"I Don't Think They're Prepared": A Recession Could Really Hurt Influencers, And Many Of Them Don't Seem Ready

·4 min read

In April 2022, Deutsche Bank warned a recession was coming.

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The major world bank has predicted that "we will get a major recession," mostly due to global inflation. And with US inflation hitting 9.1% in June, a lot of people are feeling a financial pinch that is souring their view on the economy.

Influencers, many of whom simply sell the image of a perfect life, have never been through a prolonged recession.

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Influencers weren't around for the Great Recession in 2008, the last major recession to hit the US. Those with young audiences might be especially impacted by a recession.

And people don't think influencers are ready for rough financial waters.

Buying houses, retiring partners, and going all in on influencing has become a pattern for some. But if general shopping slows down and your household has gone all in on one platform, could that spell financial disaster for influencers?

Over the past three years, top influencers have made major lifestyle changes, from new house purchases to retiring spouses.

And the husband of Julia Berolzheimer, an influencer with 1.3 million followers on Instagram, left his job to help run the company.

While 2020 did bring financial shock for many, the influencer industry actually saw financial growth as people spent more time online.

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"E-Commerce sales were $870 billion in the US in 2021, a 14.2% increase over 2020 and a 50.5% increase over 2019," says Forbes, using data from the US Department of Commerce Retail Indicator Division. And influencing positively blossomed in 2020, with 55% of large companies having a devoted budget for content marketing according to one report.

What does a recession mean for influencers, who largely make their money by selling people products online?

If no one clicks your affiliate links, how do you pay the bills?

Cathy Peshek, founder of Poor Little It Girl, is a fashion influencer who thinks a recession will impact influencers' income.

One study says 45% of US businesses are "highly concerned" about a recession, and some are already making cuts.

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According to the study, 6% of businesses have already cut their marketing budgets. Influencers with high follower counts and good engagement can make four, five, and six figures from sponsored partnerships. With decreased marketing spend, influencers could see a major loss of income.

Latasha James, a YouTuber and business mentor, told BuzzFeed she thinks influencers that serve, instead of just sell, will do well during a recession.

A prolonged recession is bad for everyone, and history shows that consumer spending drops in recessions.

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Data from the Bureau of Labor Statistics shows that in recessions, people spend less at restaurants and on furniture and appliances. People cutting back means fewer sales for influencers who sell mainly lifestyle goods.

However, influencers that focus on secondhand shopping or slow living might see a boost during a recession.

Both Cathy and Latasha anticipate some drop in sponsorships during a recession, and they plan to focus on other areas of their business.

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"My major concerns are consumer spending decreasing. If that goes down significantly, brand sponsors will likely cut their advertising budgets due to diminishing returns," says Latasha.

She thinks that her focus on helping people freelance and run their own business will be a saving grace. "We tend to see freelance work pick up a bit during recessions due to full-time positions being eliminated, so I do see higher demand for my services, as well as for my courses which help freelancers navigate self-employment."

Cathy thinks some people will turn MORE toward influencers' free content during a recession.

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Cathy worked in fashion during the Great Recession and saw magazines drop like flies. "In 2008, when all the magazines folded and people really embraced fashion blogging, I was working at a magazine that folded in NYC. And almost every magazine I ever worked at has folded...disposable income on a magazine is hard to swing when you're watching your wallet more. But blogs like mine are free for people to consume." Cathy is going to continue to focus on driving visitors to her website.

Ultimately, a recession will likely weed out some influencers.

As people's financial lives change, any online figure that doesn't have a value add could be phased out of people's lives. No one wants to follow someone who makes them feel bad about themselves during difficult economic times.