What a Future Recession Means for Influencer Marketing: Budgets, Strategy & Partnerships - Ep. 20

Welcome to Negronis with Nord. Today’s episode is about the looming recession. What might a recession mean for brands, influencer marketing budgets, and influencers’ strategy? You can submit your questions for future episodes here.

Below is a transcript of the full episode for your reading pleasure. Make sure to subscribe to the Fohr YouTube channel to get notified of new episodes.

About James' latest IG post...

James: Welcome Negronis with Nord episode 20. Today, we are gonna talk about the impending recession. Incredibly exciting, very upbeat. Y'all are going to love this. Before I get into that though, I was out in the Hamptons this weekend, which I usually don't do. Cause I don't actually like the Hamptons that much, but a friend had an extra hotel room. Me and the fiance went out there. It was a lovely weekend. I got my first pair of sneakers. Okay. 38 years old. I finally got my first pair of sneakers. I still do not have any jeans. And I took a photo of them on the dock and it looks lovely. The shoes are cool, a nicely beat-up dock and the really blue water. This stuff used to slay. I felt like I wanted to post it to Instagram. I knew this photo was absolutely 100% going to bomb. It is everything that Instagram liked six or seven years ago and everything that it hates now and surprise it's doing terribly.

Are we just bored of Instagram?

That is not the point. There was a time influencers would, you know, have a photo of themselves and then two or three photos of like random shit, a flat lay of makeup of their shoes. Just like completely fucking random stuff. That would be on there. And then another photo of themselves that would never work now, right? Like you have to be face-forward looking at the camera. Ideally having video every post. I think that so much of it just has to do a bit with boredom. We got bored of that, but also that, like there comes a point where you've like, you've seen all, you can see of one type of thing. And then it started to be the same shit over and over and over and over and over again. And you just get bored and there's diminishing returns. This is like a, a very standard economic law.

The law of diminishing returns every time that you, you know, like interact with something, you, you get less from it each time, right? If you have a piece of cake, your first bite of cake is going to be better than your second bite, which will be better than your third than your fourth. And your, you know, we have just seen everything. And now we're seeing that with video and it's naive to think that like the same thing is not going to happen with video. And that's the, the thing that is difficult with trends and with these platforms, because it is based on attention and because people have such a short attention span and because the amount of content we're seeing is increasing rapidly. That period of time, when we're excited about something new gets smaller and smaller and smaller and smaller, the kind of content that we see in TikTok that is like really popular.

And just generally that platform, I bet we will start to be like quite bored by it. People's appetite for seeing the same shit over and over again. And I took this photo of my shoes and like, it looked fine, but not that interesting. It's why it's so important to, you know, really build a relationship with your community. Especially if you're not somebody that feels like you can constantly be reinventing yourself and doing something completely new. It's why really focusing on your community is the best thing that you can do. You can either do that or you have to be like a Mr. Beast. And like every single video, you know, doing something completely fucking crazy that nobody's done before. That is completely new. That's going to get all of this attention. If they are following you specifically to see new, interesting, exciting content constantly, then that's the product and you are gonna have to constantly one up yourself and constantly reinvent yourself to stay relevant. That is really hard. Focusing on your community is easier.

"Especially if you're not somebody that feels like you can constantly be reinventing yourself and doing something completely new. It's why really focusing on your community is the best thing that you can do." - James Nord

The impending recession

Let's talk about the economy really quickly. The economy is not in a good place. I don't know what your Twitter feed looks like. At this point. You have probably heard that we are potentially in a recession. We are heading towards a recession. We've got inflation through the fucking roof. That is like really hurting people. We've got gas prices going crazy. We've got a housing shortage in the country, which is driving housing prices up, which also is increasing rent prices. We have the stock market in the toilet, but unemployment incredibly low in a really tight labor market. We've got the fed raising interest rates, which is making borrowing money more expensive, which means that we have less investment in startups. And we have less ability for organizations to borrow money, more cheaply, but ultimately a lot of people smarter than me feel like we are headed towards some kind of recession in this year alone.

You know, we've had, I think 7 trillion of, of wealth erased from the world, like just gone, right? If you think that the world can hit delete on $7 trillion and you're not gonna be affected, that is probably naive to think. We probably have to get into a situation and a mindset to say that there is going to be some kind of downturn there already. Is it just probably hasn't impacted you yet? What do you do about it as an influencer one?

How the recession could impact brands & budgets

How do we think about how this changes? The way brands think most large brands are going to continue to spend significant money on advertising no matter what is happening in the economy. There's a saying in advertising that says when times are good, you should advertise when they're bad, you must advertise. It is one of the last things brands want to cut is their ad budget.

It is the thing that is directly impacting sales. Those sales numbers are the core thing. Driving the stock price. They are reticent to cut their ad budget. So I don't think we're gonna see something like we did in 2020 with COVID when we shut the economy down and budgets were completely paused across the board and lots of influencers. It was months without a single project. That's not going to happen. So brands may reduce the amount of money they're spending on advertising, but they're not going to cut it completely. What they are going to do is focus on efficacy more, you know, the dollars that they spend are going to be much more heavily scrutinized, not just by them, but by their bosses and by their boss' bosses and their boss' bosses bosses for influencers and for our space, which is already difficult to tie ROI to, right.

It is hard to track the impact that y'all have on sales because of just the nature of these platforms and the way that you're influencing people, direct sales through Instagram is not the main channel that your followers are purchasing products that you are suggesting. And so, because of that, it is almost impossible to get a real clear ROI picture on what influencers are doing. Unfortunately, other forms of advertising do have a much more clear picture and they look like they are returning a much more ROI, right? You know, a year ago you could put a dollar into Facebook and you would make $5. That's not the case with influencer marketing. It just, it just isn't at all. That's just not really how it works. But if you are one of those influencers that does convert well, if you have an audience that does shop your feed, you are going to be much better placed to whether any downturn there might be, because you can show brands that, you know, if you post something, then you're, they're going to see a direct impact in sales.

And I think the kind of marketing that we see less and less of in these downturns is the more creative, fun stuff is the brand marketing is the stuff that we can't track as much that brands like to do. That's the place that they're going to get squeezed.

How the recession could impact influencers

If you got into this space five years ago, and you know, you've been building your presence and your business ever since you haven't really experienced a, a real downturn. You know, COVID was a couple of months where everything kind of shut down, but then the influencer space fucking blew up and exploded. So that I don't think that really counts. I think we might see that the world is much different when brands are not just throwing money at stuff and feeling like I don't really need to see if this works or not. I'm just doing it because we kind of have endless budgets and, and it doesn't really matter.

It is going to start to matter. And it's not just the influencers who are going to drive sales. Like they are gonna be in a great position, but then it's the ones that are gonna work harder for brands. They are entering a value stage. The partners you work with, especially if they're longer-term partners, I really encourage you to, if you've got a call with them or you're, if you're touching base Google their, if they're a public company Google their name and, and see how their stocks doing, you know, if their stocks down 60% over the next two months, I guarantee that CEO is sending emails out pretty consistently about cutting costs about, you know, making sure they're treating their dollars really respectfully and spending them smartly. People are losing their jobs. We're seeing a lot of layoffs happening, especially in the technology space right now, but that is probably gonna flow through to other industries here in the next six to 12 months. So I think as influencers, you have to be prepared to deliver more for your money because the money is going to get more scarce.

How the recession could impact your followers

Something else to consider is your followers. If you are a professional influencer and you're doing this full-time, you probably are doing pretty well, probably better than the average American right now, the rich are still doing quite well. They're spending a lot of money. They're traveling, they're buying Hermes. They're, you know, doing whatever they want. Inflation is really hitting those, you know, families that are less fortunate gas prices being up 40% mortgages being up groceries are up 30% year over year. Like this is, this is real shit we see in fashion during times of, of downturn, you know, less logos. I mean, that would be a, a nice outcome from, you know, this potential downturn. If we could stop at the fucking logos everywhere, constantly over everything.

Cause it's boring and uninteresting, I think. But also if you are in a position where this downturn isn't hurting you as much, I think there is understandable pressure to, to modulate your, your messaging and to make sure that you're understanding that while you may not be suffering, other people are throwing your wealth and throwing that privilege into people's faces in a time when they're struggling, isn't gonna work. This is the same stuff we talked about in COVID getting away from frivolity. You know, again, not throwing money in people's faces, understanding that people are losing their jobs or struggling. They're trying to figure out how to make the next payment. You know, you showing off a bag that Chanel sent is kind of annoying. Honestly, it will get more annoying if the economic situation in the country turns it behooves you as an influencer to understand what is going on in the world so that you can create content that helps your followers, right?

Like ideally we talked about community at the beginning of the show, you are in service of those followers. Their eyeballs are giving you this life. Without those eyes, you don't have any of the shit that you have in your life. If the financial situation in the world changes, I think it makes sense to, to alter your content and change with it and make sure that you can continue to deliver actionable quality content that either, you know, educates, inspires entertains people and doesn't piss them off and doesn't feel tone deaf. So make sure you read the room, make sure you read the, the news. When you're talking to brand partners, try and understand what's going on in their company. And as you watch what's happening in the economy, try and understand how it is potentially impacting your followers. We don't wanna start to seem like, you know, we're completely out of touch.

We're inauthentic and annoying, you know, because you'll, you'll lose your audience's trust. And once you lose your, their trust, you'll lose their eyeballs. And once you lose their eyeballs, you lose your ability to do this as a job. Super important. We're gonna continue to watch it. Obviously, you know, I, I am watching it quite closely myself, making sure I'm reading this shit every day. Any questions, please let us know. We also can maybe share some of the COVID episodes we did where we talked about some of this like return to substance and, and not throwing wealth in people's faces. We can share some of those old episodes, but please share any questions that you might have. And we as always we'll be back next week. We don't do these videos for our health. We do 'em for you. So please like subscribe, share. Tell your friends about it. Ask questions in the comments, send a note on our Instagram or email haley@fohr.co.

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Cheers, and thanks for watching.

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