Navigating “Finfluencer” Marketing

The Rise and Risks of Influencer Marketing in Finance

Many of you will have seen the news about “finfluencers” getting sued. Immediate thoughts often range from “What were they thinking?” to “Why would people invest based on an actor’s say so?” Celebrities hoping to make a quick buck promoting a product they know nothing about is not new (or maybe Jamie Redknapp is super into his Sketchers). Controversy around it isn’t new either—Sketchers also once faced a $40 million lawsuit for implying their shoes could give you a distinctive brand asset like Kim Kardashian’s. Poor Buffy the Vampire Slayer was even banned from ever eating in a McDonald’s because of a Burger King ad she did.

Celebrities are money-making machines, and endorsements are easier money than singing, acting, or eating bugs in a jungle. However, the lack of product knowledge is the crux of the issue, especially when promoting high-risk items like cryptocurrencies. Influencers often don’t see, and are not correctly advised, on why promoting investments is significantly more risky than promoting the next garbage match-3 mobile game, both for them and, more importantly, the consumer.

Why Influencer Marketing Works

So why does it work to influence consumers, when logically the connection rarely makes sense? There’s a ton of research on this, from Cialdini, Kotler, Holt, Berger, Gladwell. Biases, heuristics etc. all boil down to mental shortcuts. Shortcuts save time. And the biggest issue with finfluencers is that customers are desperate to save that time and will cling to what they recognise.

In the world of investments, for example, we all hear about people “making money while they sleep” and want a piece of it. Almost feel irresponsible for not doing so, like you’re being lazy with your money. But the average person doesn’t feel they have the time to learn about it, or are intimidated by those that could genuinely advise us, who in turn lack the necessary trust or reach. Our bizarre brains go, “Oh, I really like him, he was a clever guy in A Beautiful Mind, I’ll do what he thinks.” This isn’t necessarily conscious thought, it’s our brains grasping in the absence of easier, more legitimate advice.

The Problem with Financial Advice

And perhaps that’s the problem—not that advice isn’t out there, but that the very word “advice” is a dangerous one in financial services. “We don’t give advice!!!!” we shout proudly, like we’re claiming to only have organic ingredients or are against animal testing, or have scrawled in red (digital) pen on our copy by compliance. It’s mad when you think about it, but it is intended to protect the consumer. The large household brands people trust aren’t authorised to give advice so don’t, and their intermediaries who are authorised to advise don’t have anywhere near the same level of reach or mental availability. Thus opens a gap.

From a regulatory side, Consumer Duty is clearly trying to address this. From a marketing side, things like Google’s EEAT look to address it. Yet it’s a broader problem, a matter of market dynamics, that those with little useful to say can (usually) safely shout it loud, but those with value must provide it only after an increasing series of checks and measures, and are often relying on those unqualified affiliates to do the reach for them.

The State of Influencer Marketing

Influencer marketing has grown exponentially, with a 12-fold increase over the past eight years according to Statista. It’s now a significant part of marketing budgets, with over 40% of some brands’ budgets devoted to it. Despite the risks, it often yields positive ROI, ensuring its continued growth.

The UK is catching up with the US on this front. Celebrities in the US are already facing consequences over crypto endorsements, including proper A-listers, unlike the relatively lesser-known influencers penalised here. For more background, check out these articles from The New York Times, FT Adviser, and The Guardian.

Navigating Influencer Marketing in Financial Services

So, what should FS marketers do? The key is to ensure your influencer marketing strategy is robust and aligned with regulatory guidelines. Authenticity is crucial. Here are some tips:

  • Choose Wisely: Pick celebrities and influencers who have more than just a large following, they have to have some salience. Do their personal values, or what they are known for, align with your brand? Car insurance = car journo, savings account = personal finance commentator, business account = famous start up founder, travel insurance = travel blogger etc. There needs to be a link between each two of the product, influencer, and the consumer, as per the Meaning Transfer Model.
  • Avoid Drama: Just like traditional celebrity endorsements, you need to pick someone that isn’t a liability. It’s no different just because they’re famous on Instagram rather than TV.
  • Craft the Message: Avoid promoting offers or outcomes that promise to save or make money directly. “Fin proms” are risky to get right and the control may not be as tight. Be more subtle in your promotion. Focus on brand awareness and consideration rather than performance.
  • Educate and Inform: Make sure influencers are well-informed about the products they promote. This isn’t just about compliance; it’s about building trust with your audience. A canny consumer can spot that glassy stare of the shallow endorsement.
  • Regulatory Compliance: Stay updated with regulations like the Consumer Duty and Google’s EEAT. These frameworks are designed to protect consumers and ensure that financial promotions are clear, fair, and not misleading.

As influencers are being shut down, forced to repay money, and getting sued, it means others will be less likely to endorse dubious businesses in certain categories of finance. This cleanup will hopefully eventually lead to more trust in this area from consumers and followers, as there’s value in speaking to consumers in a voice they can trust and have confidence in, as long as that confidence isn’t misplaced.

A Good Opportunity

This presents a good opportunity for FS/fintech brands to engage in influencer marketing in a responsible, effective way. By focusing on quality over quantity, you can build a trustworthy and authentic brand presence that resonates with consumers.