How ecommerce brands can survive the economic downturn with influencer marketing

In 2022, we saw top VC and consulting firms put out statements like:

"With the macro uncertainty around inflation, interest rates, and war, investors are looking for companies that can produce near-term certainty. The market is signaling a strong preference for companies who can generate cash today"~ Sequoia.

"If you have a strong balance sheet, a downturn like we have now is a great time to be opportunistic." ~ McKinsey

"Winning companies have an opportunity to accelerate profitability during and after the recession, while losers get stalled." ~ Bain & Company

Such statements are common during a downturn, and they make total sense. Everyone turns towards profitability as investors tighten their pockets. It makes one think — What if the growth-at-all-costs model does more harm than good in the long run? What if prioritizing rapid growth is ultimately a losing game, and how can you turn the business around to bring more stability?

In a recession, the first order of business is to cut costs and divert them to the channels that you know will drive profit. Influencer marketing is the model for such economic downturns times as brands and creators set clear expectations, and you only have to pay for the sales you get (based on how you structure the deal). It's built on transparent and trust-based relationships rather than just transactions and algorithms.

This post aims to highlight why you should focus on creators and not money-sucking ad platforms to sail through difficult times comfortably.

7 reasons why you should choose influencer marketing over paid ads, especially in this economy

Influencer marketing is more than just paying an influencer to post. Pay-per-post is the easiest and boring-est of them all. Don't resort to doing that right now. There are other ways to leverage creators.

You can send them free products as gifts and maximize the chances they will give you a shoutout. You can onboard them as ambassadors. Or you can work with them on a commission basis. Depending on your budget and product type, you can choose a mix of these strategies or choose one to start with.

Each one has its benefits, so keep an open mind, get creative, and you can enjoy all the benefits of influencer marketing. Let's look at some of the perks of collaborating with creators.

Product seeding can get you a shoutout for free

When you send free products to creators and if they like it, they may post about your brand. Some of the people who follow them might buy from you, immediately or eventually, because

1. They got to know about your brand, and
2. They have social proof from the creator that your product is good and does what it says.

Even if some creators don't post about your product, it opens up the doors for further conversation tied to benefits for the creator apart from just free products.

Here's a masterclass on how to do product seeding with all the frameworks and steps you need to execute it perfectly, over and over again.

Pay for results, not empty clicks

When you run affiliate programs with creators, you use a cost-per-acquisition (CPA) payment structure instead of a cost-per-click (CPC) or cost-per-impression (CPM) structure. It is a low-risk method to generate revenue. Nano-influencers (3-20K followers) are the best category of creators for this sort of arrangement.

Here's a visual cheat sheet to help you make an affiliate deal with creators:

The best part — you don't have to be actively involved in marketing, as creators already have an incentive to post about you based on their content creation goals and the commission they want to make. You just have to align yourself with their mission.

If you have a SaaS product that uses a freemium or a free trial strategy to get customers in the door, we will soon be writing a playbook for you. So sign up for our "No BS" influence marketing letter and I'll send it to you 👉

If you are worried that you might be too conservative in dealing with nano-influencers who are low-risk but also low reward, try the barbell influencer strategy — engage with influencers at the extreme ends of the price and audience-size spectrum. The idea is to limit risk and make space for an unlimited upside.

No more playing catch-up with ads manager technology or algorithms

Due to regulatory pressure, platform competition, or innovation, the ad managers of social media or search platforms keep changing. Advertisers have to stay updated with those changes, which can be challenging.

On top of that, one has to think about what kind of ads perform well, what type of content the audience likes these days, and what format of ads (Stories, Reels, Posts, etc.) are being prioritized by the platform, etc. Paid media usually requires extensive expertise to effectively create and optimize content that delivers results.

Influencer marketing doesn't require you, the brand, to be an expert in marketing compared to paid media. You can run an influencer marketing campaign even if you are a small team or a solopreneur. The only skill you need is to focus on relationships, not transactions.

When you partner with a creator, they take care of getting you the maximum eyeballs by deciding the format, creative pitch, how and when to post, etc., because they are the platform experts. They’re incentivized to do this, especially if you’re paying them commissions. This gives you time to focus on communicating your vision and making strategic decisions.

Get warmer leads

A warm lead is someone who might not be ready to buy immediately, but they know your brand, know what it does and have some trust in it. With ads, it's tough to get someone from not being aware of your brand to considering buying with just one or two ads.

But because creators have built trust and loyalty with their audience over time, they can get people to know your brand and convince them to check it out and consider it over your competitors. People brag about buying something recommended by an influencer and not getting swayed away by advertisements. Why not align yourself with this consumer behaviour?

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Consumers place more credibility on other consumers than in paid advertisements from brands, just like you are more likely to buy after a recommendation from a friend than the salesperson in the store.

Present your story the way you want

Paid media gives brands control over the kind of words they want to use, the image they want to create, etc. But it's not complete control. You still have to stick to advertising guidelines and compliance rules.

For example, you can't advertise alcohol brands or CBD products, but you can partner with influencers (above the required age limits) to generate brand awareness. Get creative and do product placement in one of their vlogs or trips. You might not fall into these restricted categories, but new rules and regulations keep coming, so who knows when you will have to avoid using certain words or phrases which might be important for your brand vibe.

Presenting your story the way you want is easier with influencer marketing if you've built a good relationship with the creator. If your influence-partner is okay with promoting your products or services the way you want and if it follows the general public guidelines of the platforms, you shouldn't have any problems.

Compound your relationships

"Hey, how are you? Btw, I showed people at the gym my new pants from your brand, and people loved them, and I totally recommended them to buy them. Hope it helps your business."

Who do you see saying this statement?

Ad platforms?

or a creator who loves your brand and proudly talks about it with their audience? Facebook will break up with you the moment you stop spending money with them, and they will happily promote your competitors too.

Ambassadors, on the other hand, will always have your back and will be loyal to your brand.

Facebook is that heartless ex. Influencer marketing is your childhood best friend.

A great example of this is Lululemon's ambassador program. They invest in their ambassadors' who in turn are raving fans and the face of the brand in their local communities. This compounds over time as you see people queuing up to be your ambassadors and being true advocates.

What's Best For Your Brand — Influencer Marketing or Paid Ads?

If you have a bottomless pit of money, want growth as fast as possible, and have a team to create good product shots consistently and rapidly, write good copy, and have expertise in optimizing ads- go for paid ads and see the results for yourself. They definitely work if you have the time, money, and expertise.

We would advocate for influencer marketing as we are biased by the results we have seen with this approach. If you are not under pressure to grow at all costs and want to opt for a sustainable option, go for influencer marketing. This is also what most top consulting firms and VC's recommend.

If you want to use a mix of influencer marketing and advertising, we would still suggest starting with influencer marketing and creating an arrangement where you can use their creatives for ads, posters, educational material for your audience, etc. Here's more on how to get ad creatives for free with influencer marketing.

Why influencer marketing can save your brand in a tough economy

A crisis is not ideal, but if you keep the bigger picture in mind — growing your brand and turning it into a sustainable business — instead of resisting the market and spending more to acquire customers.

With the economic downturn, here are some trends we're seeing with influencer marketing, and you can leverage these to your advantage:

• Influencers are more than willing to build long-term relationships as they also face the burn of recession and realize that they need predictable collaborations rather than one-shot campaigns. So go build long-term relationships with creators, with SARAL 😉
• In a recession, people are less likely to buy into fads or buy impulsively by looking at a shiny new ad. They would be more inclined to buy something that has credibility. So leverage creators' credibility so your brand becomes the favorite purchase in your category.

It's time you aim to hit profitability and improve your runway (the cash left in the bank to run your operations), and influencer marketing is a really good way to do that.

We would love to hear your thoughts on this or if you have any apprehensions about starting with influencer marketing. Signup for our “No BS” Influence Marketing Letter to become friends over email. We send real-world, practical tips to help you get profitable with influencer marketing.