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Summary:

Marketers have long believed that some customers have a disproportionate influence on others when it comes to purchase decisions. The real challenge is identifying and targeting the “micro influencers,” or those who are particularly trusted on certain topics.

Digital influencers

Marketers have long believed that some customers have a disproportionate influence on others when it comes to purchase decisions, and they have tried different strategies to identify and target those customers. Indeed McKinsey & Co. reckons 20-50 percent of purchases involve a peer reference.
Recently academics have confirmed this contagion does happen. There are customers who are opinion leaders, and they tend to bring other customers with them.

The marketing community is clearly interested in these individuals. For example, the pharma industry dedicates, by some counts, 20 percent of marketing budgets to peer influence marketing. However, for many other sectors, the practical challenges of mass influencer targeting dissuade them from investing significantly in the area.

The challenges of Peer Influence Marketing

Communications professionals, in the past, have had to use manual or bespoke methods to identify individuals who influence other’s buying habits. These approaches were expensive and produced uncertain marketing outcomes. In other words, there was no ROI story for influencer marketing.
While it’s relatively straightforward to manually identify the top-level “mass influencers” — such as journalists, celebrities or academics — the far larger number of “micro influencers” has remained elusive. These micro influencers may not have a formal position that validates their influence, but they can be recognized among large audiences as being knowledgeable and trustworthy on specific topics. They also generate up to three times more word of mouth communications than non-influencers. Therefore, these micro influencers have a huge potential to drive purchase decisions and product contagion. One of the greatest challenges for the marketing community is identifying and targeting them.

Social influence

The sharing mentalities of Twitter, LinkedIn and others have all brought a dramatic growth of information and thus a fundamental change to the challenges of identifying influencers. The possibility of scientifically identifying patterns of influence has emerged, thanks to analysis of relationships and communications and social network data. So now it’s possible to identify persuaders, opinion leaders and influencers across multiple social networks.

Rather than having to manually identify a few individuals who have demonstrated their ability to drive sales, an automated influence mapping approach can identify micro influencers on a large scale. Jacquelyn Martino and Patrick Wagstrom, two IBM researchers, have identified networks related to mutual relationships and shared topics, showing how this kind of mapping can work.

Refining the peer influence marketing approach

However, the nature of influence is complex. It’s more valuable knowing the areas in which someone has influence, rather than just determining they are generically “influential.” For example, whilst a dedicated car enthusiast might be hugely respected amongst their social group on the topic of cars, it is unlikely their follower base would ask them for advice about fly-fishing.

A successful peer marketing campaign must incorporate this topic specificity. If you want to identify a universe of influencers you need to be certain they are authoritative within your sector. Just as with Al Gore’s climate campaign, which crucially identified scientists and trainers with specific area knowledge, it is who exactly you choose and why you choose them that is important, as it allows the message to be filtered to the right people — and on a mass level.

Another major challenge in peer marketing is engaging with opinion formers. With a bespoke approach, once influencers have been identified they must then be engaged with manually. Individually contacting a pool of influencers and managing those contacts has also limited the potential scale of Peer Marketing campaigns.

Self-service engagement channels are a solution to this problem. Rather than proactively chasing individual influencers, these individuals need to be able to choose for themselves whether to engage with a campaign.

The future of peer influence marketing

Whilst peer marketing is without a doubt going to be a major growth industry, it’s also worth considering where it’s going to be most applicable. Influence becomes important in the purchase cycle when complexity or uncertainty is a part of the decision process.

With purchases that require research such as cars, movies, music or technology products, people want advice from topic-savvy people. These informed purchases are fertile areas for peer influence marketing.

The recognition by marketers that decisions are not just made with reference to formal marketing or journalistic output is a key insight in modern marketing processes. Tapping into these informal influence networks is going to be the next stage in leveraging this understanding.

Azeem Azhar is the founder and CEO of Peer Index and has been obsessed with the internet since 1990.

Image courtesy of Flickr user ogilvyprworldwide

  1. Does this mean services like Klout will become indispensable hubs for marketers to track top influencer’s?

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    1. Sylvan Media Group Sunday, August 14, 2011

      Hey CloudGuys

      That was my exact question. How do platforms like Klout “level” the playing field for “micro” influencers.

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  2. Maria Reyes McDavis Saturday, August 13, 2011

    Your notations about micro-influencer mapping is such an important, strategic concept for businesses–large and small. The real problem is scalability and changing the mindset that mass media approach (mass targeting) may need to be adjusted appropriately to influencer marketing.

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  3. But my friends aren’t the best people to give me life advice, thanks but I’ll make my own choices :)

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  4. There’s one tool called Twittie ( http://twittie.com ) launching very soon that will help small & medium businesses in doing exactly that – targeting and engaging potential influential customers. Because it will really make a difference, to know with whom it’s best to do business :)

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  5. Gideon Rosenblatt Sunday, August 14, 2011

    For marketers to truly adopt these tools, they need to be customizable to allow for different definitions of “influence” and be integrated into CRM systems:
    http://www.alchemyofchange.net/klout-tuning/

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  6. I’m interested to see how G+ will play a role in identifying micro-influencers. I suspect that, as “who to follow” lists become more refined and segmented, identifying specific niche authority figures will become an easier task. Not “easy” by any means, but it could substantially reduce guesswork.

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  7. Anirvan Lahiri Monday, August 15, 2011

    Great to see this Azheem and to see Peerindex gain traction. Two thumbs up.

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  8. The CEO of PeerIndex must be seething that the first service anyone mentions in the comments is Klout.

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