Is the coming recession going to spell the end for the golden age of influencers?
Global central banks have raised interests rate at a quick pace which has major implications for the economy. Most economists and pundits are mainly concerned with the implications for banks, industry, or other legacy sectors, but since the dawn of the internet age one service sector has become one of the most important to highly developed Western economies: advertising. Most of the big tech companies are built on the harvesting of data for personalised advertising so when the economy sours and companies spend less on ad campaigns is has an impact which is felt in Silicon Valley as much as on Park Avenue.
As I often write about on the blog, the internet is built on the foundation of advertising. Almost all the new business models which were enabled by the internet are inextricably linked with advertising. It’s worth noting how recent many of these developments are: when the global financial crisis set off the Great Recession in 2008 Twitter was one year old, Instagram wouldn’t be around for another two years, and TikTok was ten years away. I focus on social media companies specifically as they enabled the rise of the influencer which has undoubtedly been one of the major cultural developments of the 2010’s. I bring this up because the influencer marketing sector has never faced a real recession – except for during the Covid lockdowns but that was a unique situation – so it’s not entirely clear what happens to the influencers in a recession.
The impact will most likely be most felt by mid-sized influencers. The small ones don’t rely on influencing for their livelihood, and the really big ones will have enough brand cache and buffers to outlast the bad times. Many mid-sized influencers though will likely see their earnings fall quite a bit which could force some to quit and get a day job. Add to that the fact that some of the traditionally lucrative but ethically dubious sponsors which could have saved mid-sized influencers such as crypto firms, VPNs, and online gambling have faced headwinds of their own. Many influencers also rely on donations through Patreon and Twitch bits and subscriptions which is an alternative revenue source independent from advertising. But if times are tough then influencers are likely to be squeezed from both sides as marketing budgets fall while supporters also have less money to spend on luxuries like Patreon support.
I don’t think the influencer is relic of the past after the coming recession. But it will be a time which challenges the way influencers have operated. As mentioned, the industry is remarkably young and as such it’s not clear exactly how it is affected by recessions. It could well be the end of the golden age of the influencer though.
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I've always been interested in politics, economics, and the interplay between. The blog is a place for me to explore different ideas and concepts relating to economics or politics, be that national or international. The goal for the blog is to make you think; to provide new perspectives.
Written by Karl Johansson
Cover photo by Oladimeji Ajegbile from Pexels, edited by Karl Johansson