Why influencer marketing is effective in South Korea

Online Marketing through influencers has been popular in Korea. Some people tend to buy products through the influencers they like, not the off-line store. This form of marketing is active on Instagram, especially among young women. The characteristics and effectiveness of Influencer marketing in South Korea will be given based on the interview with four Korean Instagram influencers.

What is influencer marketing?

In the 1980s and 1990s, advertisements through TV, radio and newspapers were consumed as content which could lead to immediate sales. As the Internet began to spread in the 2000s, the accessibility to expose advertisements increased, making the market dominated by online advertisements. However, people should struggle with thousands of banner ads and pop-up ads on search engines. With demand for attention on the rise and overwhelming product options on the market, consumers began to lose sight of who they can trust.

It was when social media became popular that people began to use a buzzword: “Influencer”

An influencer produces contents with narratives, has loyal followers, and distributes them directly on his or her own platform. As influencers converge on social media platform, a new digital marketing trend has been created. ‘Influencer’ in social network service (SNS) now refers to people who have the power to affect the purchasing decisions of others because of their position, knowledge, or relationship with their followers. Influencer marketing is leveraging the collaboration between a brand and an existing influencer who has built a large following, with the intent to increase brand reputation and drive sales.

Characteristics of Influencer marketing in South Korea

With the world’s fastest internet speeds that’s in the race to be first with 5G, almost 99% of South Koreans go online at least once a week, spending an average of 14.3 hours a week on the internet. Out of a population of 52 million, there are more than 45 million internet users in Korea, and even 38.4 million are active users on social networks. This places Korea in the top 2 for the use of social networking globally, ahead of the US on 7th, where 66% of the online population are active users of social networks.

Influencer marketing began to make a mark since 2015 in Korea, and in about a year, the market has increased by $2 billion. Influencer marketing is now established as a cohesive digital marketing in South Korea. According to a report published by Korea Trade-Investment Promotion Agency (KOTRA), the influencer marketing market in South Korea was tallied at $2 billion in 2017, and is expected to grow to up to $10 billion in 2020.

86% of South Korean women browse their feeds on SNS before making a purchase and 71% of consumers are more likely to purchase based on a social media reference. As social media becomes more entrenched in people’s lives and takes on more functional uses beyond communication, like shopping, influencers became vital intermediaries, helping to connect brands with consumers.

One distinctive thing that differentiates South Korean influencer marketing is that influencers role as sellers, too. Followers become “potential customers” for influencers. Selling products on SNS does not cost much to begin. A ‘Cell market’ is a newly coined term that refers to small-scale sales which are operated by a single influencer. The influencer sellers are compared to the ‘cell’ because the number of them is growing up rapidly just like cell division. There exists a lot of e-commerce companies which help anyone with a smartphone can open a market and sell products at a reasonable price. Starting a ‘cell market’ does not require a high risk due to low fixed investment costs such as rent, labor costs and marketing costs. They sell a limited number of products at discounted prices, which reduces inventory burdens. That’s why 20-30s and a woman whose career has stalled by childbirth or childcare jump into this business. Bomi Kim also started her Instagram market after her childbirth. She said this business can make sellers earn money on the side.

Products are offered to an influencer by vendors or agencies. An influencer can choose one of them and easily sell it by self-marketing with posting contents about the product on his or her SNS. Products introduced or sold by influencers range from cosmetics to food, clothing, accessories and home appliances. Mostly, they focus on categories that are related to their contents or that they can display their expertise or experience.

Instagram is mainly used as a commerce platform between influencers as sellers and followers as customers. Bomi Kim used to run a market using posts and writings on blog 10 years ago, but recently moved her sales to Instagram when she started selling again. Meanwhile, Kyeongmi Park said that people are going to shift from Instagram to the video platforms such as Youtube and Tiktok. Even though Jeong-A expressed her view on it that these platforms will develop and settle based on different characteristics, Kyeongmi explained that she was told that the era of photography would be over soon. But she also couldn’t assure what will happen because the market is changing fast.

Some influencers with strong followers serve as more than just a seller of products, but make their own brands. Launching own brand was prevalent between influencers with huge followers two years ago. Once running an offline select shop, Sena Kim used Instagram to sell more of her own brand products online. By selling her own products, she could get more profits than products offered by vendors and establish her own brand identity. But, Jeong-A explained that it was just a passing fad. This is because consumers do not trust products that less specialized influencers make.

Companies also obtain many of the advantages when cooperating with influencers. Nowadays, the distribution industry has more power than the manufacturing industry. High-quality goods are overflowing with upgraded quality of manufactured goods. However, many brands and products disappear because they lack relationship strategies with customers. Sales through retail conglomerates are a pie in the sky for small manufacturers. The Influencer market can be a bridge that will promote sales for small companies that lack contact with customers. Outsourcing distribution and marketing through influencers makes it easy to meet potential customers even if they do not go through distribution and advertising channels occupied by large companies. In particular, influencers are more likely to succeed in distribution and marketing because they communicate with followers who have similar tastes and interests.

Why customers buy products through influencer market?

Influencer marketing is a little different from traditional celebrity campaigns. Influencers, unlike celebrities, can be anywhere. They can be anyone. Influencing is close to connecting, making followers feel connected with the product and people who use or promote that product. People follow influencers, not the brand. In reality, followers don’t care less about the brand. They buy storytellings or narratives which influencers make, depending on relations or intimacy with influencers.

When asked ‘why do you think your customers buy products through your own market?’ in interviews, four influencer sellers all said that it’s because followers trust influencers. What makes the fan base stronger depends on the way the influencers interact with their followers. They build intimacy by communicating with followers by replying to their comments and chatting online through live stream. Sena Kim said she communicates with followers like a friend. “The most important thing that I keep in mind is faith and trust. When I was sincere about them, my followers also gave me a sincere response,” she said.

Jeong-A, taking an example, told that some huge influencers make a nickname for their followers to make her followers feel a sense of belonging. She also shared her difficulties while taking care of her more than 400 thousands of her followers. Most of her followers adore Jeong-A’s fashion, hair style and makeup and want to copy and practice. Followers respond to every her post, behavior, and word. She always is careful what she posts and does. Her feed has to adhere to followers’ tastes and has to be appealing.

Current trend in influencer marketing

The influencer marketing industry categorizes influencers into four tiers to quantify the cost of collaboration based on the number of subscribers on their channels. Usually with millions of followers, influencer is defined as ‘mega’ and hundreds of thousands as ‘macro’. With a relatively small impact of less than 100,000 to 10,000, influencer is defined as ‘micro’. In addition, it is common for sizes below 10,000 to be classified as ‘nano’.

Over the past few years, there is a big shift in focus from these high-end influencers to micro and nano influencers. Simply having many followers doesn’t guarantee purchasing. Bomi Kim explained that the number of followers is not equal to the number of actual customers who bought. Jeong-A has seen a fall in the number of followers, right after she sold some products for them.

So, marketers have regarded engagement rates as an important metric to calculate an influencer sales success. According to a recent research by KB Finance, nano influencers have more engagements with their followers than regular influencers. On the contrary, mega influencers who have more than 1 million followers only have a 2~5% engagement rate.

Kyeongmi explained the reason why influencers should communicate with their followers is also related to Instagram’s algorithm which was recently changed. Until a few years ago, all followers’ posts were exposed to news feed in chronological order, but now posts are being exposed in a completely different way. In the current algorithm, the engagement rate must be high for posts to be exposed at the top of the news feed.

Responsibilities influencers should have

With the rapid growth of personal sellings on sns, the number of consumer damage cases has also increased. Data collected by Korea Fair Trade Commission showed that 879 of 1,221 sellers who were warned or advised to take corrective action for false advertisements from July to September last year were social media influencers. False and exaggerated advertisements are occurring among some products, which mislead consumers into purchase.

Without regulations on sellers, the damage is solely up to consumers. As more customers speak out the necessity to supervise sellers on social media, the South Korean government now began to take an action to regulate illegal sales and revise a guideline on false and exaggerated advertisements on sns more strictly. Instagram sellers should be responsible as sellers, not just for promoting their products.  Also, influencers, who do not sell but only promote for money, will have to act with sincerity so that consumers can trust and use them themselves. Anyone who does business wants to sell a lot. “But if you sell it, you have to take responsibility for your product”, said Bomi.

Kyeongmi emphasized the meaning of ‘influencer.’: people who have an affect on others. She said that she wants to widen her coverage to give more good influence as she can. She also wanted anyone with a good influence to take the lead when there is a social issue, not just for a profit-taking. She once ran a contribution campaign, named LNC (Love and Cheer), to encourage her followers to share love and to cheer each other. Sena also donated some of her profits to an organization that props up the childhood cancer treatment and to help unmarried mothers.

Having a large number of subscribers does not mean a true influencer, said Jeong-A. In order to survive as a influencer, she advises that influencers should build their own identity. Selling products made by others can undermine not only the their identities but also the image of the products they sell.

Trust leads to the market

As we live in an era of uncertainty, it is not easy to predict the future of the Instagram market.

Rachel Botsman, an expert on the new era of trust and technology, said in her book ‘Who can you trust?’ that trust used to flow upwards to experts and authority but now it’s flowing sideways to individuals: strangers, peers, and neighbors. As technology enables trust in new forms, the era of ‘distributed trust’ has come. This paradigm shift driven by innovative technologies that are rewriting the rules of an all-too-human relationship enabled the flourishment of influencer marketing.

If you want to predict the upcoming marketing trend, trace the flow of trust which makes information exchanged. Where there is trust, there will be a market evolving itself.