The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

01. Executive Summary 02. Featured Interview: Garance Doré From an Influencer’s Perspective 01. Influencers: Work Experience & Methods 02. Quantity of Work and Types of Influencer Projects 03. Channels 04. Income Sources for influencers 05. Services Requested Most by Brands 06. Income Level 07. Collaboration Agreements 08. Influencers’ Motivations 09. Organic Collaborations Content 03. Influencer Marketing Landscape 04. Target Audience 05. Effectiveness 06. User Scenarios 07. Influencer Outreach 08. Tactics 09. Channels 10. Influencer Expectations Fashion, Luxury & Cosmetics Professionals on Influencer Marketing 11. Compensation 12. Current & Expected Budget 13. Relationship Management 14. Measurement 15. Tools 16. Challenges 17. Key Takeaways 18. Methodology

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Four years ago we began developing this annual report to offer professionals a useful resource in which they could better understand the evolution of influencer marketing. That was also when many said that this phenomenon would only be a passing or ephemeral trend. Yet, now that some time has passed, we have witnessed that this ‘trend’ was not as brief as some claimed, and that it has in fact stabilized and become a common professional practice within our sector.

In 2016, a total of 65% of professionals claimed to have worked on influencer marketing campaigns. For this edition, we surveyed over 600 professionals in Europe and the United States throughout 2017 and this time 78% admitted to working with opinion leaders. This 13% increment is the resounding answer to our question: Is influencer marketing still evolving and growing? Yes. Fashion, luxury and cosmetic brands still claim that their influencer marketing campaigns are most effective for generating brand awareness or boosting sales. We witnessed this last Fashion Week season thanks to our Front Row to Consumer report for which we extracted data on designers such as Jeremy Scott. At NYFW, Scott was able to generate $2.7 million in audience-driven Media Impact Value (MIV) – 46% of the total MIV was solely from their channels.

The emergence of opinion leaders who are able to reach millions of people through their own social channels is not only part of the democratization phenomenon that the industry has been going through the last few years, but also a sign of how vital it is to tell brand stories and reach audiences in a different way. New product and collection launches are still the main scenarios for many brands when working with influencers. When we think of the word “influencer”, celebrities such as Rihanna or Selena Gomez may be the first to come to mind. Yet, the fact is that 46% of surveyed professionals claimed that micro-influencers are the most valuable asset in order to reach a niche audience and gain real results.

Not only will this edition of The State of Influencer Marketing report help you better understand the direction that this trend is taking, but you will also gain insights from the other side, the influencers themselves. We’ve surveyed over 200 influencers and dedicated a section just for them to obtain a global perspective. We invite you to take a look at the data and conclusions in this report, apart from our exclusive interview with Garance Doré. We hope that you find it all very relevant and useful for the development of future campaigns and strategies with the new “holy grail” of the industry: influencers.

Sincerely, Michael Jaïs, CEO of Launchmetrics Michael Jaïs Executive Summary

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

Garance Doré is a celebrated photographer, illustrator, author and the founder of Atelier Doré, a lifestyle and fashion blog. Doré’s successful career in fashion started in 2006 as a street style blogger and has been credited with creating the template for street style photography. After garnering attention for her talent in illustration and photography in the fashion realm, the French native began collaborating with Chloé, Chopard, David Yurman and Tiffany & Co. among others and has also contributed as a writer and photographer to publications including American, British, and Paris Vogue, The Wall Street Journal, The New York Times, T Magazine, Elle, The Guardian, and New York magazine. Not only is Doré known for her artwork, she’s adored by her fans for her light-hearted, funny and insightful writing on an array of topics spanning beauty, style, love, travel and more. In 2012 Doré was awarded the Council of Fashion Designers of America Media Award along with Scott Schuman. She has since published her book Love x Style x Life, a New York Times Best Seller Garance Doré Featured Interview Garance Doré The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

How has your way of working with brands evolved in the last few years? Everything in the last few years has become more pro, more controlled. Every bit of social media is measured, included in contracts and monitored. What’s been really great is that finally brands are able to understand that each “influencer” knows their followers better than anyone. They’ve started to value authenticity, to look behind the numbers, to search for a new way of doing things. Do you feel that the profile of the influencers has become much more professional?

Yes, but it has now been years that people see being an influencer or a blogger as a job. They have been professionals for a while! There are just more and more and more of them. What do you value most when accepting a collaboration or work with brands? I love to work with brands that are able to establish long term relationships. That way I feel like my followers truly understand what I am like behind a product or a concept and have time to build trust – to me one of the most important values. Obviously creativity is a plus – or something that I feel will bring value to my readers. For example an experience that truly allows me to create a story around it. Where do you see the figure of the influencer within the industry in a few years?

Honestly there is no way to know. I do feel an increasing social media fatigue for many reasons. Content is repetitive because people know what “works”. The time we need to spend on our phones just to “participate” is exploding, creating a real social media burnout. I feel like a new app (or a new way to share) could completely take over right now – something that feels authentic, that doesn’t leave people feeling “less than". And with it we will have a new type of influencer, probably.

What is the process you follow to prepare the content for your followers? Right now I am taking a little break and when I start again (next week) I will probably work with someone to help me with my content. Posting, planning, organizing. Before that, it was always my longer texts and illustrations for the site which are where I feel myself the most, and for Instagram, which is the only social media I do daily and personally, it was just a pretty simple process (simple not meaning easy) of sharing pretty moments of my life.

Which channel is most valuable for you when communicating with your audience and why? My website, because for me, writing conveys something that is impossible to sum up with just a pretty image, as much as I love pretty images! Then my podcast, and then Instagram. How has your way of life changed in the last 5-10 years with respect to social networks? It’s been a great reality check to push me to understand what my message is and what I want to do with my voice. It’s easy to get lost, and even though I have real experience with sharing online, I sometimes fall into traps, like everybody else.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Featured Interview Garance Doré

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

Fashion, Luxury & Cosmetics Professionals on Influencer Marketing The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

“ “ Influencer marketing for fashion brands has the power to shift brand perception, target new consumer groups, change their fashion conversation, and provide engaging content for their consumers. It’s absolutely a channel that should be explored and invested in. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Emma Gregson, Managing Director of ITB Worldwide

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

INFLUENCER MARKETING LANDSCAPE The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Not only has influencer marketing become an established practice over the last few years, its prominence in the fashion, luxury and cosmetic industries has grown quite significantly. Out of the 600 professionals surveyed for this report, 78% have implemented influencer marketing campaigns in 2017. This represents a 13% increase when comparing to the previous year’s data. The influencer phenomenon has spread throughout FLC industries and has firmly established itself over the last five years. Proof of this evolution is the fact that 50% of those surveyed admitted that they started working with opinion leaders two or more years ago. On the other hand, we found that 22% of professionals didn’t work with influencers in 2017. Yet, 52% attribute that this was due to budget constraints.

Influencer Marketing Landscape 03 NEARLY 80% OF FASHION, LUXURY AND COSMETIC PROFESSIONALS IMPLEMENTED INFLUENCER CAMPAIGNS IN 2017. HAVE YOU IMPLEMENTED ANY CAMPAIGNS WITH INFLUENCERS OVER THE LAST YEAR? IF NOT, WHY? Budget constraints Lack of the proper tools to identify and manage the relationships with influencers Lack of a dedicated team Lack of time 20 40 60 Yes No 78.2% 21.8% 52% 23% 14% 13%

The State of Influencer Marketing - in Fashion, Luxury & Cosmetics

Yes 78.2% No 21.8% TARGET MARKET The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

Target Market 04 This year we’ve discovered new data which has given us insights into the types of brands that work with influencers. According to the professionals who took the survey, of those who confirmed to have worked with influencers in 2017, 76.4% say their target audience is mainly generation Y – millennials – 24 to 38-year-olds. Companies who target Generation X (adults between 39 and 53 years old) follow closely behind, and in third place we find Generation Z as the target audience (younger individuals between the ages of 6 and 23).

According to consultancy agency, Bain & Co’s Luxury Report last year, Generation Y represented 30 percent of all spending and, together with Generation Z (born between 1995 and 2010), generated 85 percent of the luxury growth in the last 12 months Social media and new digital platforms have made it easier for brands to reach these digitally native consumers through content and brand stories. Influencers are another gateway to this growing audience. MILLENNIALS ARE THE TARGET AUDIENCE FOR 76% OF PROFESSIONALS WHO CARRIED OUT INFLUENCER CAMPAIGNS IN 2017.

WHAT IS YOUR TARGET AUDIENCE? 19.8% Between 39-53 (Generation X) 76.4% Between 24-38 (Millennials) 3.1% Between 6-23 (Generation Z) 0.7% Between 54-72 (Baby Boomers) The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 EFFECTIVENESS

Regarding the effectiveness of influencer campaigns, FLC experts revealed the following: 89.6% confirmed that the activities they carried out with influencers effectively generated brand awareness for their companies or products. 73.3% highlighted that influencer campaigns are effective for building customer loyalty. 69% find influencer marketing effective for driving sales. > > > The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 There are some variations when comparing these figures to last year’s results. When it comes to the effectiveness of generating brand awareness, we can see an increment of 5.6%. At the same time, we’ve also witnessed a significant rise in regards to the efficacy of influencer marketing for building customer loyalty (19% increase compared to 2016). As far as driving sales, this is the only category in which we see a drop (5% decrease from the previous year).

We could attribute these variations to the increasing shift towards focusing campaigns on strengthening brand image and positioning. Stories and strategies through branded content on a brand’s own channels – what we refer to as owned media – has become increasingly relevant and oriented toward brand building. This is an obvious trend when looking at Gucci or Chanel’s strategies in 2017, for instance. 90% OF PROFESSIONALS CONSIDER INFLUENCER MARKETING EFFECTIVE WHEN IT COMES TO GENERATING BRAND AWARENESS. 69% SAY IT’S EFFECTIVE FOR BOOSTING SALES.

DRIVE SALES Effective 33.3% 21% Somewhat Effective 20% Non Effective 11% Highly Effective 21.2% Extremely Effective 14.5% Effectiveness 05 RAISE AWARENESS ABOUT YOUR COMPANY OR ITS PRODUCTS Non Effective 3.8% Somewhat Effective 6.5% Highly Effective 31.8% Effective 28.7% Extremely Effective 29.1% Non Effective 11% Somewhat Effective 16% Effective 32% Highly Effective 24% Extremely Effective 17% INCREASE CUSTOMER LOYALTY

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 USER SCENARIOS

User Scenarios 06 Results in regards to the scenarios for which professionals implement influencer campaigns in 2017 are only slightly different compared to the previous year. Industry experts claim that among the different scenarios, product launches are best for working with influencers. 41.6% of professionals confirm that they choose to work with influencers mainly for product launches (3.6% more than the previous year). This category is followed by influencer collaborations for events (28.1%) and content promotion (24.5%).

USER SCENARIOS NEARLY 42% OF PROFESSIONALS CLAIM THAT PRODUCT LAUNCHES ARE THE LEADING SCENARIO FOR WHICH THEY IMPLEMENT INFLUENCER CAMPAIGNS. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Product Launches 41.6% Content Promotions 24.5% Corporate Announcements 1.4% Other 4.4% Events 28.1%

“ “ Micro-influencers help to engage the target audience and to drive more conversions because they can connect with a faithful audience. Jeoffrey Romano, Digital PR & Social Media Manager of Santoni The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

SELECCIÓN DE LOS INFLUENCERS INFLUENCER OUTREACH The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The influencer marketing landscape in fashion, luxury and cosmetics is immense when it comes to the array of influencers. Brands such as Versus Versace opt for niche influencers for certain campaigns in order to reach a more segmented audience. Then there are others, such as Coach, which choose to work with celebrity influencers like Selena Gomez, allowing them to impact a larger global audience. When the industry professionals were asked about which tier of influencers they considered were the most effective for their campaigns, they answered the following: When it comes to selecting the right influencer, 45% of professionals said the quality of content was the most important criteria. 32% claimed that the engagement rate was priority, and 15% said the influencer’s niche experience mattered most. Only 8% of professionals claimed that the number of followers was the decisive factor. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 45.8% prefer to work with micro-influencers on their campaigns (influencers who have between 10k to 100k followers). 33.6% opt for macro-influencers (101k to 500k followers).

9.3% said they preferred working with mega-influencers (501k to 1.5 million followers). 11.3% said it was more effective to work with celebrity influencers on their campaigns. > > > > Influencers Outreach 07 46% OF BRANDS PREFER WORKING WITH MICRO- INFLUENCERS ON THEIR CAMPAIGNS. WHAT TIER OF INFLUENCERS DO YOU CONSIDER MOST EFFECTIVE FOR YOUR BRAND? Macro (101K-500K) 33.6% Micro (10K-100K) 45.8% Mega (501K-1.5M) 9.3% Celebrity (1.5M+) 11.3% WHICH OF THE FOLLOWING ARE MOST IMPORTANT FOR YOU WHEN SELECTING INFLUENCERS? Rate of engagement 31.8% Her/His content quality 44.9% Her/His niche expertise 15.1% Number of followers 8.2%

IF NOT, WHY? IF NOT, WHY? The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 TACTICS

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Sample lending and/or gifting has once again ranked as the most used tactic by professionals in fashion, luxury and cosmetics when engaging with influencers – a whopping 98% use this method to be exact. Social media outreach has gained popularity positioning it at second place in the ranking – this tactic was only the fourth most used in 2016 – followed by event invites and email outreach. Among the different tactics used, we can see that sending press releases is still at the bottom of the list. Despite ranking low, this method has increased in popularity by 4.9% compared to the previous year; 63% of experts used this tactic in 2017.

Tactics 08 SAMPLING AND GIFTING RANKED HIGHEST AS MOST USED TACTIC AT 98% WHEN PROFESSIONALS ENGAGE WITH INFLUENCERS. WHICH OF THE FOLLOWING TACTICS DO YOU USE TO ENGAGE WITH INFLUENCERS? Send Product Samples Social Media Outreach Invite to Events Email Outreach Share your company's digital assets One-to-One Meetings Send Press Releases Phone Outreach 98.5% 63.3% 89.8% 88.7% 90.5% 78.2% 69.10% 51.60%

HOW MANY YEARS HAVE YOU BEEN BLOGGING OR GENERATING CONTENT FOR YOUR COMMUNITY? The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 CHANNELS

Channels 09 With the introduction of various functionalities on Instagram such as Instagram Stories (specifically the swipe-up feature for verified accounts) and Instagram Shopping, it’s no wonder this social media platform still reigns supreme as the preferred channel for influencer campaigns. Although growth is minimal (at 35.8% as opposed to 34% in the previous year), it’s still more than twice as popular as Facebook, which ranked second. The only two other channels that saw a slight increase in popularity were Twitter (8.6% as opposed to 8% in 2016) and Linkedin (3.1% compared to 2% previously). Snapchat saw the biggest drop, from 10% in 2016 to 5.6% in 2017, while YouTube and Blogs also fell slightly as the preferred platforms.

Ultimately, when it comes to preferred channels, this scenario is quite similar to that of the previous year. Yet, the fall we see with Snapchat and slight increase in Instagram preference proves that the latter is continuing to grow as the favored platform. This is especially important for brands who are targeting millennials as they “are slightly more likely to be daily users of Instagram than of Snapchat” according to CivicScience. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 INSTAGRAM IS STILL MORE THAN TWICE AS POPULAR AS ANY OTHER CHANNEL; 36% OF PROFESSIONALS CLAIM TO PREFER THIS SOCIAL MEDIA PLATFORM WHEN DEVELOPING INFLUENCER CAMPAIGNS. Blog 13.1% Instagram 35.8% Facebook 16.3% YouTube 12.4% Twitter 8.6% Snapchat 5.6% LinkedIn 3.1% Pinterest 3% Other 3% WHICH CHANNELS DO YOU PREFER TO USE WHEN DEVELOPING INFLUENCER PROGRAMS OR INFLUENCER MARKETING CAMPAIGNS?

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 INFLUENCER EXPECTATIONS

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 When influencers collaborate or work with brands they seem to have the same expectations as they did the previous year, according to the professionals in this survey. However, the types of expectations are more evenly divided and a new interest has appeared: networking with other influencers. 27% of fashion, luxury and cosmetic industry experts claim that monetary compensation is the main incentive for opinion leaders, while 20% say influencers are motivated by the visibility a campaign could offer them. Interest in receiving free products has grown. This is the motivational factor for 19% of influencers, up 6% from the previous year. Professionals also confirmed that curating valuable content for their communities is another driving factor for influencers (which has increased by 7%). The biggest growth was seen in the interest to participate in new experiences, which saw a 9% increase compared to the previous year.

This scenario demonstrates that there’s opportunity for brands to propose mixed programs when working with influencers, proving that both monetary and non-monetary compensation can be motivating for opinion leaders, depending on the type of activity. Influencer Expectations 10 27% OF PROFESSIONALS BELIEVE THAT THE MAIN MOTIVATION FOR INFLUENCERS IS MONETARY COMPENSATION. 20% CLAIM IT IS VISIBILITY. WHAT THREE THINGS DO INFLUENCERS LOOK FOR WHEN COLLABORATING WITH BRANDS? 15.7% 18.8% 20% 10.3% 8.3% 27% Monetary Rewards Free Merchandise Valuable Content and Information Networking with other peers New Experiences Exposure

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 COMPENSATION

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Industry professionals are divided on the topic of monetary compensation. While 29% say they pay opinion leaders frequently and 12% claim they always pay, 24.4% admit to only paying them occasionally and 15.6% never do. What truly stands out in this category is the number of professionals that claim to only pay influencers for big campaigns; this has gone from 6% in 2016 to 18.7% in 2017 (12.7% growth). This data leads us to believe that brands have become more selective when spending on influencer campaigns and that non-monetary tactics can be as effective as monetary compensation.

Compensation 11 24.4% Rarely 29.1% Frequently 12.2% Always 18.7% Just for big campaigns 15.6% Never DO YOU COMPENSATE THE INFLUENCERS YOU WORK WITH MONETARILY? 41% OF FASHION, LUXURY AND COSMETIC PROFESSIONALS SAY THEY ALWAYS OR ALMOST ALWAYS PAY THEIR INFLUENCERS.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 “ “ I think fashion brands should invest in building authentic relationships with a wide range of talent across mediums. Brands need to be multi-hyphenate. Influencer marketing is only one piece of a comprehensive strategy. Aliza Licht, EVP brand marketing & communications, Alice + Olivia and the author of “Leave Your Mark”

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 CURRENT & EXPECTED BUDGET

INFLUENCER MARKETING BUDGETS GREW IN 2017 AND 60% OF PROFESSIONALS CLAIM THEIR BUDGETS WILL CONTINUE INCREASING IN 2018. In 2017 we found that the estimation professionals made a year before was accurate. The budget allotted to influencer marketing campaigns has grown between 3% and 6% globally. The number of companies that dedicate less than 10% of their budgets to influencers has fallen by 6% compared to the previous year. In fact, we can see that most professionals – a total of 60% – confirm that their budgets will increase in the near future.

Current & Expected Budget 12 The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Less than 1o% 40.5% 1o-30% 36.7% 30-40% 11.5% 40-50% 6.2% 50-70% 3.1% More than 70% 2% HOW MUCH OF YOUR OVERALL MARKETING/COMMS BUDGET IS ALLOCATED TO INFLUENCER MARKETING? Increase 60% Remain the same 33.6% Decrease 4.5% Be taken away 1.8% IN THE NEAR FUTURE, THE PART OF YOUR BUDGET ALLOCATED TO INFLUENCER MARKETING WILL:

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 RELATIONSHIP MANAGEMENT

Relationship Management 13 41% OF PROFESSIONALS CONFIRM THAT THEIR PR AND COMMUNICATIONS TEAMS ARE THE ONES RESPONSIBLE FOR INFLUENCER RELATIONSHIP MANAGEMENT IN THEIR COMPANIES. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 This scenario remains as it was in previous years. 41.3% of fashion, luxury and cosmetic experts confirm that those responsible for influencer management in their companies are the PR and Communications teams. Social media teams have become more relevant in this category, ranking second, as opposed to third place in 2016, and are followed by the digital marketing teams.

This year’s report shows that external agencies represent a mere 3.6% of the replies articulating the growing value brands see in internalizing this relationship management. This year we’ve also witnessed a slight growth in the number of companies that have a team specifically for influencer management. 9.3% of companies have these types of teams, compared to 7% the year before. WHICH TEAM MANAGES THE RELATIONSHIP WITH INFLUENCERS IN YOUR COMPANY? Others 6.7% Digital Marketing Team 15.3% Social Media Team 17.6% PR & Communication Team 41.3% External Agency 3.6% Content Marketing Team 6.2% Designated Influencer Relationship team 9.3%

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 MEASUREMENT

> > > Social media engagement Web traffic Impact on sales Social media engagement is still the strongest KPI for brands when determining just how effective their influencer marketing campaigns are, representing 25.8%. The top three factors used to measure effectiveness remain the same as in 2016: According to the survey, professionals place more weight on the increase of web traffic as an indicator of influencer campaign success (this KPI saw a slight increase, from 17% to 18.7%). However, industry experts claim that impact on sales is less decisive, as this key measurement fell from second to third place with a drop from 23% in 2016 to 18.2% in 2017.

The quantity and quality of the audience reached has grown in strength as an important indicator, as has press coverage, which is a new player in this category. Yet, the number of mentions in blogs has lost traction, at only 7.5% in 2017 as opposed to 15% in 2016. Overall we can say that social media engagement is still the solid choice for measuring the effectiveness of an influencer campaign and that when brands select influencers, they should pay closer attention to the ability the influencer has to engage their audience, as opposed to their number of followers.

Measurement 14 24.4% Rarely 29.1% Frequently 12.2% Always 18.7% Just for big campaigns 15.6% Never DO YOU COMPENSATE THE INFLUENCERS YOU WORK MONETARY? HOW DO YOU MEASURE THE EFFECTIVENESS OF YOUR INFLUENCER MARKETING CAMPAIGNS? 25.8% 18.7% 18.2% 18.8% 11% 7.5% Social media engagement Increase in website traffic Impact on sales Quantity and quality of audience Press coverage reached Number of mentions in blogs The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 26% OF FLC PROFESSIONALS CLAIM THAT SOCIAL MEDIA ENGAGEMENT IS STILL THE STRONGEST KPI WHEN MEASURING THE EFFECTIVENESS OF INFLUENCER CAMPAIGNS.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 TOOLS

Tools 15 The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 22% OF INDUSTRY EXPERTS CLAIM TO WORK WITH INFLUENCER MARKETING SOFTWARE OR INFLUENCER MARKETPLACES. Each year, before launching our surveys, we carefully analyze the questions from previous years and incorporate new ones to ensure that we are offering a 360-degree view on the state of influencer marketing, As the influencer landscape continues to evolve, more tools and digital platforms are emerging to assist industry professionals in influencer identification, campaign measurement, scalability and more, which is why we thought it vital to ask experts about the tools they have chosen to use. When asked about how they identify and manage relationships with influencers, 35% affirmed that they work with social media monitoring tools. Google Alerts, Twitter, Instagram and other native tools came in a close second at 30.5%.

CRM tools and more specialized influencer marketing software were practically tied, at 12.2% and 12.3% respectively. 10% of industry professionals confirmed that they benefited from using influencer marketplaces to identify suitable opinion leaders for their campaigns. Considering that 60% of professionals claim their budgets will increase in 2018, it is highly likely that we’ll see more and more industry experts using software designed specifically for influencer marketing. We’ll be following this data closely in the coming years.

WHICH TOOLS DO YOU USE TO IDENTIFY AND MANAGE RELATIONSHIPS WITH INFLUENCERS? 100 75 50 25 35% Social Monitoring Tools 30.5% Google Alerts, Twitter, Instagram and other native tools 12.2% CRM 12.3% Influencer Marketing Software 10% Influencer Marketplace

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 CHALLENGES

30%OF PROFESSIONALS CLAIMED THAT INFLUENCER IDENTIFICATION WAS THEIR MAIN CHALLENGE, WHILE 29% FOUND IT TO BE MEASURING THE SUCCESS OF CAMPAIGNS. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 This category is where responses varied most compared to 2016 and the differences are notable. When considering the challenges that FLC experts face, influencer identification emerged as the area they struggled with the most, representing 29.6%. Whereas in 2016 a whopping 47% of professionals stated that measuring the performance of influencer campaigns was their biggest challenge, only 28.5% chose this same answer in 2017. Although still the second biggest concern, the dramatic drop could perhaps be attributed to the increase in monitoring tools available to FLC brands.

In third place we can see that content, a new factor in this category, also presented struggles for professionals. As more and more content is generated by brands, it’s no wonder industry experts find it difficult to keep up. The most significant fall was regarding legal issues. Only 6.4% of FLC experts confirmed that dealing with legalities (related to monetary compensation and contracts) presented challenges, as opposed to 32% in the previous year. This decrease could be due to the implementation of certain laws, and therefore a clearer view about the legalities of campaigns, such as the Federal Trade Commission requiring influencers to disclose relationships with brands when promoting products. Challenges 16 CHALLENGES WHEN IMPLEMENTING INFLUENCER MARKETING PROGRAMS 10 20 30 29.6% 26.8% 8.8% 6.4% 28.5% Identification Measurement Content Scalability Legal

“ “ Today in the buying process there’s a new step, the Zero Moment of Truth (ZMOT), when the consumer looks online for information, reviews, opinions, etc. So, the brand needs to manage this moment with content actions through influencers focused on their specific target. Stefano Ardito, Managing Director of TwentyTwenty The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

KEY TAKEAWAYS The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

Key Takeaways The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 17 1. MORE FASHION, LUXURY AND COSMETIC BRANDS WILL USE INFLUENCER MARKETING IN 2018. 78% of companies in the industry have implemented activities with influencers and this number will continue growing. 2. INFLUENCERS ARE ESPECIALLY EFFECTIVE FOR REACHING MILLENNIALS. 76% of brands that implemented influencer campaigns in 2017 targeted millennials. 3. INFLUENCER MARKETING STRATEGIES ARE POWERFUL FOR GENERATING BRAND AWARENESS AND BOOSTING SALES.

New scenarios such as generating sales or customer loyalty are among the objectives obtained by professionals. 4. PRODUCT LAUNCHES AND EVENTS GO HAND IN HAND WITH INFLUENCER MARKETING. Product launch cycles are becoming shorter and shorter and influencers offer the possibility to create a quick and lasting impact. 5. MICRO-INFLUENCERS ARE KEY WHEN IT COMES TO REACHING MORE SEGMENTED AUDIENCES. 46% of professionals claim they gain more effective results when working with this type of influencer.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Key Takeaways 17 6. SAMPLING OR GIFTING IS THE MOST POPULAR TACTIC WHEN WORKING WITH INFLUENCERS. 98% of professionals use this tactic and when observing its evolution over the past year, we suspect this will maintain. 7. INSTAGRAM REIGNS SUPREME AS THE PREFERRED SOCIAL MEDIA PLATFORM FOR FASHION, LUXURY AND COSMETIC PROFESSIONALS. Not only has the Snapchat landscape shifted, but functionalities such as Instagram Shopping are fulfilling brands’ needs and expectations in the industry. 8. COMBINING PAID AND ORGANIC CAMPAIGNS HAS BECOME KEY TO OBTAIN BETTER RESULTS.

The number of brands that claim to pay their influencers has grown, while the majority of opinion leaders say they often consider collaborating for free. 9. IDENTIFYING QUALITY INFLUENCERS IS A MAIN CONCERN FOR PROFESSIONALS YET AGAIN. The micro-influencer boom will require professionals to gain more expertise or use specialized influencer tools to identify key opinion leaders. 10. BUDGETS AND INVESTMENT IN TOOLS SPECIFICALLY FOR INFLUENCER MARKETING WILL INCREASE. 60% of professionals confirm that their budgets will grow in the next year, which points to an increment in the number of experts who will invest in influencer-specific tools in the near future.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 METHODOLOGY

Methodology 18 The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 This report is based on a survey that was sent out between the 8th and the 26th of January 2018. A total of 600 professionals in marketing, communications and PR from the fashion, luxury and cosmetic industries completed the survey. On the following pages you will find a breakdown of the profiles of the participants. 34.2% 28.7% 12.6% 10.5% 10.7% 3.3% Senior Management Middle Management Other C-Level Entry Level Trainee/Intern LEVEL OF EMPLOYMENT 38.5% 17.6% 16.9% 9.2% 10% 7.8% PR & Communication Social Media Marketing Content Marketing Influencer Marketing Digital Marketing AREA OF EXPERTISE US / UK FR 2.7% IT 68.5% ES 11.6% 17.1% SURVEY ANSWERS BY MARKET

Methodology 18 The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 WHICH INDUSTRY DOES YOUR COMPANY OPERATE IN? 74.4% 16.9% 8.7% Fashion Luxury Cosmetics Brand 48.3% Media 24.7% Agency 31.5% WHICH COMPANY TYPE DO YOU WORK FOR?

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 From an Influencer’s Perspective *The results presented on the following pages are based on a survey answered by 200 influencers in the fashion, luxury and cosmetic industries in the United States and Europe between January and February 2018. The respondents are members of Launchmetrics’ private communities, Style Coalition our premium Influencer network of Micro, Mid-Tier & Mega Influencers, as well as GPS Radar, the members-only platform for FLC professionals to connect and share.

Who is considered an influencer? The Launchmetrics definition of an influencer today is anyone who uses their voice to speak directly to consumers; a journalist, blogger, style icon, editor, digital influencer, model, celebrity, etc.

INFLUENCERS: WORK EXPERIENCE AND METHODS The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

66% OF INFLUENCERS JUGGLE THEIR WORK WITH OTHER PART-TIME OR FREELANCE JOBS. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 HOW MANY YEARS HAVE YOU BEEN BLOGGING OR GENERATING CONTENT FOR YOUR COMMUNITY? IS YOUR BLOG / INSTAGRAM / YOUTUBE CHANNEL...CURRENTLY YOUR PRIMARY OCCUPATION? 1-2 years 32.7% 6 or more 19.3% Less than 1 year 2.0% 3-5 years 46% I have a full time job and only blog in my spare time 34.7% 31.3% I have a part time job/freelance project in addition to my personal channels 34% Yes, I’m a full time influencer Influencers’ work experience and methods 01 After surveying opinion leaders who work specifically in the fashion, luxury and cosmetic industries, we found that 46% of influencers have been generating content for brands for the past 3 to 5 years. Nearly 33% of individuals have been working as influencers for 1 to 2 years, and 19% have 6 or more years of experience as opinion leaders. This data confirms that the influencer phenomenon has been present globally for more than 5 years now. On the other hand, it’s interesting to see that only 34% of individuals are full-time influencers, while 66% admit to juggling their work as opinion leaders with other part-time or freelance jobs. And, despite how prevalent influencer marketing has become, only a small number of influencers can live off of the content they create for brands.

QUANTITY OF WORK AND TYPES OF INFLUENCER PROJECTS The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 48% of opinion leaders surveyed claimed to spend an average of 6 to 15 hours on generating content for their channels weekly, while 59% say they work on 2 to 5 campaigns with brands per month. 59% OF INFLUENCERS PARTICIPATE IN 2 TO 5 CAMPAIGNS WITH BRANDS PER MONTH. Less than 5 hours 41 or more hours 16-40 hours 6-15 hours 20 40 60 48% 29.3% 15.3% 7.3% HOW MANY HOURS DO YOU DEDICATE TO YOUR PERSONAL CHANNELS PER WEEK? WHAT IS THE TOTAL NUMBER OF CAMPAIGNS YOU PARTICIPATE IN PER MONTH? PLEASE CHOOSE A MAXIMUM OF 3 TOPICS YOU ADDRESS IN YOUR CONTENT: 1 or less 18.7% 5 to 10 16.7% 10 or more 5.3% 2 to 5 59.3% Women’s Fashion Beauty Travel Luxury Food Home Decor Men’s Fashion Sports & Health 02 Quantity of work and types of influencer projects 84% 68% 30.7% 29.3% 20% 20% 8.7%

“ “ My belief is that influencer relationships will begin to deepen with brands in order to harness more integrated relationships that build advocacy. Peer to peer influencer marketing will certainly grow and the platforms coming to the market to enable micro influencers to engage directly with brands will facilitate this even further. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Emma Gregson, Managing Director of ITB Worldwide

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 CHANNELS

Channels 03 Not much confirmation was needed as it is already a well-known fact that Instagram has positioned itself as the preferred social media channel for fashion, luxury and cosmetic brands. 99% of opinion leaders in the survey confirmed that this is the star platform for them, followed by blogs which are used by 85% of influencers, and Facebook in third place which is used by 67%. Surprisingly YouTube only made it to 6th place, falling behind Twitter and Pinterest. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 INSTAGRAM HAS TAKEN OVER AS THE MOST USED PLATFORM. 99% OF INFLUENCERS PREFER THIS CHANNEL. Twitter Facebook Blog Pinterest YouTube LinkedIn Other Instagram 50 100 150 99.3% 41.3% 12.7% 85.3% 67.3% 56.7% 31.3% 6.7% WHICH CHANNELS DO YOU USE TO CREATE CONTENT?

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 INCOME SOURCES FOR INFLUENCERS

82%% 62.7% 48.7% 40% 36% The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Income Sources for Influencers 04 Sponsored content (articles, Instagram posts or other formats) seems to have become the main source of income for 82% of influencers. Social media ads are the second biggest source of income for 63% of opinion leaders, and in third place we find that 49% of influencers received the biggest chunk of their revenues from affiliate links. 82% OF OPINION LEADERS CONFIRM THAT SPONSORED POSTS ARE THEIR MAIN SOURCE OF INCOME.

Sponsored posts Promotion on social networks Display media Affiliate links Event hosting and personal collaborations Video PLEASE INDICATE YOUR TOP 3 REVENUE SOURCES 36% 11.3%

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 SERVICES REQUESTED MOST BY BRANDS

Not only is sponsored content the main source of income for influencers, it’s also the type of service that brands request from them the most. Among the top 3 services that brands seek from opinion leaders are social media ads – approximately 81% claim that FLC companies request this frequently – and display media or banners on influencers’ websites (which 37% of brands request). The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 FOR 85% OF INFLUENCERS, SPONSORED CONTENT IS THE SERVICE THAT BRANDS REQUEST THE MOST.

Services requested most by brands 05 PLEASE INDICATE THE TOP 3 SERVICES ADVERTISERS REQUEST FROM YOU THE MOST: Video 84.7% 36.7% 33.30% 30% 80.7% Sponsored posts Promotion on social networks Display media Affiliate links Event hosting and personal collaborations 12%

“ “ [A great influencer campaign means] tapping influencers that make sense for the brand and not because a competitor worked with them! I love the idea of a campaign that tells a story and having a diverse cast of influencers create the messaging in their own unique ways. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 Aliza Licht, EVP brand marketing & communications, Alice + Olivia and the author of “Leave Your Mark”

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 INCOME LEVEL

When asked about their income level and how much they expect it to grow based on the past few years, we can see once again that only a few receive a notably high income. Nevertheless, most opinion leaders claimed that their earnings have grown compared to the previous year. 46.3% of opinion leaders receive less than $5,000 per year, meanwhile 62% confirm that their income grew by 25-to-50% in 2017 compared to previous years. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 62% OF INFLUENCERS SAW A 25-TO-50% RISE IN THEIR INCOME OVER THE LAST YEAR.

Less than $5,000 $5,000 - 10,000 $10,000 - 25,000 $25,000 - 50,000 $50,000 - 100,000 7.5% 14.2% 16.4% 11.9% 3.7% 46.3% $100,000 or more WHAT IS THE TOTAL REVENUE YOU GENERATE FOR YOUR INFLUENCER SERVICES PER YEAR? DID YOU SEE REVENUE GROWTH IN 2017 COMPARED TO THE PREVIOUS YEAR? Yes, my revenue grew 50% Yes, my revenue grew 25% No change Yes, my revenue grew more than 150% Yes, my revenue grew 100% 7% 20.3% 29.4% 7.7% 3.5% 32.2% My revenue has decreased Income level 06

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 COLLABORATION AGREEMENTS

Collaboration Agreements 07 When working with brands, only 32.7% of influencers confirmed that they always signed collaboration agreements, whereas 60.7% claimed to sometimes work with contracts. 4% of opinion leaders secure agreements through influencer marketplace platforms, and only a mere 2.7% said they never signed any form of a term sheet. This data could be attributed to several factors. For instance, many activities carried out between brands and influencers happen organically and don’t require a signed agreement. And, the fact that only a small number of opinion leaders work on big campaigns could also be an influential factor. In any case, it will be interesting to keep track of this data over the next few years to understand the evolution of influencer marketing in our sector.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 ONLY 33% OF INFLUENCERS CONFIRM THAT THEY ALWAYS SIGN COLLABORATION AGREEMENTS WITH BRANDS. WHEN YOU COLLABORATE WITH BRANDS, DO YOU USUALLY SIGN A COLLABORATION AGREEMENT? Yes, always 32.7% 4% I always work with brands through marketplace platforms Never 2.7% Not Always 60.7%

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 INFLUENCERS’ MOTIVATIONS

Influencers’ motivations 08 Discovering influencers’ two main motivations behind working with brands proved to be an interesting category, especially considering the differences in opinion on the topic between industry experts and the influencers themselves. Whereas only 27% of marketing, communications and PR professionals claimed that influencers were motivated by monetary rewards, a total of 62.70% of opinion leaders in this survey confirmed that this type of compensation was their main incentive for working with brands. However, monetary compensation was only in second place as 63.3% of opinion leaders claimed that generating valuable content for their communities was their primary objective behind working on campaigns with FLC companies. Conversely, a mere 15.7% of industry experts believed that creating valuable content was the main motivator. Interest in gaining exposure through working with brands on campaigns was the third biggest motive, according to a total of 52% of opinion leaders. The two final incentives chosen by influencers were networking opportunities and free merchandise, representing approximately 20% each. What we can draw from this data is that influencers are mainly interested in generating appropriate and engaging content, and receiving monetary compensation for it.

The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 WHEN CHOOSING TO WORK WITH BRANDS, INFLUENCERS ARE MAINLY MOTIVATED BY GENERATING VALUABLE CONTENT AND RECEIVING MONETARY COMPENSATION; EACH CATEGORY REPRESENTING APPROXIMATELY 63%. WHAT ARE YOUR TOP 2 MOTIVATIONS FOR WORKING WITH BRANDS? 63.3% 62.7% 52% 40% 20.7% 20% Valuable content for my brand Monetary compensation Exposure New experiences Networking with other relevant peers Free merchandise

ORGANIC COLLABORATIONS The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018

Organic Collaborations 09 Previously in the survey we could see that influencers were mainly motivated by the opportunity of creating interesting content for their communities, and secondly, monetary compensation. However, in this final category we find that influencers are not completely closed off to working with brands for free. In fact, 44.7% admitted that they would be interested in working with brands, but only ones they truly admired. Meanwhile, 46% claimed they would consider working for free if the FLC company offered something in return: whether it be trips, free products, samples or others - as long as the non-monetary compensation was enticing enough.

Only a slight 2.7% refuse to work for free and 6.7% consider it would be worth it if the opportunity led to working with other relevant bloggers or influencers. From this data we can confirm that FLC professionals have a wide array of options when it comes to their influencer strategies, incentivizing opinion leaders through paid or unpaid (but with other types of compensation) methods. The State of Influencer Marketing in Fashion, Luxury & Cosmetics 2018 WHEN DO YOU CONSIDER COLLABORATING WITH BRANDS FOR FREE?

It depends on the type of compensation they offer me (trips, gifting, samples, etc.) 46% Only when it comes to a brand that I really love 44.7% Sometimes, when there are other relevant bloggers/Influencers involved 6.7% I never collaborate for free 2.7%

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