How We Spent $5 Million on Influencer Marketing like Warren Buffett

Collaborating with strong influencers with an engaged following is a great way to get in front of a relevant audience along with building your brand equity for the long term, but it also comes with certain risks.

Many companies have reached out to us at Shoptagr and asked us how we do Influencer Marketing, so in this post, I want to share some of our most important learnings from spending over five million dollars on Influencer marketing profitably.

Invest Like Warren Buffett

Influencer-collaborations are like stocks — you need to put down the money in advance, which is risky, and sometimes they perform, and sometimes they don’t. Like Warren Buffett evaluates his businesses (and says no to most!), you need to be able to evaluate an influencer by looking at hard facts unaffected by the influencers’ personality, popularity, how many followers they have, and what other people think of them. Study the influencers you would like to partner with closely and build your golden portfolio according to your budget while measuring your risk.

At Shoptagr, we look at multiple parameters, like avg. views count, engagement rate, purchasing intent, the growth rate, among many other factors. We have around 30 specific things we look at to minimize risk before even reaching out to an influencer for a potential collaboration (We’ve built a proprietary scoring system based on this “secret” list!).

We find ourselves saying no most of the time to influencers that reach out to us for potential collaborations because they simply don’t meet our minimum score. We also spread our monthly budget across multiple verticals (like health, fitness, fashion, lifestyle, tech), price points, and Influencer types/sizes. Find out what/who resonates well with your product/service and obsess over your screening process before you decide to invest in an influencer.

Direct Like Christopher Nolan

Once you start to work with influencers, its crucial that you get your story structure in place along with consistent messaging. You need to obsess over how your product/app/service’s story is being told to the audience, along with a clear call to action. One of Christopher Nolan’s (known for The Dark Knight, Inception, Interstellar, Dunkirk, and more) biggest strengths is his understanding of story structure, meaning how a story is being told. Make sure the influencer showcases your product and its story the right way while making it relevant/match the theme of the video. If an influencer gives you (the audience) 5 tips on how to get clear skin in a Youtube video (which your company is sponsoring), then make sure your product/app/service plays an active role in that story — kinda like an Aston Martin or a Martini in a James Bond movie.

Know Your Unit Economics

Knowing your numbers and cash flow is crucial! If you don’t have a crazy lifetime value along with sky-high brand budgets, Influencer Marketing can be a tough nut to crack from a unit economics perspective and it takes time to achieve positive ROI — so make sure you know how much time you can afford!

Influencer Marketing comes with high risk in the beginning as you are building out your Rolodex of influencers whom you know perform well consistently for your brand — but once you have it in place, it works, and you can rotate between them again and again! We’ve had great success focusing specifically on Youtube influencers because the video-format is a fantastic medium to tell a story, showcase how our digital shopping assistant works and how it can save you time and money when you shop online automatically.

It’s also essential, especially on YouTube to measure the effective CAC on your entire influencer portfolio videos for a given month as the vast majority of people/viewers don’t actually click the link below the video — most people simply open a new tab and search for your app which is obvious when comparing link clicks to actual visitors in google analytics when a video goes live. Accept that it’s not performance marketing and not 100% measurable, so analyze the upper funnel closely and compare it to your internal analytics.

You’re Buying Digital Assets

One of the fantastic things about Influencer Marketing compared to Performance-based marketing is that you are building a portfolio of digital assets on the internet, which will live on for years to come driving traffic back to you! We got over one thousand influencer’s YouTube videos, driving long tale traffic, installs and signups to Shoptagr every single day, not to mention the brand equity we are building — and if you manage to identify and invest in up and coming youtube stars, it can turn out to be an incredible long-term investment (a bargain!). It’s also great that Google identifies a lot of incoming traffic from YouTube to your website, which, in return, boosts your overall SEO profile affecting your relevance in search positively.

There is No Magic Pill

If you decide to give Influencer Marketing a shot, parts of the reach-out process can be automated, but at the end of the day, its HARD manual work! You need to start building great relationships with influencers, agencies, and platforms from scratch, and you need to continuously be optimizing and refining your score system (as mentioned previously) based on your learnings, which will eventually become your Bible. At Shoptagr, we’ve built an internal Rolodex of hundreds of high performing influencers over the years, which works well for us, and we are always expanding as we scale our marketing budgets.

I hope you’ve gained some value from this post, and I wish you the best of luck with your influencer marketing. What might work for us, might not work for you, but if you decide to give Influencer Marketing a try, focus on becoming an expert in one channel first, I.e., Youtube or Instagram and then go all-in on that knowing that you might not break-even at the beginning on your spend. Be prepared to be in the red for a while until you start identifying patterns, so you can start optimizing. Your payback time on Influencer marketing may vary (depending on your business model) between 1 month and even up to 12 months. Still, if your product/service/app provides real value and your users stick around, it can work wonders — So don’t give up too soon!

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