Recession Fears? Expand ROI With Influencer Affiliate Model: Nisarg Shah Of affable.ai At Your Digital Marketing Coach Podcast

Editorial Team
January 10, 2023
5
min read

Amid the looming recession fears, influencer marketing stands strong in helping marketers drive authentic engagements. But is there a way for marketers to double their campaign ROI with influencer partnerships during a recession? 

Nisarg Shah, Co-Founder and CEO of affable.ai, and Neal Schaffer, Digital and Social Media Marketing Consultant, Speaker and Author, answer the question in detail at the Your Digital Marketing Coach podcast to help you decode influencer partnerships and increase your returns even if the recession hits. 

Neal Schaffer, listed under the Top 50 Social Media Power Influencer by Forbes, is a blogger and podcast host who publishes marketing, social media, and creator economy related content on his podcast. This interview episode with Shah reveals knowledge gems to help you understand the flexibility influencer marketing offers, key takeaways for collaborating with creators, and the future of influencer affiliate marketing. 

Neal Schaffer: 

Some say we are entering a recession as we go into 2023. Your marketing spend might be reduced next year. With a small budget, influencer marketing might be your best investment. You'll learn more about why this is the case in this next episode of Your Digital Marketing Coach podcast. 

Hey everybody, welcome to my podcast. This is Neal Schaffer, your digital marketing coach. We have discussed influencer marketing many times on this podcast, but this is something we have not talked about — Why influencer marketing makes a lot of sense when you have a small marketing budget. 

Today is an interview episode with a special guest, Nisarg Shah, Co-Founder and CEO of affable.ai, an
influencer management platform trusted by over 100 leading global brands and more than 4000 data-driven marketers. So he's definitely an expert in the field. He comes with a lot of experience, which he delivers from our conversation about the ROI of authentic and relatable content and how people will turn toward trusted voices during a recession. So I hope you'll enjoy this interview. 

Nisarg Shah: 

Thank you so much, Neal, for having me here. I'm super excited to discuss all things influencer marketing, especially with you, who's written a book around it as a thought leader and an influencer yourself in the space. I've learned much from your content and look forward to adding some of my learnings.

Neal Schaffer: 

Thank you. Many of the listeners here understand the benefits of influencer marketing, and I think, in this conversation, we're going to uncover some additional benefits that I've never spoken of on this podcast. So I'm also excited to learn from your perspective and what you hear in the market. With all of my other guests, influencer marketing wasn't a buzzword when we were both born, so how did you get started with influencer marketing and become the Co-Founder and CEO of affable.ai? 

Nisarg Shah: 

Yes, we get this a lot, especially because my Co-Founder and I don't come from an influencer marketing world. We're both software engineers, and because of it, we were outsiders to the influencer industry in 2017. We noticed a lot of push in the influencer space, mainly because Asia and China were growing with live commerce. 

In the last five years, Asia has been at the forefront of working with celebrities and influencers as a way of word of mouth, so we had a hypothesis. We hypothesized that the future of commerce will be driven by social rather than search, which means people would buy while scrolling on Instagram rather than searching on Google or Amazon. 

If you think about it, in the last five years, much of that has come true. So if the future is social commerce, brands would need a way to predictably grow their commerce with micro and nano influencers, having them talk about the brand on an ongoing basis. 

Earlier, the influencer management process was very manual, so we spoke to many brands and figured that there is a big opportunity or a big white space to streamline the entire process. That is what gave birth to affable.ai. 

Neal Schaffer: 

I believe China and Southeast Asia are the countries that are most advanced in influencer marketing. I'm curious, back then, before you started the company, you talked about streamlining processes, etc.; were there other solutions in the market? And what were the gaps you found in them that you tried to cover with this new technology?

Nisarg Shah: 

Yes, back in 2017, before we started affable.ai, most of the solutions in the market were either an agency offering influencer management as a service or there were marketplaces where influencers and brands could sign up and connect. The solutions were not integrated with the existing tech stack that the brand was already using and did not support transparency and authenticity in the influencer marketing space. 

So the solution we set out to build was kind of pillared around the fact that one, it should not be a solution in silo. It should talk or connect to the remaining systems the marketing teams or brands already used. 

Second, it should focus a lot on transparency and authenticity while removing the black box from the whole influencer ecosystem, giving more insight to the brand of who are the relevant influencers, how to find them, how to reach out to them, what's their conversion rate, and who's driving what kind of sales for you. So a lot of data-driven decisions were not taken back in 2017. The industry has matured in the last five years, and many players in this space are now building tools. It's a gold rush once you realize where the gold is you're taking. That's the hindsight we had back in 2017.

Neal Schaffer:

Yeah, indeed, there have been many players in this gold rush. But, since you're both software engineers, it explains a lot about your data-driven approach, which I agree is necessary in the market. 

We're hearing a lot about an upcoming recession in the market, and since you have some insight into that, why don't we talk about the flexibility of influencer marketing and its benefits? 


Nisarg Shah: 

There's definitely a lot of sentiment among brands in preserving cash and the sources so they don't overspend for growth. This is where many brands are struggling to identify avenues to push and still grow. After listening to many of our clients, it seems that brands are convinced that influencer marketing is not taking the hit. They might be lowering their ad or digital spending, but marketers tend to continue investing in influencer marketing because it is one of the most flexible forms of advertisement. Influencer marketing enables you to do product gifting, which other ad formats do not allow you to do. You cannot give the product to someone and expect a billboard advertisement to come out of it. But you can do that with influencers. So the ability to find influencers willing to do product gifting campaigns and continue your brand awareness campaigns works very well. 

Secondly, it is flexible in the form of payments that you can either pay influencers upfront or ask them to take a percentage in affiliate commissions while being respectful to the creators. So if a creator has specific rate cards, you should respect that. And if they don't fit into your budget, you can work with other creators, which will be smaller and more flexible. 

Finally, working with creators is a very creative format. There is a blend of influencers to create content for you on your behalf. So you can direct some of the production costs of the content agency to influencers because they serve multiple purposes. They would create the content for you and publicize it on your behalf. So the value you get from a creator is much more.

However, influencer marketing should be an always-on strategy. It's not something where you turn it off, do it during Black Friday, and then again return to it during Christmas or Mother's Day. That way is not effective. 

Neal Schaffer: 

Yes. It seems like brands are finally starting to realize the benefits of influencer marketing and how it fits well with a potential recession. There's flexibility, so you're not locked in, which is what I find interesting. Talking to a lot of YouTube influencers, I discovered that many of them can't ask you for money before finishing the content which takes time to complete. So there are companies that finance influencers and give them an upfront fee, so they don't have to ask the brands. So it's a very interesting world with lots of flexibility. 

Another point I often talk about is the difference between advertising content and authentic and relatable content published by influencers. So how do you think it will help brands going into recession? 


Nisarg Shah: 

People tend to trust other people, which is basic human nature. And that's word of mouth. I trust you because you talk about something. So marketing works because we trust the people who are creating the content. In these times, influencer marketing works even better because users are careful about who they trust and turn towards trusted advisors in a specific niche. 

So if you combine these things, brands will get creator content as discussed, but will also be able to broadcast the message to a trusted audience, which they don't get with the spray and pray method where you put a $20,000 ad budget and target every mom in Texas. Contrarily, working with creators, maybe 20 of those targeting their audiences, brands get a trusted voice here, especially when people are careful with their buying patterns. 

I was reading a report that estimated that the Black Friday commerce sales might not be able to live up to last year's sales expectations because people are in control of their spending. Plus, they will want to trust someone they can relate with instead of a brand trying to push them a product to meet its quarterly builds.

Neal Schaffer: 

I think since Covid, who we trust online has evolved. We've seen the emergence of TikTok as well, but at the end of the day, this raw and real content and the people behind it seem to be the ones we trust more than those shiny-looking ads or mega celebrity influencers. The trust isn't there because they don't seem real. 

People or brands listening to this might have run an influencer marketing campaign a few years ago, which wasn't successful. Chances are they weren't working with the right people. Correct?


Nisarg Shah: 

Yes, it's very important to identify your ambassadors early on and not get lured away by someone who is trending or hot in the market. Their followers may not be your target audience as a brand. 

Also, influencer marketing saw a big boost during Covid because people were spending more time on their phones at home, so many of the budgets were shifted towards channels that can influence those people. But at the same time, YouTubers and TikTok creators started creating engaging content, talking about their lives, and people related to that as they were looking for inspiration. Influencer marketing grew as an industry and now stands as a pillar during an upcoming recession, and can work through it better than other marketing channels. 

Neal Schaffer: 

It's funny we talk about the creator economy, but people don't realize that a third of that economy comes from brand collaborations, i.e., influencer marketing. So I have to remind people when you think creator economy, think influencer marketing because that's the backbone. I think when we look back at the creator economy from a few years ago, Covid did create this trigger that just increased the impact of influencer marketing even more.

Nisarg Shah: 

A lot of content creators became influencers as people started creating more content. They also started following their passion in identifying a niche, creating more content, getting engagement, and building businesses around it. 

As you said, one-third of the creator economy is influencer marketing, which is very true. The creator economy started with influencer marketing and grew beyond it. It gave birth to a career that creators chose, leading to the construction of an entire industry to serve them. The industry finances the creators, giving them money, credit cards, and accounting solutions to run campaigns because their taxes are completely different than a normal business. So it is an exciting time in the creator economy, but influencer marketing is the backbone and the pillar around the entire economy being built right now.

Neal Schaffer: 

Yes, I couldn't agree with you more. We now talk about these creator funds, except the YouTube Partner Program, the platform from many years ago offered that to them. 

But outside of that space, YouTubers are trying to find growth beyond ad revenue, which will come with collaborations with companies. 

So I want to talk about one more thing we discussed, which I have a personal passion for. I believe marketers have really been miseducated on what influencer marketing is and that many things have already existed. So one of those is affiliate marketing, where you're tapping into people that have an influence and signing them up to be affiliates. It's a type of influencer marketing. I know this is something you've built into the platform, and you're a big evangelist for leveraging influencers as an influence because it gives you measurable ROI and massive leads, so I wanted to sort of tap into that, what you see and how your product has been built to sustain that.


Nisarg Shah: 

When we started talking to marketers, excited about the potential of influencer marketing, there were two main things that we'd talk about. One is the brand awareness the influencers can provide, and the second is the uptick in sales. So, it is obvious when a marketer is spending $1, they expect some sort of ROI out of it. It can be in whichever channel it is. With influencers, there are either social ROI or performance-driven ROI—what kind of sales can influencers drive. Now, influencers are amazing affiliates because they give you both the ability to reach a massive scale even if people don't buy, and at the same time, they give you the ability to convert. 

So if I'm a brand wanting to work with influencers and give them products, I might as well create an affiliate program out of it. This could include trackable links or discount codes and, depending on the channel, other different strategies. But it goes back to my point about connecting systems that brands already use. Now a brand, let's say on Shopify, is already tracking the daily sales (the source through which the sale came in). They have Google Analytics to measure traffic, so why not incentivize the creators to republish the content or to have more authenticity in the content because they will get a percentage of whatever sale they drive. 

If there is no affiliate component, a creator might treat it as a one-off project, especially if the brand works with the creator for a one-off campaign. So build your advocates. 

One thing we've seen work very well is converting customers as advocates and identifying who is an influencer among your own customer base. So we connect with Shopify, Magento, and other e-commerce backends. We connect with the brands on social channels and help them identify which people are already talking about their brand or buying products from the brand and have some sort of influence. They may be nano influencers, micro-influencers, high engagement, and low saturation in terms of other brands to talk about. But trying to help them identify these ambassadors is a big part of it. And we believe that affiliate as a channel gives brands more control as they are able to actually track dollar to dollar the return on the investment they're making. Especially during recession times, it becomes very important because they want to spend on performance-based campaigns rather than just reach-based campaigns.

Neal Schaffer: 

So you have built all this into your software, correct? 

Nisarg Shah: 

Yes, that's right. 

Neal Schaffer: 

So let me ask you, does every influencer want to become an affiliate? This is more of a theoretical question. I often find that people can talk about this, but in reality, sometimes the direction we want to take relationships don't always go there because influencers are people, and everybody is in it for different reasons. So I'm curious, based on your experience working with brands, what sort of conversations happen after they introduce these affiliate links or discount codes to influencers? What have you seen in the market?

Nisarg Shah: 

I think the question leads to a very valid point that not all influencers are open to being affiliates only. They are open to the idea of having a hybrid structure where you still have some sort of paid collaboration, and then you incentivize them with an affiliate strategy. Right now, what we are seeing in the market is brands and influencers are in a binary relationship. Brands push for pure affiliate collaborations, and influencers ask for purely paid collaborations. But the balance is where you merge it and hype. 

So one of the features of our software is how you push out a proposed collaboration fee to the influencers and add a layer of affiliates on top of it. We've done market research where we reached out to influencers and asked them for the rate cards. So we provide certain estimates to brands that, based on their budget, these influencers might be open to a paid collaboration according to what information we've collected from influencer surveys. 

I am a big proponent of paying influencers for what they deserve because if you're paying the creator $500, they have to pay tax on top of it. Plus, the influencer has to create content, support certain staff members, spend 10 hours, and at the end of the day, the revenue they make does not justify what you're paying them, especially because they're also giving you a reach instead of just content creation. 

So the brand should consider the multiple services influencers provide, including content creation, reach, ambassadorship, etc. There should be a fair payout done for that person, and the middle ground is a fixed pay plus an added incentive of commissions on top of it.

Neal Schaffer: 

I think it's almost like if an hour of your time is worth more than a $50 amazon gift card, why are you pitching an influencer? It's such a lowball offer. So I couldn't agree with you more. I want to come near the close of the conversation with once again the vision and then the reality. Over the last few months, TikTok has created its influencer marketplace, and Instagram is also starting to move in this direction. I got invited to the beta release but haven't seen it evolve yet. 

On the other hand, I won't name the name, but there's one very famous influencer marketing tool company that was recently kicked out of the Meta partner program, and they no longer have access to Facebook and Instagram data. I'm sure this is what I heard from one of their competitors at the Digital Marketing World Forum last week, and then another company did some cold outreach on LinkedIn, saying, 'Hey, if you use them, then you don't get access to that data anymore.' 

So I'm curious, have you seen any? Because I'm assuming that you are tapping into the API of all these social networks as software engineers? Do you see any changes coming? Or do you think that even if Instagram, TikTok, and Facebook have their influencer marketplace, you will still be able to add additional value?


Nisarg Shah: 

That's a very good question, and it is top of the town right now, especially with Meta being more interested in the economy. Generally, what we believe is as long as you're being respectful to Meta's and TikTok's API limitations, as long as you don't do something, which is not in terms of service, you're generally fine. Meta doesn't have an issue with you because you bring more business to them. If you think about it, this entire ecosystem of influencer marketing platforms, which is more than a billion-dollar industry itself, is adding to Meta's visibility and the content created there. Many platforms, like affable.ai, are driving the influence of content that ends up on these platforms. 

Now, of course, Meta and other channels would want to protect their content and the work the creators are doing there. I wrote a long piece of content a couple of weeks ago—Why do you believe third-party platforms like affable.ai still add a lot of value? 

I believe they add value for three main reasons; one, if there is no third-party tool, brands would have to go on to each respective marketplace, like you would have to go to TikTok marketplace, the Facebook marketplace, and Instagram and Snapchat marketplace, which is troublesome. It doesn't solve your campaign requirements because you have campaigns across channels, so that's where third-party platforms like ours would still make sense. 

Second, marketplaces give you limited data. They will not tell if an influencer has fake followers. For example, Twitter will never say how many bots exist on its platform. The same thing is true with marketplaces, but as a third party, we can tell you if the followers are real. 

Third, creators find it challenging to land collaborations through creator marketplaces. An article came out recently about creators not finding gigs on Instagram's creator marketplace because there is not enough volume on either side. So how do you build out that volume, there's a critical mass after which marketplaces become useful, and right now, none of the creator marketplaces have reached that critical mass. 

So for these three reasons, third-party platforms like ours still make a lot of sense. We can integrate with e-commerce platforms like Shopify, Magento, Bigcommerce, and WooCommerce. On the other side, we can also integrate with e-commerce tech stack, like Klaviyo, Senlin, etc., and build one product that talks to the entire tech stack, rather than relying on ten different products, and three different marketplaces, which don't connect to each other.

Neal Schaffer: 

That makes a lot of sense, and thank you for the candid answer. I guess it has taken you five years to develop what you have. Instagram and TikTok marketplaces will be limited to their platform, and they're not going to build in all the analytics and everything else you have. So I suppose marketers have to question this, are you the type that goes into an ads manager and wants to control everything and have all your options? Or do you just want to press the boost button? 

One of my clients is in the TikTok marketplace, and it's easy to find a limited number of people, but the results haven't been that effective with the marketplace model. You only get what you pay for and don't have access to all the data that platform's like affable.ai show. So Nisarg, we discussed all the best practices and covered many of them in your conversation. Congratulations because it sounds like your technology is based on many of these best practices today in influencer marketing. Are there any other missed areas that you want to tell my listeners about?


Nisarg Shah: 

We covered many of the best practices your listeners have already heard in the influencer marketing industry. I want to add that we are a big proponent of fair pay, making sure the influencers are compensated for the time they invest. 

Secondly, we talk to our customers and partners about giving influencers creative freedom. Influencers are influencers because they can go out and create content they know resonates with their followers, but many brands want to control what kind of content goes out. So generally, as a best practice, if you are a brand, and you're listening to this and planning to work with influencers, set certain guidelines, but let them come up with the content because they know what their followers will like. Different influencers would have a different tone and message that they know works best; it is very important to let them create their own content. 

We've seen the results too! Brands come back and tell us that the influencer campaigns where they tried to control a lot did not get any conversions. But where they saw any form of virality was when influencers were using their creative juice and creative freedom. With that, we have covered everything. Your (Neal's) book is like a golden resource for everything related to influencer marketing. The ongoing content you post on your LinkedIn channel and other forums are super useful. I look up to that a lot. I read that a lot and share it with my team members. So with this, I think we kind of covered a lot of what I feel is the current sentiment in the market around influencers. 

Neal Schaffer: 

Thank you my friend. We didn't talk about this before, but I lived in Singapore for six months. So when I hear your accent, I listen to all the Singlish terms and all the food courts in Singapore, so good memories. 

But just as a final note, there are probably many listeners who want to check out your tool. So the URL is affable.ai. Is that correct?


Nisarg Shah: 

That's right. affable.ai. The listeners can request a free trial. Someone from our team would get in touch and walk you through the platform. I am nisarg@affable.ai, so if you want to reach out to me directly, you can also do that. I'm also active on LinkedIn, so reach out there, and I'll reply to all the messages. Search Nisarg Shah, affable.ai, and LinkedIn on Google to find me. 

Neal Schaffer: 

Okay, so you don't have to go into details, but I'm assuming the affable.ai business model is based on a monthly fee that gives you access. What is the price point that you start at? Is this just for huge enterprises? Or is there a beginner price point that even small and medium-sized businesses can start using your platform?

Nisarg Shah: 

We serve across the spectrum. Unlike a lot of the solutions in the space primarily geared toward enterprises. We do have startup packages, which are designed and tailored specifically for SME (small and medium enterprises) mid-market brands. We work with a lot of Shopify brands, less than 50 employees, and less than 30 employees who use our software to run the entire stack. Many agencies connect with us to manage their client campaigns on our platform. So our starting point is around 10,000 A year-ish. And it is from their point onwards, depending on the client's requirements, which is much less compared to many platforms in the space that start at 25k to 30k annual fee. Plus, you get locked into long-term contracts with them.

Neal Schaffer: 

Yes, I've seen a lot of inflation in the influencer marketing tool space, as many tools want to serve the enterprise. But it sounds like you have tremendous value added to what you're delivering, so congratulations on that. I know you're no longer in Singapore in the Bay Area. So, next time I'm up there, we'll have a chance to meet.

Thank you so much. And once again, everybody that's affable.ai and Nisarg. 

Nisarg Shah: 

Neal, it was great chatting with you. Thanks a lot for having me here. We both are industry outsiders who helped build openings around the influencer marketing space, so great chatting with you about that.

I look forward to meeting you in person when you're in the Bay Area next time. 

Neal Schaffer: 

Thank you, my friend. I think growing industries need disruptors and outsiders with different perspectives to help them grow out of themselves. We've both been playing that role in our ways. I look forward to continuing the conversation. 

Check out the audio episode here! 

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