Is the influencer ‘bubble’ about to burst?

This clash between creativity and commercialism is testing the billion-dollar influencer economy as platforms like Instagram and TikTok keep evolving at a dizzying pace, leading many to beg the question: is the influencer bubble about to burst?

This multi-billion-dollar industry, which initially aimed to attract a younger audience unreachable through traditional advertising, now faces scrutiny amid shifting consumer preferences, oversaturation concerns, and a pressing need for measurable returns on investment (ROI).

“The industry is currently transitioning toward maturity,” said Amit Vyas, Founder of NEXA and DXB Group. “As brands develop more efficient measurement tools and influencers become more professional, the market will likely grow more consistently and sustainably.”

The influencer advertising market is currently worth around $35 billion and is projected to grow to $52 billion within the next four years, according to Statista.

However, this evolution hasn’t been without its challenges. Saul Marquez, CEO and founder of digital marketing agency Outcomes Rocket, warned of the potential “burst” of the influencer bubble.

“Market oversaturation, with too many influencers promoting similar products, can lead to diminished consumer trust and engagement,” he said.

“Inauthentic endorsements, where influencers promote products they don’t genuinely use or believe in, can erode credibility.”

Concerns over authenticity and tone-deafness have rapidly emerged over the past few years. In 2018, Egyptian influencer and Huawei faced backlash after promoting the brand’s Nova 3 smartphone in an ad that was revealed to have been filmed with a DSLR, not a smartphone as the ad alleges. A behind-the-scenes Instagram post by the influencer showed the camera being used. Once pointed out by a Reddit user, she deleted it.

Another notorious example was Kendall Jenner’s partnership with Pepsi in 2017 for a tone-deaf ad that trivialised the Black Lives Matter movement, leading to a swift apology and withdrawal of the campaign, and even a tweet from Martin Luther King Jr.’s daughter, Bernice King, calling out the matter. “If only Daddy would have known about the power of #Pepsi,” she tweeted at the time.

If only Daddy would have known about the power of #Pepsi. pic.twitter.com/FA6JPrY72V

— Be A King (@BerniceKing) April 5, 2017

The end of ‘aspirational’ influencing?

Now, as the influencer marketing industry begins to mature, a profound shift is underway – a gravitation towards authenticity and relatability – and a concept that has come to be known as de-influencing.

“Influencers now focus more on helping brands build and nurture robust communities rather than just selling products,” said Vyas.

Marquez echoed this sentiment. “There is a discernible shift in consumer behaviour and preferences towards influencers who offer authenticity and relatability.” He cited the viral incident at VidCon 2022, where a TikTok influencer with millions of followers had a meet-and-greet that no one attended, sparking mistrust and skepticism among consumers.

This trend is driven by a desire for more meaningful connections and transparency in an often-superficial digital landscape. As Marquez explained, consumers are “moving away from highly curated, aspirational content that feels out of touch with their realities.”

“Instead, they favour influencers who share genuine experiences, vulnerabilities, and everyday moments.”

Measurable ROI and engagement metrics

Brands are tightening their influencer marketing budgets as they seek tangible returns on their investments. “Recently, major brands have slowed their spending, often seeking more efficient ways to measure the effectiveness and ROI of influencers,” Vyas confirmed.

Brand budgets for influencer marketing are “not going down,” according to Marquez, but their strategies are beginning to shift. “They are concentrating their spend on influencer with higher, more authentic engagement, and with conversion and sales track records.”

Research suggests that influencer marketing is still an effective and profitable tool for brands. On average, brands can gain $5.78 for every $1 spent on influencer marketing. While a remarkable return on investment, it should also be considered from a wider context beyond sales such as its impact on brand awareness, engagement, and brand loyalty which are often more difficult to quantify.

To address this challenge, agencies are adopting data-driven approaches and leveraging predictive analytics to forecast influencers’ performance and optimise campaigns in real-time.

“Data needs to be at the core of the strategy, aiding in the fine-tuning of influencer selection, editorial direction, and deliverables through expert predictive analysis,” Vyas explained.

A popular metric being used to estimate the value of influencer mentions and exposure is Earned Media Value (EMV). It helps brands estimate the advertising value they would receive from organic influencer mentions and engagement. It translates likes, shares, comments, and impressions on influencer posts into a hypothetical cost a brand would have paid for similar traditional advertising, providing them with a benchmark that allows them to gauge the reach and impact of the campaign.

This shift also comes as new apps and platforms that can accurately decipher real vs fake engagement and followers continue to emerge. Some of these include Modash, HypeAuditor, and Brandwatch.

Oversaturation and eroding trust in influencer marketing

One of the most significant threats to the influencer marketing industry is oversaturation, which can dilute the impact of influencer campaigns and erode consumer trust.

“Market oversaturation is a factor, with too many influencers promoting similar products, can lead to diminished consumer trust and engagement,” Marquez warned.

Additionally, inauthentic endorsements, where influencers promote products they don’t genuinely use or believe in, can further undermine credibility.

“Inauthentic endorsements, where influencers promote products they don’t genuinely use or believe in, can erode credibility,” he added.

The verdict?

Despite the challenges and potential pitfalls, the consensus among experts is that the influencer marketing industry is undergoing a necessary maturation process, one that will ultimately strengthen and refine its practices.

“The growth might not be as rapid as in its initial, frenzied years, but it will be much more thoughtful and deliberate,” said Vyas.

According to Marquez, the future of influencer marketing lies in “creating meaningful, authentic, and engaging content that resonates deeply with consumers, and of course, making sure it converts to justify the investment.”

In this evolving landscape, brands and agencies that prioritise authenticity, foster genuine connections with audiences, and leverage data-driven insights to tailor campaigns and measure tangible results are poised to thrive.

While the influencer ‘bubble’ may indeed burst, it is likely to give way to a more sustainable, transparent, and impactful era of influencer marketing.