Big brand vs Small brand, which is more influenced by influencers?
Effect of KOLs on revenue
- Many Chinese brands use famous KOLs to promote their products. Since KOLs introduce products with more honesty and fun factors, followers are easily persuaded by them and actually go on to buy the products.
- One of the top KOLs, Li Jiaqi, is also known as Lipstick King overseas because once he introduces a product, it is sold out in several hours.
- Big brands that have already made their reputation in the market want influencers to promote their products, and new small brands, likewise, look for influencers so that their name will be widely known in a short time.
- We have analyzed our data to see if the influencer effect is larger for big brands or for small brands in terms of revenue growth.
- In skincare category we picked Guerlain, which is loved by many Chinese consumers, and the ordinary, a Canadian brand that is less well-known.
- Guerlain’s gold essence has stayed on Top 20 ranking list on essence category, which proves its popularity among local users. The product has been selling with a side note saying ‘Li Jiaqi’s recommendation’ since this April.
- The ordinary started to put a phrase saying Li Jiaqi recommended their product from June.
- The circles indicate the months in which Li Jiaqi started to promote the respective products. Guerlain’s revenue jumped 325.9%, mom on April, and the ordinary’s revenue increased by 14.8%, mom on June, which is not as prominent as Guerlain’s case but still the highest this year.
- This leads us to assume that already well-known products get an extra boost in their sales when they are recommended by an influencer.
- In lipstick category we picked two local brands: Perfect diary and Mansly.
- Perfect diary’s 星动臻色金钻唇膏(Star dynamic gold diamond lipstick) was newly launched this spring and recommended by Li Jiaqi on May. The brand has been active in marketing the fact that he made a positive review on the product.
- Mansly produces color makeup products with ancient Chinese style packaging. Li Jiaqi recommended a product from the brand this April.
- Perfect diary’s revenue on May grew by 53.0%, mom. Meanwhile, Mansly’s grew 14.8%, mom. Like we have already observed from essence category, influencer effect is more prominent in big brands.
- In other words, consumers trust KOL’s recommendation; and if they see a recommendation on well-known brand, they have conviction in their purchase. However, if a KOL recommends a brand that is not yet known or unpopular, consumers may buy it out of curiosity or fun, but the purchase is unlikely to recur.
- Although top KOL marketing can be effective for big brands, it can be less fruitful for small and medium sized brands. Therefore, smaller brands can either work on building rapport with smaller influencers or building its own brand reputation before approaching big KOLs.