Bonus: The Math Behind Influence and Why Most Influencer Marketing Fails with Yash Chavan from SARAL

0:00Yash Chavan:Whenever somebody says brand awareness or mindshare, people tend to think that's just like a woo-woo concept that happens to some brands and does not happen to other brands. But you can pretty much use basic math to reverse engineer that concept. At any given time, only 3-5 % of your total addressable market is going to be in-market, looking to buy right now. algorithms on paid media are incentivized to go find you the customer that will convert the fastest for the cheapest those are in-market buyers you have a motion right now with your paid media to drive people who are in market to purchase from you but there has to be another motion that takes people who are in that other 97 out of market influencing them to move in market so that your ads perform better

0:53Yash, welcome back to the D2C podcast. I've got my pyramid ready. We're talking influencer marketing and I wanted to start with your bold statement. Why is influencer marketing broken?

1:06Yash Chavan:Yeah, I like to say that or I say influencer marketing is broken or doesn't work because of the way, frankly, how a lot of brands approach it and how a lot of content out there promotes influencer marketing to be. And the usual typical approach is you would try to like worst case, try to pay influencers, pay a bunch of random influencers for posts and then see if they get you any sales. Or they would do some sort of mass seeding campaigns where they would send out dozens of products to random influencers. And then hopefully they post, maybe they post, maybe they don't post, right? Or you would have some sort of an ignored affiliate program, like a random link in the footer of your website or something.

1:47Yash Chavan:And obviously that doesn't end up working. And then brands conclude that, well, influencer marketing doesn't work. And then hopefully through this podcast, we're able to share, how do you make that work? But that's why I come with that bold statement. And I say, hey, influencer marketing, the way you're doing it so far does not work. Let's take it back to basics. I think you described it really well in a way that I kind of understood. How do you describe influence? What does it actually mean to build brand awareness through influencers? That's a very good question. And I may have a very analytical answer to that.

2:19Yash Chavan:Because whenever somebody says brand awareness or mindshare or one of these terms, people tend to think that's just like a woo-woo, a little bit of a woo-woo concept that happens to some brands and does not happen to other brands. But you can pretty much use basic math to reverse engineer that concept, right? So the way I think of it, because that's what we tell our brands when they come on, we're like, hey, your job is not to do influencer marketing. Your job is to build influence in your market. That's what you need to do. And it's basic math. So if you break down, let's go down to the micro.

2:58Yash Chavan:If you break down your ICPs or anybody's day into what I call scrolling sessions, there are typically anywhere between three to six scrolling sessions in everybody's day. like you wake up, you're scrolling on your phone, maybe commuting to work, you're scrolling on your phone. After lunch break, you're scrolling, commute back, you're scrolling and that final like guilty scroll right before bed, right? So there's these like three to five scrolling sessions that are happening. If that's where their attention is, right? Because everybody talks about this, like you need to be where their attention is.

3:29Yash Chavan:If that's where their attention is, and those are the five social media scrolling sessions that they have, if your brand pops up three times, five times in their feed and pops up organically, not interrupting them with advertising, but organically pops up in content that they would have anyway consumed regardless of your brand. That I think is brand awareness and mindshare. And the way you reverse engineer that here's where the math part comes in is to pop up thrice in somebody's feed. That means some influence organically. An influencer has to post about you thrice a day or three influencers have to post about you once a day.

4:04Yash Chavan:If you just scope that out, that becomes a hundred active, you know, from my last podcast, I keep talking about this, like build long-term relationships, build an ambassador program. You just need a hundred active ambassadors posting at least once a month. And if you have that, you have on average 3.33 posts per day, which means you're popping up thrice a day in somebody's scrolling sessions. You know, this is a little bit reductionist of math, but you're technically you're popping up thrice a day in somebody's scrolling sessions. And there you You have it, you own Mindshare because you're popping up those many times in somebody's feed.

4:37Yash Chavan:And they're noticing you and the consequence of this is they then go directly visit your website and buy. Or they go, whenever your Facebook ad pops up, they're more likely to click on it. Or they see you in a retail store and they're likely to pick up your CPJ code or whatever. So that's what I call owning Mindshare and building influence in almost like an analytical fashion. I haven't heard it described like that before and it makes a ton of sense. It's just practically when we're doing the scrolling. And I've actually been furnishing a new home that I'm in now. And so I think I am a prime candidate for advertising and it knows it.

5:13And it's amazing the way it's kind of pushing me through these themes of what it thinks I need. And it's working. So we're talking about ambassadors, which are pretty near the top of the influencer, the pyramid of influence that you've described. And you talked about having 100 ambassadors. and that's obviously, that's a program at scale to get a hundred ambassadors, how much product seeding are we doing?

5:36Yash Chavan:Yeah, so typically we recommend brands do at least reaching at least 500 to 100 send outs per month. Now this is for the typical brand. If you're a more lower ticket brand, maybe you could do more. If you're such, for example, there's some furniture brands on Sural that seed maybe 10 or 15 products every month because they're literally sending out sofas or office chairs or something very expensive like that. So volumes vary, but typically 50 to 100 products seeded every month, and you end up with 100 or so active ambassadors in three to four months, roughly speaking. So if you do it consistently, it's pretty straightforward to get to that sort of two to three posts per day brand awareness metric.

6:18Now, just to reiterate, I think we've probably talked about it on all three of our podcasts, but I think for anyone listening, it bears repeating again. I have the implement right here. Just walk us through the pyramid of influence that you build out on Sorrel.

6:33Yash Chavan:Yeah, so brands need to stop doing this pray and pray influencer seeding and marketing that doesn't work. And I like to call it build your pyramid of influence, right? Or the influencer Illuminati, like we called it on the last podcast, which is more of a fun name. But a pyramid of influence is basically your pyramid of influencer partnerships that drive this influence in the market for you. And the way you build that is broken up into three distinct phases. And I'll tell you why this works, but I'll describe the phases first for everyone. At the bottom layer of the pyramid is a high volume seeding program.

7:06Yash Chavan:So you're seeding out product to 50, 100 influencers on a monthly basis on average. Some of them are going to post about you. When they post about you, most brands stop at the seeding. They're like, yeah, we're running an influencer seeding program. But that's like consistently running on a treadmill with no outcome or nothing long term to show for it because you see it and then they post and then that's it. And then like nothing happens from there. So you need a way to ascend the posters into something else, which is most likely an ambassador program. So an ambassador program typically has some affiliate commissions, discounts for their fans, giveaways, early access to products, you know, invites to events, maybe a community on Facebook or WhatsApp or something like that.

7:49Yash Chavan:It can be as deep or as light as you want it to be, but typically involves some sort of a commission and a discount. So that's your ambassador layer. So you're seeding influencers. Most of them are posting, hopefully. Then you take the posters or whoever's content you like and you turn them into ambassadors for your brand. So you have something long term. So you're not just seeding and giving up. You're then making them affiliates so they have incentives to keep posting about you again and again. And that's how you build that. You pop up three times in somebody's feed. So you take that ambassador program and in, say, three months of building the program, you will see that the top, it's always a 90-10, where the top 10 % of your ambassadors drive most of the sales, most of the views, and bring the highest quality of content to the table.

8:34Yash Chavan:So you take those top 10 % across views, sales, and content quality, and you turn them into custom partnerships where you can then do UGC partnerships with them, whitelist their content for ads, put them on retainers so they keep posting about you and a bunch of stuff like that, or co-produced products, give them equity. You could go again, you could go as deep as possible in some of these layers, but that's generally the structure. So seeding, ambassador, custom partnerships, and then you have a pyramid because at every layer there is drop-off. And so this is the big reason to do this is to shift from randomness to predictability, right?

9:09Because you have this whole system contributing. If you're just focusing on that bottom layer, you're going to have a lot of inconsistency, right?

9:15Yash Chavan:Correct. 100%. And so basically, the reason why this works is you are and the reason why this is predictable, why the word predictable is used is because at every layer, you're reducing risk and rewarding performance. So at the seeding layer, you have the least risk because the worst thing you lose is your cost of goods, right? So you lose your cost of goods if they don't post, if they post, that's great, then you got something in return. then what you do at the second layer that you don't lose anything because you're only paying for performance you're not paying for posts or anything you're only paying if they get you a sale then only after they've performed consistently for three months four months you take the top 10 % who are pretty much always guaranteed to perform whose audience is warmed up and already knows about the brand has bought from them you turn them into like paid deals and what what you would what would fall under more traditional influencer marketing where you're paying for posts and doing custom partnerships like that.

10:11Yash Chavan:So at every layer, your risk is the least when you start off. And as they prove performance, you keep incentivizing them for more and more while reducing your risk. And then what this does is this ecosystem of partners that you create or an owned influencer community generates these three posts per day, five posts per day. And it becomes like this fountain almost of posts coming out about your brand. And suddenly you have brand awareness, right? So you can manufacture it. I think one of the things I like about influencer marketing, like the thing that I'm talking on the podcast all the time these days, again, is just real true top of funnel and how you actually grow a brand.

10:46You not how you don't just, you know, milk the people who are already in market, but that you're constantly bringing new people in into the market. And so talk to me about how influencers work to bring new people into the market.

11:00Yash Chavan:I like that question because it's that saying, right, in marketing, at any given time, only 3 % to 5 % of your total addressable market is going to be in market, aka looking to buy right now. So when you're doing interest-based ads or when you're running, say, pay-per-click ads for keywords, you're specifically targeting your incentive. The algorithms on paid media are incentivized to go find you the customer that will convert the fastest for the cheapest. those by definition are in-market buyers so you're consistently targeting in-market buyers and what happens with that is every time like this is the classic and you've seen this we've all seen this the classic ddc growth stories they get to their first growth milestone with paid media right because it's so it's easy to advertise you can learn facebook ads and you can grow to three five million dollars gmv but what and you do that by targeting all the in-market buyers and you think it's easy you think that hey i can just keep spending more to grow more but you hit that milestone, three, five mil usually, and then you hit a ceiling because now you're running out of the in-market buyers.

12:03Yash Chavan:Now the ads are being shown to the same people and they don't want to buy anymore because they've already bought from you or they already have a subscription and they don't, they're not responsive to ads. So then you resort to trying tactics and different ads and hooks and so on. And that might appeal to some people, but you're not going to get a step change in results. The way you, on a more, even stepping back from influencers, right, on a more conceptual level, the way you get a step change in results after this plateau is by having a motion you have a motion right now with your paid media to drive people who are in market to purchase from you fantastic but there has to be another motion that takes people who are in that other 97 percent out of market and keeping on moving them in market influencing them to move in market so that your ads perform better so right usually a lot of influencer marketers talk about influencers are a better channel because of the ROAS is higher or you could pay 10 % affiliate commission and that's 10x ROAS or whatever.

12:59Yash Chavan:But it's like, hey, it's not a standalone channel. It actually works so that all your other channel works even more effectively and it brings in its own revenue. It's like a multi-impact channel. And the way you do that is you influence the market as influencers warm people up. It almost, in one line, I like to say it like greases the funnel a little bit. If I'm seeing a product thrice every day mentioned organically, then I see that ad pop up on YouTube or on Google, I'm going to click and I'm going to buy. And then I don't even need a discount, for instance, because there's so much brand awareness.

13:34Yash Chavan:I already see people buying it. Maybe you don't have to discount anymore. So you're more profitable. Your click-through rates on your ads are higher. Your cost per click on Google is going down and so on. So that's how I think influencers, once you build this influence, kind of grease your funnel in a way. And what you're talking about here ultimately leads to attribution. So what's going on with the state of attribution with influencers? What are you guys contributing? Yeah, it is. We're building some interesting stuff in our product around this. But just generally speaking, attribution is so because it brings to mind this one example.

14:07Yash Chavan:I don't know if I shared it the last time, but I'll share it this time. It's the we had a client, but I was running an agency before this. and then we had a client skincare brand new new brand so they started working with us for influencers typical skincare right and then they started working with a google ads agency a few weeks later um so just setting up getting vendors on board and so on so we started working with influencers in some four months or so we had about some 150 or so active ambassadors for them posting consistently getting two to three posts per day but they were not seeing enough affiliate sales So she was a little bit frustrated, the founder.

14:45Yash Chavan:But the Google Ads agency was crushing it. She's like, hey, look at this report. The CPCs are consistently decreasing. We're getting more clicks month on month. I'm like, who's driving all that demand? Where are the searchers coming from? And she was just unable to see that correlation. So she canceled our contract. We stopped working with her. And then two months later, she comes back to me and she's like, hey, we need to spin up that influencer program again. because all the Google ads started getting worse and worse over the last two months because not enough influencers are posting, which means not enough people are searching for the brand and not enough people are clicking.

15:20Yash Chavan:So Google and Facebook tend to be these like almost sleazy salesmen that stand right at the door of the checkout and hand in their cookie, right? Because if somebody's searching your brand name, they're most likely, they know about the brand. They're going to find your brand and buy anyway, but then you're, you know, you're measuring your branded search and so on. And so that's one of the examples of how attribution is so wonky and broken and is like a black box in the space. I just did a podcast yesterday with our Google team and they had discovered that on several of their accounts, Google started reporting, well, across all their accounts, Google started reporting new versus returning customers.

15:55But by using Elevar, they saw that they were wildly overstating the number of customers who were actually real. And it's just because the cookie data or whatever was not refreshed so that Google doesn't really know who's new and who isn't. So I'm sure that was something that influencers contribute to as well, because they are inherently going to be bringing new eyeballs to your brand.

16:15Yash Chavan:Yeah, 100%. They are that 97 % who hasn't heard about your brand. You target all the people who have ad blockers, for instance. And then the question comes up, like, how do you measure this? How do I know if it's successful? And the way you know if it's successful is, one, yeah, you measure all the basic stuff. Like, hey, how much affiliate revenue are we getting? Are influencers even posting about us? Because if they're not posting, you're not going to get anything, right? How many posts per day? That's one of the metrics that we track in Surreal is PPD. So how many posts per day are you getting?

16:43Yash Chavan:Are you getting two, three posts per day after at least six months? Then yeah, like something's happening. So those are the basic metrics, right? On a more marketing level, you could track conversion rates on your ad campaigns. Hey, are our Facebook ads in general doing better than before? So is this click-through rate higher, for instance? If the CTR is higher, people are more interested because there's a brand value built up, right? Is the cost per click on our Google ads going down? Because people are searching with more intent. Are our branded search keywords rising? That's one thing. Direct traffic to the website.

17:19Yash Chavan:Are people just typing in the brand and visiting? Because a lot of influencers mentioned, like, hey, go to www.brandname.com. And then people, so is your direct traffic increasing? Some of this stuff is important to track and see how the, because the influencer programs, its own impact is one of the ways to measure it is affiliate codes and discount codes and so on. But the true impact that we've seen is in some of these other ways, like your ads are performing better, your direct traffic is rising, branded search is rising, and so on. So that's how you should measure it more holistically. Super cool.

17:52Using AI every day, obviously, in this new world, how is Soral thinking about AI to improve its service?

18:00Yash Chavan:It's a little bit tricky because influencers are such a we believe at least influencers are such a human to human sport that it can't it you cannot have an agent talking to an agent in my opinion like an ai agent um so it has to be human to human because there's creativity involved there's that relationship involved there is you know sometimes you hop on a call with a creator and then you build that relationship that you don't build otherwise you like the pura vida founders for example big brand built purely on influencers in the early days uh one of the sort of like the darlings of influencer marketing right it's like great great case study so to speak and something to study for anyone who's building influencer programs their founders i think are he's on a podcast or something he said he went on lunches with their first some 200 or 250 influencers like took them out for lunches and coffees like that's the sort of nature of influencer marketing so i don't know ai we're doing a lot of stuff like we recently launched Sia which I know that that you saw Sia is our Saral influencer agent which basically can find influencers for you can draft personalized outreach can respond to creators for you almost acts as a think of Sia as like an executive assistant for your influencer marketing so in an old world where you would have to say get on Saral and then also hire a VA or hire an influencer marketer and then train them to run Saral for you.

19:23Yash Chavan:Now Sia can do some of that basics so that you can focus on the strategy and so on. But we still have what we call human in the loop, right? So Sia does find the influencers, but you've got to approve them. Sia writes the responses, but you've got to again, approve, edit and send, because there's always this human to human element that we want to preserve. Where do you see all of this going? Like where is, I think as AI gets more and more prevalent, human to human connection is going to be valued. I think that's why we built agency. I've heard people predict that's why sporting is going to be even bigger because you have real humans competing head to head.

19:58I guess influencer marketing is in a similar boat. As long as you can create authentic relationships with people who can create authentic content, it's going to only grow.

20:07Yash Chavan:Yeah, that's why I don't super agree with the people who say that AI influencers are going to be all over the place. I think there'll be some AI influencers, just how, you know, There's these characters like Deadpool or one of these, you know, Thor and so on. You know, there's these few of them, but you can't have an entire ecosystem where people are. Because again, influencer marketing, I think I said this on the last one, but it's basically about trust. It's about word of mouth at scale, where in an old world you had, you know, one person talking to five of their friends. It's now one person talking to 50 ,000 of their fans, right?

20:43Yash Chavan:So it's that. And I don't think an AI influencer, because if the ads are now being created by AI and everything's created by AI, you're shopping on chat, GPT, you need something that's authentic that you almost have a one-to-one relationship with. And I think influencers are a great way at scale to build that relationship with your target customers. You mentioned Pura Vida as a D2C darling. Are there any brands like in the last couple of years that you think have done extremely well with their influencer strategy? Yeah, so many. I think one of the examples that comes to mind really is Obvi is one of our customers.

21:21Yash Chavan:Everyone knows of Obvi. So they're a great case study as well. His podcast comes out on Monday. Oh, does it? Okay, great. Ash, yeah. Yeah, we did a webinar with them. It's probably somewhere on YouTube. If you search Obvi influencer strategy, you'll probably find that. They do this exact, again, by the way, this pyramid of influence is not my creation. it's because I'm in a position where I can see 250 brands and the successful ones and the not successful ones and I can see how they're structuring their programs it's almost like a reverse engineered abstraction of how the successful brands are running it that's exactly what Obvi was doing before I ever coined the pyramid of influence or whatever so Obvi is a great one Ridge is a great one who else I think First Farm is it's a fantastic affiliate program to study the fitness brand.

22:07Yash Chavan:They have some 4 ,000 active ambassadors, huge, very passionate community about the whole, their whole narrative is really compelling. So First Form is a great example of labeling. They call them legionnaires. So they've given, they don't even call them ambassadors or affiliate. They call them legionnaires. So First Form is really, we all know the very popular ones, right? So we know like Sephora has one and Gymshark has one, but those are maybe a little bit too huge. So first form is good. Ridge is good because of their focus on YouTube as a channel, because YouTube is so long term. Instagram, TikTok, I mean, now they're being indexed by SEO.

22:46Yash Chavan:So we'll see how it goes in the next. Maybe we could do another one of these podcasts in a year and see where we are. But YouTube right now is the second biggest search engine. And so the videos are being indexed. So you get long term value. So I think some of those are really good, really good examples to study. Triangle is a good one. triangle is a was a bikini brand they had a very good they fomoed um i think kylie jenner into posting about them because they couldn't they couldn't afford her fees so they seeded product i think this is way back in 2015 or something like that but they seeded product to all her friends who were smaller influencers um and then kylie got fomo and she reached out to them saying hey let's collaborate that's like a very interesting story so some of these like so So Triangle, if you want to study, First Form, Ridge, Abvi, Pura Vida, obviously, are some really good examples.