Influencer Marketing is like fighting downhill

The Fog of Retail
Jul 23, 2017 · 5 min read

Victorious warriors win first and then go to war, defeated warriors go to war first and then seek to win.” -Art of War

Article summary: Doubling YouTube views doubles retail sales for brands.

Many companies I talk to think the magic bullet will be getting their product into big box retail stores. “Once I get into 1,000 Walmart/Best Buy/Target stores I’ll be successful.” There are many things wrong with this. First, going from 0 to 1,000 mph will break the wheels off your car, which we will go into in a few weeks as we don’t have time for it here. Second, just getting in front of customers in big box is not enough. You need to have marketing support. If you don’t have marketing, like influencer marketing from YouTube, no one will buy it and your product will just sit on the shelf.

Marketing is a funny thing: It’s hard to quantify. At The Fog of Retail we attempt to demystify marketing—remove the fog of war, if you will—and put credible numbers on the scoreboard so you can start to think about marketing more logically. Does online social, social influencer marketing drive offline sales? Can you win at retail before you start? Let’s see…

My assumption…

In order to be successful in retail you need to provide marketing support. And one of those ways is to create YouTube videos and other influencer marketing. (YouTube tends to be good for technology products, while fashion influencers tend to be on Instagram and home decor influencers are on Pinterest, so pick your poison based on your product category). I tend to believe that online media tends to lift sales, but is that true? I checked YouTube to get an idea. Is there a relationship between sales volume and interest on YouTube?

How we figured it out.

To do this I looked at 1.) the number of YouTube results for the brand (or whatever people would typically search for that product) and 2.) the number of views on the top video. I chose a search keyword such that all first page search results would be for the product in question.

I compared this to sales of products in our b8ta stores over a specific period of time.

Image 1.

Note: all numbers are rounded to the order of magnitude (10, 100, 1,000, 10,000, etc.) to anonymize the data. For our purposes, the order of magnitude is sufficient to be illuminating.

Results

We started with WIFI routers. Note: The shade of green in the tables below accents the magnitude of the number.

Table 1.

The results were pretty clear—more YouTube engagement led to more sales in store. So we looked at electric skateboards:

Table 2. Company2 might have had higher sales if they hadn’t run out of inventory.

Again the results are staggering. Take a look a this short video from the YouTuber, Jesse, and you can see why YouTube engagement would lead to more sales. It doesn’t even mention how he made a magic carpet in the video. But anyone watching this is certainly wondering “how did he do it? Which electric skateboard did he use?”

Video 1. The name of the company is not even listed in the video but this video is so engaging that people started asking how they made the video? What electric skateboard did they use?

Well, 2 for 2. So far, YouTube engagement is a great predictor of offline sales. What about audio?

Table 3. There are a few notes to explain the outliers.

Again, pretty similar. I made a few notes to explain the outliers. Company5 and Company6 are major outliers and don’t fit the trend. What happened?

Discussion

In the audio category there were a few companies that got their product placed on the best YouTube review channel for innovative consumer electronics, but didn’t have many other user generated videos (only around 1,000). Getting a good review on Unbox Therapy is not enough, apparently.

There are quite a few other YouTubers to work with. Marques Brownlee has built a subscriber base of nearly 5m. While Lew on Unbox Therapy is pure entertainment, Marques has the vibe of the relatable average, wholesome dude next door.

Video 2. Marques Brownlee Pixel review.

So how do you get your product on a YouTube Review channel? Are these guys just good samaritans? As we all know, nothing is free in this world. Below each video is an affiliate link for Amazon where the reviewers gets 4% commission on each person who clicks and buys the product on Amazon. So you need to have your product listed on Amazon for a reviewer to agree to do a review. Often reviewers will also charge $10,000 for the review, which when you compare it to the cost of a billboard is a pretty good deal. The billboard is only up for a month; your video will be up forever, constantly driving engagement. For the video above, 50% of views happened after the first month.

Image 2. 50% of views for Marques Brownlee’s Pixel review happened after the first month providing long term value for Google.

Graph 1 shows that not only does it intuitively make sense that more YouTube engagement would correlate with increased retail sales, but there is also great data to back it up. R² = 0.78 means that 78% of the valiance in sales can be explained by the variance in number of search results. P<0.01 means the probably that this pattern occurred by chance is less than 1 in 100 (i.e. these results are statistically significant).

Graph 1. 78% of the variance in retail sales can be explained by the number of YouTube search results with the probability that this pattern randomly appeared at less than 1 in 100.

Conclusion

Win the war before you go to war; win retail before you go to retail. For most new companies these days that means getting lots of great content on YouTube.

For startups, YouTube is a great way to get your product in front of a lot of people for very little expense. I hope you now have the data to be convinced of that.


Have a question? Think I’m totally wrong? Have a product that solves this problem? Comment below or inline.

The Fog of Retail

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Entrepreneurs are fighting a war through a dense fog. We shine a light on what you didn’t know you didn’t know.

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