Do you encourage your customers to recommend your business to friends and family they think can benefit from your products and services? Hopefully, the answer is “yes,” as word-of mouth and referral marketing is one of the most powerful and effective ways to generate new leads that convert at high rates to new customers.

One major reason for this is trust. According to a September 2015 Nielsen Global Trust in Advertising Report, 82% of North Americans (US & Canada) trust recommendations from people they know. That is a full 16 percent higher than their next highest trusted source: opinions and reviews posted online (66%), and a good 20-40% higher than most other types of traditional online advertising such as paid search ads (49% trusted), social network ads (42% trusted), and mobile ads (39% trusted). In fact, according to the study personal recommendations (whether from friends or strangers) were also more trusted than traditional advertising channels including television ads (63% trusted), editorial content in online and offline publications (63% trusted), newspaper and magazine ads (65% and 62% trusted respectively), and radio ads (60% trusted.) Another study confirms this finding, reporting that 88% of people trust online reviews written by strangers as much as they trust recommendations from people they know.

Interestingly, the Nielsen study also found that trust and action are well correlated with both personal recommendations and online reviews, with 83% of people taking action as a result of the former and 69% as a result of the latter. Television advertising, at 69%, was the only other channel that drove purchasing action at a similarly high rate.

How can small businesses take advantage of this data? Encouraging your customers to make referrals and to post online reviews for your products and services is always a great idea. (See PaySimple’s own User Reviews page, referral loyalty program, and invitation to post a review as examples of how to integrate these features into your own website.) However, regardless of effectiveness, television advertising is likely to be beyond the reach of most small businesses.


Sponsored Social for Trusted Advertising

Luckily, there is a video alternative to television that is within the reach of business of every size—YouTube. And while you may think that only kids and Millennials pay attention to this type of content; that is actually not the case. According to a recent study, YouTube reaches 99% of all social media users (age 18-70) each year, and reaches 83% of them weekly and 54% daily. And, while it is true that it has marginally greater penetration in the younger 18-24 demographic (98%), it reaches 95% of 51-39 year olds, 90% of 40-49 year olds, and even 85% of 50-70 year olds. (Though remember these numbers are based on a sample group of social media users, not the general population.)

An increasingly popular way to leverage the high engagement levels with YouTube and the trust customers place in reviews from trusted sources is with Sponsored Social Marketing, or Influencer Marketing. Not limited to just YouTube, Sponsored Social campaigns span the entire social media spectrum to include Blogs, Facebook, Twitter, Instagram, Pinterest, Periscope, and any other place where your potential customers connect with and follow people whose opinions they trust. (Note that Influencer/Sponsored Social marketing differs from content marketing in that in the former utilizes independent 3rd parties, while the latter utilizes editorial and other content created by your company or by professional journalists.)


Engaging “Regular” Influencers

The concept of Sponsored Social isn’t new; it is simply an evolution of the tried and true celebrity endorsement that big companies have been using since the dawn of advertising. However, with the Internet and social media you no longer have to be a “celebrity” to be an influencer, you simply need to have developed a following on one or more social media venues. In fact, a recent survey found YouTube Stars More Popular Than Mainstream Celebs Among U.S. Teens. And, the IZEA 2015 Consumer State of Sponsored Social report looked at how “celebrities” vs. “regular people” are followed across the major social networks, and found that while celebrities hold about a 60/40 advantage on YouTube, Vine, Twitter, and Periscope, the split is about 50/50 on Facebook, Instagram, Tumbler, and WordPress Blogs, and “regular” people have a slightly higher following on SnapChat, Pinterest, and LinkedIn.

While, your small business may not have the budget to engage a “YouTube Star” with millions of followers, that is not necessary for an effective Sponsored Social campaign. The key is to find someone who is an authority for your customer base, and who is willing to try your product/service and provide an honest (and ideally positive) review and recommendation to their following. When you get the audience and the influencer right, you can see amazing results for relatively low cost.


Effectiveness of Sponsored Social

How Amazing? A recent Thompson survey of online marketers found that businesses make on average $6.50 for every $1 spent on Sponsored Social/Influencer Marketing campaigns, with the best performers making $20 per dollar spent, and 70% making at least $2 per dollar spent. That’s pretty good ROI.

The IZEA study also found that consumers of Sponsored Social advertising found them to be highly effective. Periscope Sponsored Social messages were rated highest at 7.7/10, followed by Snapchat at 7.5, and YouTube messages were last but still received a 7/10 rating. That’s higher than ratings given for any other advertising medium (online or off) except TV commercials which received a 7.3/10 rating.

The Thompson study found that Blogs were by far the most effective venue for Sponsored Social, followed by Facebook, and with YouTube a distant third. It also found that 51% of respondents though that customers generated via Sponsored Social campaigns were more valuable than other customers because, “Social media users tend to spend more money, and are more likely to spread the word to friends and family.”


Implementing a Sponsored Social Campaign for Your Small Business

The basic concept is simple: Find people who provide content related to your small business products and services and who have a reasonably large social media following, and get them to post complimentary content about your company. Unfortunately, that is far easier said than done.

While you can certainly hire a social media agency to connect you with influencers as most big companies do, that cost can be significant and defeats the purpose of leveraging the ostensibly even playing field on the Internet. The do-it-yourself route is likely best for most small business owners on a budget.

A good first step is to engage with your current customers who may have a social media following. Offer incentives such as discounts for them to include reviews of your business in their posts. If you have a blog, try to figure out if there are any influencers who read or re-post your content, and approach them about doing a more in-depth review. (For example, try the free Warble service to see who is sharing your content on Twitter.)

For more ideas, 10 Ways To Discover Top Influencers On Social Media and 7 Tools For Discovering Influencers In Your Industry, both posts from a social media marketing company, provide many helpful suggestions for identifying and approaching potential influencers.

Another approach is to use a service that connects businesses directly with influencers. One good choice is FameBit. This service “connects Brands with influencers to create original content that is shared with millions of engaged viewers on YouTube, Instagram, Vine, Twitter, Facebook and Tumblr.” When you sign up for a free account you can create Campaign Proposals that provide information about your company, products, and services, as well as your target audience, your goals for the campaign, and your budget. The Campaign is then broadcast to a large network of influencers who provide bids to produce your campaign. The system provides an easy interface for viewing the proposals, along with detailed information about the Influencer and his/her following, and you can accept or reject as desired. You get a space to work with your selected influencers on the campaign, and they publish the content you approve and promote it to their social networks. You pay FameBit 10% of each accepted proposal (and the influencer does the same), and in exchange they act as an intermediary to ensure that you are satisfied with the content produced. Campaigns can be purchased for as little as $100, making FameBit a great way to dip your toe in the Sponsored Social waters without any expensive or long-term commitments. For more detailed information, check out the FameBit Brand FAQ, and sign-up for your free account here.


Working with Influencers on Sponsored Social Campaigns

While many influencers are professionals and experts in their field, many others are just “regular people” who have followed a passion and developed a following. Starting your Sponsored Social experiment with a service like FameBit is a relatively safe way to go, as it provides a business framework to which everyone can adhere. Approaching influencers on your own may result in more casual business dealings, such as email correspondence and PayPal payments with little or no contractual terms to govern the relationship.

Cash is the typical method of payment for Sponsored Social Campaigns, but influencers also report accepting free products/service, discounts on products/services, gift cards, and free travel as compensation. And in some cases, if they really like your company they may tout it for free.

However even when you pay, you typically get far more than you actually pay for when you engage an influencer. The IZEA State of Sponsored Social 2015 report found that 89% of engaged influencers verbally tell friends about the brands that hire them, 85% say they are likely to purchase from their sponsors, and 83% provide additional free mentions of their sponsors in other posts. And since their own brand is on the line, an influencer will not typically agree to your sponsorship unless they really do like your product and can wholeheartedly recommend it. Additionally, influencers will typically only agree to your sponsorship offer if they think your products/services will be of interest to their audience—as they do not want their own following to diminish as a result of irrelevant content. This makes their efforts on your behalf intrinsically more trustworthy; which is important because the FTC requires that they disclose the sponsorship relationship on all posts related to your company.


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Lisa Hephner

Lisa Hephner

My name is Lisa, and I'm the Vice President of Knowledge, responsible for the management of corporate, product, competitor, marketplace, legal, and regulatory knowledge, and creation and dissemination of knowledge tools using these assets to PaySimple prospects, customers, employees, and partners.

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