Influencer Marketing: Is the ROI Worth it for Community Banks?

Banks are beginning to work with influencers to help increase brand awareness. But an influencer deal gone wrong can be a reputational nightmare for any organization. Before signing a contract, banks must do their homework.

The first time First Horizon Bank decided to try out influencer marketing was right after it merged with IberiaBank in July 2020. First Horizon needed a way to connect with customers in some of the markets IberiaBank dominated like Birmingham, Alabama, says Paula Beale, director of Brand Strategy at First Horizon Bank.

“There’s many different types of influencers,” she says. “What we did early on was do a lot of small tests, it really helped us understand what’s going to be valuable.”

As part of a bigger marketing campaign, First Horizon partnered with a third-party agency that manages influencers. The agency was able to connect the bank with several micro-influencers in the Birmingham area for the campaign. Not everything went as planned, however. It was difficult to find influencers in the geographical area that fit the needs of the bank.

“The agency was great at helping us find resources we would never have found on our own,” she says. “But they were focused on geography, but not alignment with the audience.”

Beale still liked the idea of connecting with influencers — and the bank has since done other influencer marketing campaigns, including one through a partnership with TEDWomen.

“Influencers are great because they’re putting a megaphone to your message,” she says. “They’re going to help you with what you’re trying to convey.”

Most small banks are not jumping at the opportunity to partner with the average TikToker. But some bigger banks have been cautiously trying it out, and more will likely follow suit in the near future. Brands are expected to spend $7.14 billion on influencer marketing in 2024, up from $6.16 billion in 2023, according to data from Insider Intelligence.

To be sure, reputational damage that comes with an influencer marketing campaign gone wrong could outweigh the benefits. This is especially true for smaller banks, which are more likely to use micro-influencers that may be harder to vet. There are also regulatory considerations that all businesses need to keep in mind when advertising using an influencer.

“It’s definitely tricky,” says Maddie Shackleton, influencer marketing specialist at Belle Communication. “Marketing, public relations, legal compliance, everybody needs to be on the same page about what we can and cannot have that person say.”

Banks should proceed with caution but that doesn’t mean influencer marketing is totally off of the table. Here are a few considerations for bankers that are curious.

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Get the Data

Influencer marketing needs to be a decision that aligns with the brand vision of the bank. Banks shouldn’t simply invest in it because it seems trendy. Instead, think about the customers the bank is targeting and whether or not influencer marketing makes sense for that demographic.

“Find a creator that actually speaks to the audience you’re trying to reach,” Shackleton says. “There are tons and tons and tons of financial influencers out there.”

It’s also important to ensure that you have a way to collect data after the campaign goes live. Beale recommends thinking about the type of information you need — the email address of a potential client, for example — then figure out if there’s a way that you can easily collect it.

“We’re looking at how we are building brand awareness and how we get data collection, just enough contact information so that I can start a conversation with a prospect,” Beale says. “When it can accomplish those two things, that’s when we consider it a real win.”

Do Your Homework

Banks should do thorough vetting to make sure influencers are a fit for the message they want to send to potential customers. It’s important to look at past posts on all social media accounts and meet the influencer face-to-face before signing a contract. It’s also important to have a good understanding of the influencer’s audience and reach.

“Vetting is a really important process to make sure you understand who your audience is and to make sure you’re protected,” Beale says. When drawing up a contract with an influencer, make sure that you have an out. Agencies that regularly work with influencers can provide guidance throughout this process.

“The Internet never forgets,” Beale says. “You’ve got to do your due diligence to understand what you’re stepping into.”

Read more: 4 Ways Personalization Is Evolving at Top Banks

Think Micro

Micro-influencers have smaller, but more well engaged followings, says Erika Lovegreen, senior vice president of marketing at ICUC, a Dentsu agency that works with banks including Goldman Sachs and JPMorgan Chase. These influencers can have the best ROI, particularly for smaller brands.

“Where I am seeing some brands find success is finding micro-influencers who really cater to a specific community,” she says. “They usually have very passionate followers.”

The majority of influencers are considered “micro” — but they can still reach thousands of eyeballs. Micro-influencers tend to have anywhere from 5,000 to 30,000 followers, but can have a true reach that is much higher, according to data from Klear, an influencer marketing platform.

“Where I am seeing some brands find success is finding micro-influencers who really cater to a specific community. They usually have very passionate followers.”

— Erika Lovegreen, ICUC

Micro-influencers made up 91% of the influencer market in 2021, according to Klear data. Because there are more of them, working with micro-influencers often costs less. The average Instagram post for a micro-influencer costs about $354, according to Klear.

However, micro-influencers can be harder to vet than those who have millions of followers. Simply because there are fewer eyes on them. Because of this, brands need to ensure they are doing their homework, Lovegreen says.

“There’s definitely some consequences for brand awareness, think about the goals and who the individual is, what they do as a celebrity and as a person,” she says.

Expand Your Definition of Influencer

Perhaps the most stereotypical image of an influencer is a peppy twenty-something snapping selfies at a restaurant that has a year-long waiting list just for the opportunity to make a reservation. But influencers can really be anyone who has an audience within a particular community.

Even existing clients can be influencers. Small business owners, in particular, are often well-connected to their local communities and may be open to participating in marketing opportunities with their bank. This could be a good opportunity for small banks, in particular, who are looking to get more customers in a specific locale.

First Horizon, for example, has a podcast called “Bucket Listening” where it interviews existing clients about their work. “They have become their own kind of type of influencer, there’s all different ways to enter this type of marketing practice,” Beale says.

Whether or not a bank chooses to invest in influencer marketing is a decision that should be made after the marketing team has done their research. But it can be a good way to make your brand more approachable.

“What I like about influencer marketing is it’s very dynamic, it’s very accessible,” Beale says. “If there’s a unique audience you want to go after, it really has changed how you can engage others to help.”

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