As the world faces a potential recession, the impact on influencers has come under the spotlight. While influencers may have seen an increase in their follower numbers and engagement in the past few years, the economic downturn has harmed their ability to generate revenue at the same time as hindering their relatability with their audiences.
How will content creation look in the midst of a cost-of-living crisis, when more and more people are excluded from the lavish lifestyles that many influencers promote? How will brands, agencies, and influencers themselves adjust to this new reality?
This article will discuss how the economy could impact the lives of social media influencers, including a decrease in brand partnerships, reduced ad revenue, difficulty obtaining sponsorships, and how the mindset of their audience may shift during a recession making their content less relatable and engaging.
Negative Impacts on Social Media Influencers Earning Capacity
Despite their often large followings, influencers are typically not self-employed and depend largely on their deals with brands for an income thus in some ways lacking the financial stability of a regular job. All of which could be affected significantly by the recession.
Now that businesses seem to be cutting back on spending, there are likely to be fewer brand collaboration opportunities for influencers going forward. As a result, influencers run the risk of seeing their primary source of income diminish.
- Brand partnerships are a vital source of income for most social media influencers. As businesses face financial difficulty during the economic downturn, they’re less likely to invest large percentages of their annual budgets into influencer marketing campaigns, resulting in more irregular opportunities for influencers to team up with brands. This can have a major impact on their earnings, as the average influencer makes roughly $1000 for each sponsored post.
- Ad revenue is also a major source of income for influencers, and this too is feeling the effects of the economy. Advertisers are pulling the plug and resorting to UGC content due to its cost-saving nature.
- Sponsorships are another way influencers use to make an income, but this is becoming increasingly problematic. As mentioned above, companies are cutting influencer marketing spend, as they are skeptical of the potential returns due to people’s overall reduced spending power.
Moreover, the economic recession could lead to more competition among influencers, as they compete for a smaller amount of active jobs. This could quite possibly lead to a decrease in the amount they can charge for their services, reducing their overall yearly earnings.
The Unrelatability of Influencers During a Recession
A great example of how the current state of the economy is already reshaping influencer marketing from the audience perspective is when back in late November Lydia Millen’s broken heating led her to check into Britain’s renowned Savoy, where rooms can cost up to $5,500 a night. The British influencer shared her stay with her 814,300 TikTok followers, stating that she would make full use of the hot water.
This post garnered an immense response, with over 4 million views and a plethora of comments, many comparing her to Marie Antoinette and others making light of her situation. The comment that resonated most with viewers, garnering 14,000 plus likes, was a simple yet effective statement: “The room (a very cold one) has not been read.”
*(the creator has since turned off the comments to this video)
Millions of people around the world are financially stressed as prices surge; and six days before Millen checked into the Savoy, inflation had hit its highest level in 41 years. Families worldwide are having to decide between heating and eating, while rail workers, nurses, and firefighters are taking action and planning to strike in order to receive decent wages.
Millen’s post demonstrates the impact of the economic downturn on influencers, and how even though they may still be able to promote lavish lifestyles, they are not immune to the effects of a cost-of-living crisis. It also serves as a reminder that influencers need to adjust their content creation strategies to stay relevant in a changing landscape.
Alternative Strategies for Social Media Influencers
Sadly, the economy is bound to have an impact on social media influencers’ capacity to earn, similar to how it will affect most of the population in some way or another. But, influencers don’t have to let it define them, and with a little planning and some strategizing, they can weather the storm.
Influencers can continue to make a living creating content and doing what they love, but perhaps with some new approaches and tactics in mind.
Tips for Growing Income Streams:
- Diversifying Income Sources
Diversify, diversify, diversify! We’ve all heard it a thousand times before “diversify your assets”, well this is a similar situation. Instead of depending solely on brand deals, influencers should look at ways to monetize their own content by creating services or products. For example, influencers could create a course, launch a blog or Patreon, and even sell digital products. These are all viable income streams that aren’t reliant on third parties.
By creating new income sources, influencers won’t have all their eggs in one basket and be completely reliant on sponsored posts, this can help to stabilize their monthly earnings.
- Exploring Other Platforms
For years now Instagram has been the most popular app for influencers. But times are changing, and now is when influencers need to adapt and explore new opportunities and social media apps.
TikTok and Youtube are growing in popularity, and influencers should take advantage of that fact and expand their reach to other platforms. By doing so they can increase their earnings while making sure they aren’t solely dependent on one platform. It’s a similar concept to diversifying income sources, but instead, influencers are diversifying their social media presence.
- Reaching Out to Smaller Businesses
Finally, influencers might want to consider getting in touch with smaller businesses. While big-box brands are cutting their marketing budgets, smaller businesses may be more inclined to collaborate with influencers.
By networking with small business owners, influencers might be able to still make an income while at the same time supporting small companies during a recession, which will undoubtedly not only have an impact but also be extremely rewarding.
Tips for Engaging Their Audiences:
Influencers have the power to create change and build authentic relationships with their audiences. This alone can be especially important during times of economic uncertainty. During a recession, it’s important to be mindful of other people’s situations, followers may be facing financial pressures, and it is important to be sensitive to the collective’s feelings.
Here are some simples tips for how influencers can use their platform to be more relatable and show support to their audience during difficult times.
- Authenticity and Transparency
Influencers need to try and show authenticity and transparency with their audience. They should share personal stories of their struggles, even if these are from years ago, and how they have managed to stay positive during hard times. Their followers will appreciate vulnerability and rawness and reward these acts with loyalty.
- Offer Solutions and Opportunities
It is important to acknowledge the hardships people are facing, but it is equally great to emphasize solutions and positive opportunities. Organizations, initiatives, and resources that are helping those in need should be highlighted, as well as any new business opportunities that have arisen as a result of the crisis.
For example, an influencer in the recipe and cooking niche could share content related to meal batching on a budget, providing their audience with unique recipe ideas that help to lower their food bill each month.
- Leveraging Social Media to Help Others
They use their platform to spread awareness about organizations and initiatives that are helping those in need. They can also use their influence to launch fundraisers or other charitable initiatives that can help those struggling during a crisis.
A great example of this, was when many influencers teamed up over the holidays in 2020 to fundraise money for children’s Christmas presents as many families were struggling due to the closing of businesses during the pandemic.
As we’ve seen in this article, the economic recession can have an impact on social media influencers. But, by diversifying both their income streams and social media platforms they can expand their reach and grow their earning capacity in ways that aren’t so dependent on brands and algorithms.
Influencers should also try to be mindful of their audience, and instead of always showing cherry-picked highlights, they can choose to show up authentically allowing their followers to connect with them on a deeper level and find elements of relatability. By doing this, the audience will feel more connected and thus less likely to unfollow and disengage.