AI-enabled disruption to the influencer economy

Abstract

The influencer economy, also known as the creator economy, refers to the monetization of content generated by digital content creators for promoting the goods and services of a brand. This sector has grown exponentially over the past half-decade, reaching a staggering 1200 Crores, and is projected to continue its upward trajectory, expected to hit 2800 Crores by 2026, with a compound annual growth rate (CAGR) of 21.7%. Simultaneously, artificial intelligence is disrupting this segment, streamlining processes and accelerating its growth. In 2021, the market for artificial intelligence in marketing was valued at 15.84 billion US dollars.

This report outlines the characteristics of the influencer economy and explores how artificial intelligence is reshaping its dynamics.

To gain a comprehensive understanding, we interviewed key stakeholders, including four major brands (P&G, Coca-Cola, DS Group, and Sugar Cosmetics), one AI-driven influencer marketing platform (Qoruz), one talent management agency (Mirchi Lagi), and a freelancer (Ms. Kajol). These industry experts highlighted several critical factors in influencer selection, including follower count, engagement rate, brand alignment, and conversion rate. Depending on the campaign’s goal—whether raising awareness or driving purchases—engagement and conversion rates are prioritized as key performance indicators (KPIs). Additionally, the pandemic has significantly boosted the influencer economy, with brands of all sizes, from traditional companies to new-age startups, increasingly relying on influencers for targeted, cost-effective campaigns. Larger brands also engage influencer marketing agencies, which have begun leveraging AI for influencer discovery and content creation.

Despite its rapid growth, the influencer economy faces numerous challenges that hinder brands in effectively implementing their marketing budgets. Key issues include campaign uncertainty, poor communication due to intermediary involvement, lack of standardization, fraudulent influencer practices, rising competition among brands, increasing compensation demands from influencers, delayed payments to marketing agencies, and audience aversion to sponsored content. Brands have expressed the need for an industry-wide influencer database that could standardize processes, enhance transparency, and foster trust among brands, influencers, and audiences.