Brands Are Relying on ‘Influencer’ Marketing More Than Ever

July 13, 2017, 7:01 PM UTC

Before the internet took over the economy, “marketing” used to mean spending hundreds of thousands of dollars on a creative team, communications staff, and messaging. And that’s before the billboards, print ads, and TV spots necessary to get a brand in front consumer eye-balls.

“Now all that’s changed—there’s been a major disruption,” says Mike Heller, founder and CEO of Talent Resources, in an interview with Fortune senior editor Anne VanderMey. “When you have an influencer that has 30 million followers, 20 million, five million—that’s more powerful than any of the other traditional media outlets out there.”

Talent Resources, a company with an inconspicuously understated name, is one of a number of new firms now transforming the advertising industry by championing the new, growing business of influencer marketing.

Influencer marketing capitalizes on social media’s reach, by paying Internet celebrities of varied levels of fame—including pets—to tout products in their social media accounts to their followers. It’s gaining popularity among brands who would rather not shell out for the relatively inefficient and hard-to-measure traditional advertising tactics. Even Internet behemoth Amazon is looking to recruit influencers with its recently launched “social influencer” program.

One key advantage, other than the relatively lower costs and ease of production, is that influencer posts don’t get shut down by ad blockers and can be highly targeted. People trust and identify with the celebrities they follow, which often means they’ll like the same brands favored by their favorite stars—as long as the brand aligns with the influencer’s lifestyle. “We’ve turned down millions of dollars on products that just aren’t aligned with the talent and their lifestyle,” says Heller. “It has to be authentic.”

Influencer advertising certainly raises some ethical concerns. While the consumer thinks they’re looking at the Instagram feed of people whose style and lifestyle they admire, they might in fact be looking at a feed of advertisements. One of the most recent examples is the lawsuit against the now-infamous Fyre Festival, where numerous celebrity influencers such as Kendall Jenner and other Instagram stars were paid to tout the ultra-exclusive and expensive music festival, which turned out to be less glam than advertised, and the celebrities paid were not even at the festival.

Of course, social media itself is not exactly authentic in the first place, and looking at someone’s social media posts is basically looking at a manufactured version of what they want to display of their lives, complete with image filters and other enhancements that show them in the best light. That’s legal, of course, but when money changes hands it a different story. The FTC requires such advertising to be disclosed to the users, though the sheer number and speed of production of such posts can make it hard to oversee. In April, the FTC published a press release to remind influencers and brands to disclose their connections.

Legal technicalities aside, the influencer marketing trend seems to be here to stay and is expected to become a $5 to $10 billion market within the next five years, according to mediakix.

For the inside track on how the sausage gets made, watch our interview with Talent Resources founder and CEO Mike Heller above.