maybe offering them a free case. LaCroix’s strategy of working with promoters who have small numbers of followers is much the same today — and likely helped it earn a No. 1 ranking earlier this year on Newsweek’s annual list of the most trusted brands.

Traditionally, research and best practices in influencer marketing have favored big (or macro) influencers for their extensive reach, expecting the wider scope to lead to a higher return on investment. However, two recent studies conducted by this author group paint a more nuanced picture.

The first study, which used data on sales generated from influencers primarily on Instagram, revealed a surprisingly high ROI from nano influencers — those with small but devoted online followings — with significantly higher sales conversion rates compared with the rates for more prominent influencers. The second study, which looked at livestreaming influencers on TikTok, largely confirmed those results. Additionally, we found that there’s value in thinking about exactly how influencers with different follower counts should be strategically combined in a marketing campaign.

The implication for companies is that there are new ways to answer two important social media marketing questions: How should I think about my mix of influencers? And how do I best engage nano influencers? We’ve found significant opportunities for increased success when companies take a tailored and strategic approach to working with influencers, including choosing which ones to work with, determining the best ways to roll out campaigns, and understanding what can be measured to better judge which campaigns are successful.

New Data Shows How Small Can Be Mighty

Influencer marketing was on track to be a $21.1 billion industry in 2023, according to Influencer Marketing Hub’s 2023 Benchmark Report. While 39% of companies surveyed for the report said they worked with zero to 10 influencers, about the same number (37%) worked with 10 to 100, and 11% worked with 100 to 1,000. Twelve percent worked with over 1,000. According to eMarketer, the total share of U.S. influencer marketing spending for nano influencers — identified as people with fewer than 10,000 followers and sometimes just a couple hundred — increased by 11% from 2021 to 2024. The share for macro influencers — those with over 100,000 followers — decreased by 10%.

According to a survey of marketers, product sales is the leading goal of influencer marketing efforts. Particularly for direct-to-consumer companies, identifying influencers who drive positive ROI with regard to directly attributable sales remains the biggest challenge when considering influencer marketing as a revenue channel.

The study that focused on Instagram was conducted by four of us and was published in the July 2024 issue of the Journal of Marketing. Instagram is the most prominent user-generated content network for both brands and influencers, and billions of sponsored posts make their way onto the platform each year. The study looked at secondary sales data of 1,881,533 purchases and drew from three field studies, reviewing hundreds of paid-influencer promotional posts.

That research found that nano influencers offer more than three times the ROI compared with macro influencers. Nano spokespeople typically charge about $50 for a promotional post or simply trade a post for vouchers and products. (The going rate for promotional posts typically correlates with the influencer’s follower count.) We found that despite their modest audience sizes, these influencers yield, on average, a remarkable return of over $1,000 for a post — 20 times the investment. Macro influencers, in contrast, often command fees of well over $1,000 for one post but deliver only $6,000 in return, on average — an ROI of six. For posts from nano influencers, a remarkable 7% of engagements (likes, comments, or shares), on average, convert to a sale. This is more than double the effectiveness of posts from macro influencers, where only 3% of engagements convert to a sale. All this highlights the superior impact of nano influencers in driving ROI compared with their macro counterparts.

The second study, conducted by three of us and also published in the July 2024 issue of the Journal of Marketing, shows that, although the extensive audience reach of macro influencers may offset their lower conversion rates, nano influencers excel in cultivating intimate relationships with their followers and exhibit markedly higher sales conversion rates.

Adopting a hybrid strategy that incorporates both nano and macro influencers may seem appealing, but our studies also found that influencers sometimes undermine each other’s sales effectiveness when promoting the same product. Specifically, we found that the sales effectiveness of a macro influencer may drop by as much as 16% when a nano influencer is employed to promote the same product at the same time. Why? We think it could be that the credibility of macro influencers regarding a product may diminish when consumers repeatedly see the same item being promoted by different influencers. It may look more baldly commercial in comparison. However, we found that consumers tend not to question the trustworthiness of nano influencers when several are seen promoting the same product at the same time.

Choosing and Managing a Mix of Influencers

Companies have a number of questions to consider when weighing social media partnerships. Should they engage solely with nano influencers with intimate followings or exclusively with macro influencers with wide-reaching audiences — or a blend of both? Should they collaborate with amateurs or seasoned experts? How can they best measure the success of each partner? Here are some observations gleaned from our research:

Nano influencers have distinct benefits. The primary advantage of influencers with smaller follower counts lies in their ability to nurture more intimate relationships with their audiences; many smaller influencers directly interact with their followers, including responding to comments. These content creators are often in the target audience’s peer group. They usually come up with their own talking points and way of speaking to their audience. This translates into action when the influencer talks about a product in a sponsored post: In our study, 48% of the followers of nano influencers engaged with sponsored posts (liking the post, commenting on it, sharing it, or clicking through to the product site). Only 26% of macro influencers’ followers engaged with sponsored posts.

Influencer selection should be data-driven. Access to services from platforms like Instagram and specialized third-party service providers helps marketers understand influencer-follower dynamics. These services offer engagement and responsiveness statistics and identify specific influencers — including lesser-known individuals, families, and children — who match a brand’s values and resonate authentically with the target audience. These services also can help marketers mitigate the risk of selecting influencers with too much follower overlap. By analyzing audience demographics and follower bases, marketers can ensure diversity and reach within their influencer portfolios.

Influencer marketing tools streamline and enhance every aspect of influencer collaboration. Platforms such as CreatorIQ, Upfluence, and Klear offer functionalities that include automating the generation of discount codes for influencers, tracking conversions, and accurately attributing sales to each influencer, which allows companies to measure the success of each one. Crucially, these tools also help companies ensure that contracted influencers post as promised.

In addition to organizing logistics, these tools provide detailed, personalized briefings at scale. Real-time data can help marketers optimize campaign strategies and work with hundreds of influencers simultaneously without having to do hundreds of times the work of coordinating and monitoring just one influencer.

Blending macro and nano influencers requires thoughtful timing. Curating a diverse portfolio of influencers, both large and small, allows brands to leverage the unique strengths of each category to enhance brand awareness. But the order of who promotes when makes a difference. Starting with a macro influencer to initiate product promotion offers broad initial exposure, lends credibility and legitimacy to the brand’s messaging, and instills trust and confidence in an audience. Partnering with big influencers at the onset of a campaign can generate significant initial buzz and momentum, laying a strong foundation for subsequent marketing efforts.

Incorporating nano influencers into the campaign as a next step further amplifies reach and impact. By tapping into their microcommunities, brands can target specific audience segments with tailored messaging, driving viral messaging through shares and then, finally, sales conversions. A prime example of this shift is Adidas Running, a walking and running app produced by the footwear company. Initially, its influencer strategy involved mega and macro influencers, but the brand has since transitioned to nano influencers, such as Elle Linton, a personal trainer and cycling and running coach with about 7,900 followers.

Importantly, strategically sequencing the involvement of macro and nano influencers helps mitigate potential negative interaction effects. By allowing macro influencers to kick-start the campaign, subsequent promotion by nano influencers can reinforce the brand’s messaging without diluting its impact. This sequential approach maximizes the effectiveness of influencer partnerships while minimizing the risk of audience fatigue or oversaturation.

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Influencer marketing is not a one-size-fits-all endeavor. Rather, it demands an approach that takes into account the unique characteristics of both the brand and its target audience. A shift away from the traditional emphasis on macro influencers can be the best way to maximize impact and ROI.

In a dynamic and ever-changing digital landscape, what works today won’t necessarily work tomorrow. Our studies underscore the importance of ongoing monitoring and optimization of influencer campaigns, and the significant upside of a blended portfolio of endorsers.