Daraz and GroupM are about to disrupt the $25 million influencer space

Separate investments from the nations’ largest online marketplace and the nations’ largest media investment firm are expected to unleash a butterfly effect that shifts the way the advertising industry approaches the tactic of influencer marketing

The latest data from Sensor Tower pertaining to Pakistan shows that half of the top ten apps downloaded in Q1 2021 were social media apps such as SnackVideo, Snapchat, TikTok, StarMaker, and Likee. These apps allow their users – also known as social media content creators (SMCC) – to upload videos, clips, and images of themselves in a range of creative activities, attract a following and monetize their audiences through deals with media agencies and advertisers.

As repeatedly reported by Profit, the tactic of using SMCCs to help advertisers raise awareness, grow trust, and lift consideration is proving to be an effective component of business-to-consumer (B2C) tools. Popularly referred to as influencer marketing, the repeated use of the tactic has spurned Pakistan-based platforms such as DEN, Walee, Amplifyd, and Bradri.

In speaking with researchers at firms such as Ipsos and Kantar, Profit was told that considering the findings from post-campaign effectiveness research exercises – which include conjoint analysis, Zaltman metaphor elicitation technique, netnography – marketers are learning that one-way advertising is gradually declining in terms of recall, positioning reinforcement, and engagement. 

These include television commercials, as well as advertising on the radio, print, and out-of-home advertising, with the marketing community actively seeking alternatives. One such alternative appears to be using SMCCs who create seemingly off-the-cuff and unpolished content, appear relatively relatable and approachable to the Generation Z populace.

“The extent to which the salesperson was perceived to be likable and similar to members of the buying firm and frequency of business contact with the salesperson had significantly positive effects on the trust of the salesperson,” said celebrated researchers Patricia Doney and Joseph Cannon in their critically acclaimed 1997 paper “An Examination of the Nature of Trust in Buyer-Seller Relationships” in Journal of Marketing Vol. 61. “In general, trust of the supplier firm and trust of the salesperson influenced a buyer’s anticipated future interaction with the supplier.”

Applying the rationale that the new normal in Pakistan with Generation Z  suggests high signals of trust with SMCCs, the incoming investments from the largest online marketplace in Pakistan and the largest media investment company in Pakistan are about to disrupt the current status quo by which SMCCs can earn the title of influencer. 

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GroupM will use its size to regulate the market

In speaking with Profit, executives from the largest media investment agency in Pakistan have shared that their influencer marketing campaign management solution – INCA – will roll out for large, medium, and small advertisers nationwide by Q3 2021. 

“As marketers, you always continue going back to the drawing board in terms of your value proposition,” said Naveed Asghar, CEO of GroupM Pakistan. “From time to time, you see brands doing a launch or relaunch in order to strengthen the overall value proposition. The same is the case with us that we have seen the market for influencer marketing grow leaps and bounds across the globe and even here in Pakistan.”

In 2017, GroupM introduced a campaign management tool called MFluence which allowed advertisers to view a database of SMCCs, including their self-reported audience insights, and pricing. While executives from GroupM that spoke to Profit would not disclose whether an application programming interface (API) would be used to bridge SMCC accounts with INCA, they did say that the tool would rank SMCCs based on engagement rates instead of follower counts. This mirrors the approach used by G&B, an influencer management firm.

“The initial screen test to see about fake followers is the engagement to follower ratio,” said Kyle Hjelmeseth, the founder & CEO of G&B, in a statement to Profit. “A lot of fraud detection tools use this as an initial screen of whether or not an account bought followers. But, it’s important to analyze that sample properly and take a ‘statistically significant’ sample of the influencer’s followers and then determine how many are “fraudulent accounts” or bots.”

Asghar told Profit that INCA would allocate SMCCs to advertisers based on alignment first with the target audience and then by the type of product, acknowledging that SMCCs and the platforms they occupy are just touchpoints for marketers.

“In this market, INCA might even open doors for us to penetrate into other accounts – the SMEs so to say – which at times have budgetary constraints and this kind of solution can certainly help us give them a reason and a way to utilize their marketing budgets which are relatively small yet give the right return rather than trying to give them a solution that spread them too thinly across multiple mediums,” said Asghar. “This could be a replacement, giving them a focused and targeted approach of getting traction with relatively smaller budgets.”

That said, the WPP media agency is once again dipping its toes into a space that lacks a level playing field, expecting SMCCs to abide by brand safety guidelines, register themselves as taxpayers, and make a drastic change to how they conduct themselves off-camera to limit controversies for the advertisers they are aligned with. As the only SOX-compliant media agency in Pakistan, GroupM cannot reportedly conduct itself as its competitors can.

“We are a very compliant, transparent, and ethical company that operates in this domain,” said Asghar. “And in fact, that might come back to haunt us at some stage because others have an unfair advantage for resorting to certain tactics. That’s a risk that we are absolutely okay to live with but we’re not going to stoop down to their level.”

Asghar firmly resisted the idea that a case is made that the regional headquarters of GroupM gives the Pakistan team leeway to localize their go-to-market approach, stating that two wrongs do not make a right. He believes that in staying the course of doing business the right way, the market will adapt and follow suit.

“We have been doing influencer marketing on a small scale here and there and all the influencers that we worked with earlier, in the beginning, were not tax registered but they did,” said Amna Khatib, the chief digital officer of GroupM Pakistan. “Rather than us changing the rules and doing something wrong, [SMCCs] will realize that if they want to work with GroupM they have to be tax registered which will actually create the right shift for everybody.”

She said that SMCCs that want to approach the monetization of their audiences as a business will register themselves while those that look at the field as a hobby will not, with GroupM preferably aligning itself with those that take the work seriously. She said that the team in Pakistan will adhere to regional guidelines on how to onboard SMCCs.

“INCA doesn’t believe in reach, only outcomes which are engagement,” said Ateeq Rehman, chief investment officer at GroupM. “Even if someone has good reach but how effective they are [means that] the market will move towards a much more realistic delivery parameter which is why INCA promises guaranteed outcomes.”

Similar to how it approaches digital publisher inventory on Xaxis, GroupM does plan to place a select number of SMCCs in a private marketplace (PMP) within INCA, allowing advertisers to use SMCCs with lookalike audiences that match the specifics of their respective target audiences. The media agency will approach the monetization of INCA – be it flat fees, retainers, performance based on targets, media commission – based on the size and goals of clients.

“INCA would be a product where we would have that level of flexibility,” said Asghar. “We will have the door open to pitch INCA to non-GroupM clients because why should we confine our services but I think there would be enough demand & traction from our clients, to begin with, that our hands will be quite full, there’s no restriction per se.”

Khatib told Profit that authentic content will be heavily weighted within INCA in ranking SMCCs, preferring those that are original and high quality, as well as those that resonate with audiences enough to generate organic shareability and not just consumption. 

She noted that today advertisers use SMCCs at the last minute to amplify their campaign reach, which she said would not happen under her watch, with SMCCs engaged early on as a sophisticated piece of the campaign rollout and buyer decision journey.

“The influencer will be remunerated based on the sort of results they generate and not just because they are a big name who may not have the right quality of following,” said Khatib. “So the absence of quality following will not dictate the money offered, the quality outputs will dictate the money that should be given. Because it’s an unregulated industry, influencers’ [payments are based on arbitrary factors] and these are practice variables which will improve.”

In this way, Profit believes that INCA will allow GroupM to compete at a much more sophisticated level against competing platforms, small media & digital agencies, multichannel networks, and the forthcoming content marketing initiative from Daraz. 

Daraz will change how advertiser value SMCCs

The leading online marketplace is tapping into SMCCs such as Tabish Hashmi as the face of a new content marketing initiative which will help the business retain eyeballs and drive contextual sales on the back of a shopper-entertainment experience.

Within the Daraz app, the company plans to publish programs in the genre of comedy, cooking, fashion, and game shows, all of which either display a product that can be purchased in real-time on the Daraz app or will proactively offer viewers – through the app – a chance to either win one or win digital cash that only is redeemed on the platform.

“TV viewership has decreased year on year, billboards have also decreased, traditional advertising consumption is decreasing,” said Pireh Shafiq, the public relations and user communications lead at Daraz. “Only the first ten seconds of video content is consumed on digital assets as well. Advertising needs to be more consumable and relevant, consumers are avoiding advertising, we need to adopt more entertainment-based marketing. Content marketing is a growing area for marketing and education as well. Content marketing is far more than what we are doing.”

Recognizing that the only reason people open the Daraz app is to make a purchase, while also admitting that the daily active user (DAU) rate spikes when the online marketplace offers exorbitant discounts, Shafiq said that this investment into creating entertaining content is meant to give people more reasons to visit Daraz.

“People don’t only go to a mall for shopping, reasons to visit need to increase, [such as] entertainment, bills, etc,” she said. “Lazada has also adopted this strategy, they recently invited Katy Perry and saw great success in terms of numbers.”

Simulcast across six countries on the 26th of March to kick off its ninth-anniversary celebrations, Lazada Super Party was a virtual concert created by Alibaba-owned Lazada. Hooking viewers in to watch live musical performances, the eCommerce company offered its customers across Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam to tune in via the in-app live stream channel LazLive and partake in the birthday sale for the platform.

According to Lazada, more than 80% of local LazMall brands had participated in the one-day birthday sale, reportedly earning RM9,500 for every RM1 invested with the sponsored product discovery tools of the marketplace.

“During Ramadan, since our user base and general masses are more inclined towards entertainment content, we have also seen great examples of TV shows focusing on interactive game shows for better ratings,” said Shafiq. “Daraz wants to move away from just a discount-based online shopping platform, our app backed by Alibaba tech has much more to offer in terms of entertainment, browsing, games, and bill payments – shopping should not be the only reason users visit Daraz.”

Profit believes that this initiative by Daraz will result in a new standard of measuring the value of SMCCs, one which looks at the average gross merchandise value (GMV) they have helped businesses move and the ratio between said GMV being full-priced versus discounted. This, Profit believes, will matter much more – as it rightly should – than the vanity metrics SMCCs are currently priced based on, such as followers and engagement.

It will be the impact SMCCs have on moving GMV which will truly result in them earning the right to call themselves influencers, which is a term this scribe actively avoids using when covering SMCCs due to their value being measured by advertisers based on vanity metrics. The SMCC with a million followers and the ability to move a billion rupees of GMV will be much more valuable to advertisers than the SMCC with ten times that following and one percent of that commercial influence. Think of it as the average revenue per follower.

Furthermore, Profit believes that Daraz will list its top GMV moving SMCCs on a localized version of AliMama, the key opinion leader marketplace by Alibaba. The detailed insights within this could further segment and rank the SMCCs by the ratios comparing GMV moved at a discounted price versus a full price, which is the difference between commoditizing a product and allowing it to retain its brand equity. 

At scale, this decision by Daraz could fundamentally change the way advertisers and media agencies price SMCCs, including the role they play in the buyer decision process by virtue of GMV, moved and the recorded average revenue generated per follower. 

Profit believes that this initiative, coupled with the launch of INCA and the mainstreaming of competing platforms will disincentivize SMCCs from seeking fake followers and engagement, focusing more on quality content and their salesmanship. 

Babar Khan Javed
Babar Khan Javed covers the advertising industry and marketing function in Pakistan for Profit. He can be reached on [email protected] with details about media, creative, and digital briefs, future projects, management changes, client wins or losses, and everything in between.

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