What Companies On The Verge Of Digital Transformation Need To Know
10 months ago on August 09, 2023
Leading digital-native brands have enjoyed immense growth in recent years, rapidly outpacing traditional competitors and gaining brand awareness. PrettyLittleThing is a prime example of one of these companies and accrued over £500 million ($694 million) in revenue in 2020 despite being founded just eight years before.
Through extensive research and my experience working with highly successful and quickly growing digital businesses (what I call digital rockets) within the fashion and interiors sector, I’ve uncovered some commonalities between these brands in terms of their marketing and communication strategies — especially when it comes to ways they utilize influencers.
So what’s their secret?
These brands have constructed their marketing strategy to speak directly to what millennials and younger generations want: peer-to-peer communication, value-based marketing, strong community and long-term relationships. And all of this at scale.
As many as 84% of millennials report that user-generated content on a company’s website influences what they buy, and in a poll of 1,000 consumers, 60% say they predominantly discover new products on social media, a channel that revolves around peer-to-peer communication.
Digital rocket companies are capitalizing on consumer preferences for social media and investing heavily in social media marketing, which includes utilizing influencers to create communities and build viral word-of-mouth hype around products and services.
Cost-Efficient Traffic
A digital rocket’s main focus is cost-efficiently driving traffic. To achieve this, they use influencer marketing to drive brand awareness and market preference. However, web traffic is only a primary KPI; digital rockets understand that influencers can affect other channels within their digital ecosystem, not least by driving cross-channel sales.
Let’s consider an organic search, for example. When conducting influencer marketing correctly, you should notice your organic search rate climbing. This is one way to know if your investment in influencers is paying off. This tactic can be much more cost-efficient than trying to outbid competitors for the most common search engine keywords or optimizing SEO, especially now that the online market has exploded and ad prices have soared due to the growing competition and bidding payment models.
Other ways you can measure the effectiveness of your campaign include watching your direct traffic and the rankings of your brand's search engine keywords. But these are still hard metrics; influencer advertising's biggest advantage is its connection to soft-brand metrics such as increased awareness, credibility and recognition.
Influencer Marketing Tactics
If you want to emulate successful digital rockets, consider scaling influencer marketing strategies and incorporating many different approaches: large ambassadors, mid-size influencers, micro-influencers, etc. However, a trend I consistently note is that micro-influencers tend to be the group that digital rockets scale the most — a decision that speaks to the higher levels of trust and engagement these influencers elicit from their audience.
In a podcast for McKinsey & Company, Emma Spagnuolo described how mega- and macro-influencers are less trusted by the Gen Z population and to "cultivate this community of micro-influencers who each talk to 30,000 people."
Successful digital-native companies often have more than one influencer marketing strategy in play. In fact, I have seen that it's not unusual for digital rockets to have more than 1,000 monthly activations running in mature markets, often in parallel to collaborative collection launches with celebrity influencers.
Take Gymshark, for example. When the millennial-favorite sportswear brand started out, they decided to invest not in traditional social ads, but in community-building. This meant allocating the majority of their marketing budget to influencer marketing and social media.
While big-name influencers make big news, the success of these collaborations more often lies in a blended promotional strategy built on a foundation of micro-influencers. The resultant halo effect might not make the headlines, but it’s the real star of the show. Micro-influencers can also be a way to keep investments into this area affordable when first breaking in.
As Jonas Colliander, a professor at Stockholm School of Economics, said in a podcast produced by my company, "The most effective way of getting through the clutter of commercial messages is going through someone you like and trust...and now that sphere of people has grown into the digital area."
Nothing exists in a silo.
One crucial difference between traditional retailers and digital rockets is that even when traditional brands are cultivating their online presence, their efforts are often hampered by operating different marketing channels independently. By building channel strategies that are not aligning while also only counting the last click per channel, brands miss out on a holistic view of marketing returns and fail to capitalize on the various channels' collective strength.
Looking at influencer marketing specifically, traditional retailers often struggle to accurately assess influencer ROI and consequently only put a small percentage of their budget into the channel. But by failing to scale or broaden their strategy, they put themselves at a disadvantage against digital rockets that routinely run hundreds of activations every month and continuously analyze and optimize their activations.
For example, in another podcast produced by my company, Oscar Von Konow, COO at NA-KD, said that 86% of their first-time shoppers came “from social media channels or influencer marketing."
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