Brands are increasingly turning to trusted online content creators to influence shoppers’ buying habits, especially to attract Gen Z and millennial consumers raised on technology.
That’s a key takeaway of research by Dallas-based LTK and Northwestern University into how brands are attracting younger shoppers — a key segment as retailers wrap up a holiday season that still accounts for an outsized portion of yearly sales.
Gen Z — generally defined as those born in the mid- to late-1990s to the early 2010s — now makes up 40% of all global consumers with spending power estimated to exceed $150 billion annually. How they shop is important to brands’ bottom lines.
Influencer marketing is expected to reach $21.1 billion this year. An earlier LTK study said 75% of Gen Z consumers and 67% of millennials make online purchases based on influencer recommendations.
“So many millennials and Gen Z … often have kind of negative attitudes toward traditional advertising and traditional communications through media,” said Frank Muhler, who oversees Northwestern’s retail analytics research center. “So this influencer thing kind of cuts through that and resonates with young people.”
Influencer marketing is playing out in multiple ways — from lucrative deals between brands and heavily followed celebrity creators to TikTok shops allowing any person to earn a commission for promoting a product.
LTK, formerly known as RewardStyle, is living proof of the power of connecting influencers with brands so they can make money off the content they create. Since its founding in 2011 by Southern Methodist University graduates Amber Venz Box and Baxter Box, LTK’s creators are credited with driving over $18 billion in sales.
Many consumers think of online creators as their friends, making it easier to trust their recommendations, said Amanda DeWitt, Dallas-based lifestyle and fashion content creator.
“They feel like they know this person. They see their everyday life, they see their family, their clothes, the products they use, their home and it makes you trust that,” DeWitt said.
DeWitt, who often works with brands on traditional social media platforms and LTK, said she’ll try a product for several weeks or months before touting it to her audience. Her daily posts have helped her to build a base of over 50,000 followers on TikTok. She strives to make her recommendations seamless by weaving them into her regular posts.
The LTK and Northwestern survey, conducted in August, gathered input from 164 marketing leaders who put money into creator marketing. Eight in 10 planned to increase their spending this year, and nine in 10 expect it to grow next year.
Influencers are now viewed as personal shopping assistants by some consumers, said Rodney Mason, head of brand marketing partnerships at LTK. His company’s survey showed that 51% of fashion brands credit creators with improving their brand image.
Brands also are using creators in their marketing campaigns. Mason said one company LTK worked with replaced its models with content creators.
Other ways creators are influencing spending is in how consumers search for products. Someone searching for the best frying pan, for example, might make a faster buying decision if the results show options with a stamp of approval from their favorite creator.
“[When many] people search for products, they’ll go into social media and search,” Mason said. “Having those creator posts, even in the social channels or on LTK where people come and search every single day and having those creator posts in there is another form of SEO.”
Shoppers also want someone to tell them about and display the best items to buy, Mason said. The LTK-Northwestern survey said that’s why about 36% of brands spend half of their online marketing budget on creators.
“It is changing the way people shop,” Northwestern’s Muhler said.