The Rise of Virtual Influencers to Disrupt the Influencer Marketing Industry

The world of influencer marketing is experiencing a fascinating transformation with the rise of virtual influencers. These computer-generated characters, presented as real individuals, are quickly gaining popularity on social media. Their growing influence is obvious not only in their expanding follower bases but also in their increasing roles in promoting products and services. This trend raises an intriguing possibility: might these virtual influencers one day replace their human counterparts in the influencer marketing arena, or will they coexist, each finding their unique place?

Success for both virtual and human influencers depends on their ability to engage their audiences. Interestingly, younger, tech-savvy audiences may be more attracted to virtual influencers. Meanwhile, real influencers can still capitalize on their authenticity and relatability. Yet, the question remains: how long can they hold onto this advantage?

TRANSFORMATION IN BRAND INVESTMENTS: A RESPOND TO CONSUMER PREFERENCES

Gen Z, the generation that is following influencers the most, is mainly looking for fashion, beauty, and lifestyle inspiration. Digital personas can showcase a broader range of fashion styles and offer unique, limitless beauty tutorials. Their ability to represent idealized lifestyles can better satisfy younger audiences' imaginations. Being digitally native, they quickly adapt to and reflect the latest trends, keeping the audience engaged with what's new and trendy. This can result in them starting to prefer virtual influencers. This shift in preferences is obviously leading to the recent changes in how brands allocate their marketing budgets.

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According to a study by Influencer Marketing Hub, brands spent an average of $18,000 to $30,000 on a single virtual influencer campaign in 2023. Brands like Samsung and Nike invested upwards of around $1 million in virtual influencer campaigns. In key cases, virtual influencers like Shudu Gram have showcased the integration of technology in Gucci marketing, promoting luxury fragrances. Dior's venture with Gal Gadot for makeup followed this trend. These initiatives reflect the rising role of virtual influencers, with notable market penetration in fashion (51%) and beauty (47%), extending to the food and lifestyle sectors.

VIRTUAL INFLUENCERS ACHIEVED REMARKABLE RESULTS IN ENGAGEMENT AND ROI

The average engagement rate for virtual influencer campaigns in 2023 was 5.9%. This is 3x higher than the average engagement rate for real influencer campaigns, which was 1.9%. Moreover, the average ROI for virtual influencer campaigns was 13.7%. This is slightly higher than the average ROI for real influencer campaigns, which was 12.3%.

These figures suggest that brands are actually seeing a positive return on investment from working with virtual influencers. As the technology continues to improve and the reach of virtual influencers grows, we can expect to see even more brands investing in this type of marketing.

REDUCED DEMAND FOR REAL INFLUENCERS

Virtual influencers are offering brands a cost-effective alternative to real influencers. They can be even created and controlled entirely by companies, eliminating the need to pay real influencers for their services. This can lead to reduced demand for real influencers, especially in mentioned industries where virtual influencers are gaining more popularity.

A study by AspireIQ found that 37% of marketers believe that virtual influencers will eventually replace real influencers. Also, another study by Influencer Marketing Hub found that 61% of marketers plan to use virtual influencers in their marketing campaigns in the next year.

These studies suggest that virtual influencers are becoming increasingly popular and are literally posing a threat to the real influencer market. Furthermore, virtual influencers are perfect in adapting to changing trends due to their digital nature, offering brands the flexibility to rapidly update styles and looks. With the metaverse projected to reach US$507.8 billion by 2030, these influencers are better positioned to capitalize on technological advancements and offer unique consumer engagement. As the technology continues to improve and the cost of virtual influencers continues to make more sense, we can expect to see even more brands switching to virtual influencers.

The projected growth rate of the virtual influencer market is also impressive. The global virtual influencer market size is expected to expand at a compound annual growth rate (CAGR) of 38.9% from 2023 to 2030, compared to 17.9% for the real influencer market. This suggests that virtual influencers are gaining popularity at a faster rate than real influencers.

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THE QUEST FOR AUTHENTICITY

Digital personas, however, often lack the human essence, touch, and emotions that real influencers naturally convey. This absence can restrict their ability to connect with their audience on a deep emotional level and gain their trust, as the audience may find it challenging to establish a real connection with a virtual entity. Viewers may even struggle to understand their personal views, beliefs, and ideologies, ultimately decreasing the key element of relatability.

BUT THIS MAY NOT LAST FOR LONG.

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POWER OF BACKSTORY: AN AUTHENTICATED VIRTUAL IDENTITY

An effective way to tackle the authenticity challenge in virtual influencers is them have an engaging backstory, character profile, and identity. When a virtual influencer has an interesting story that adds depth to their persona, it allows viewers to connect more deeply by understanding their motivations, values, and experiences, ultimately strengthening the emotional bond and trust between virtual influencers and their audience.

WHAT TO EXPECT

It's a race to see who will dominate the influencer marketing world: the virtual creations or the real-life influencers. Given the trends and available data, it can be predicted that the replacement of real influencers by virtual ones is not just a possibility, but likely to happen.

However, while the virtual influencer market is growing rapidly, it is important to note that the real influencer market is also growing at the moment. This suggests that there is still a strong demand for real influencers and that virtual influencers and real influencers are likely to coexist in the near future, at least for a while.

In response to this market shift, real influencers can quickly explore the creation of virtual versions or digital avatars of themselves. This move lets them keep up with digital trends and go beyond their undeniable limits.

By expanding their presence into the virtual world, real influencers can then connect with their audience in new ways, and use the many opportunities the digital world offers. This bold step enables them to remain at the forefront of the influencer industry, ultimately positioning them as unlimited beings in the universe of influence.