Virtual influencers are playing an increasingly important role in digital marketing for retailers. These entirely computer-generated digital personas have become a notable part of consumer engagement strategies for some brands, due in part to their ability to interact persuasively with specific customer segments.
According to an Influencer Marketing Factory survey, 58% of U.S. consumers over the age of 18 follow at least one virtual influencer, with 35% of these followers having purchased products endorsed by these digital figures. In fact, the appeal of virtual influencers is largely due to their high engagement rates, which are reportedly up to three times greater than those of human ambassadors, leading to increased sales conversions and higher revenues (see more below).
However, if you’re considering using virtual influencers in your marketing strategy, you should be aware of the immediate and longer-term risks. This insight, based on perspectives from our most recent Retail Futures Report, examines both the opportunities and limitations of virtual influencers in more detail.
One of the earliest virtual influencers Lil Miquela has around 2.5 million Instagram followers and has also worked with major brands including Prada and Samsung. Luxury brands including Balmain have deployed virtual influencer Shudu Gram, while sports brands including Adidas have used virtual influencer Imma.
In 2022, M&S launched a virtual influencer: Marks & Spencer, Influencer, Reality, Augmented, or Mira. M&S created Mira as part of its “focus on experimenting with emerging trends and new technologies,” with the aim of building a connection with a younger audience. M&S follows the likes of Pretty Little Thing, which launched its own virtual model in early 2022.
Higher engagement – Virtual influencers tend to engage more effectively with audiences compared to their human counterparts. The 2023 survey mentioned above shows the average engagement rate for virtual influencer campaigns was 5.9%, three times higher than the 1.9% for real influencer campaigns. This higher engagement can translate into better marketing campaign performance and more effective communication with your target demographics.
Scalability – You can scale virtual influencers more easily than human influencers. Virtual influencers allow you to create large volumes of content quickly and efficiently, without being bound by geographical or time constraints. This scalability makes it easier to meet marketing demands and maintain a consistent presence across various platforms.
Cost efficiency — Employing virtual influencers can be more cost-effective than traditional influencers. Since they lack physical limitations, virtual influencers can ‘work’ around the clock without the need for travel, accommodation, or other logistical expenses, reducing the overall cost of marketing campaigns.
Flexibility and control — You can have complete control over the actions and appearances of virtual influencers. This power enables precise targeting and consistent messaging across campaigns, allowing you to tailor marketing efforts more effectively to meet specific sales objectives.
Reduced reputational risk – Virtual influencers pose a lower risk of negative headlines than human influencers, protecting your brand's reputation and ensuring smoother, more predictable marketing activities.
Broader consumer reach — With fewer constraints, virtual influencers can easily reach a global audience, providing opportunities to tap into new markets and demographics that might be less accessible to human influencers.
Authenticity concerns – Virtual influencers may lack the authenticity and relatability that human influencers offer. This perceived lack of genuineness can affect their credibility and might lead to trust issues with your target consumers, potentially impacting the effectiveness of campaigns.
Limited long-term data — As a new phenomenon, there's limited long-term data available on the effectiveness of virtual influencers so the long-term return on investment remains uncertain.
Technological and creative investment — Creating and maintaining virtual influencers requires significant technological and creative resources. These demands can be a barrier for smaller retailers with limited budgets, as the initial and ongoing costs might be prohibitive.
Reputational backlash — There are ethical concerns and potential backlashes from consumers who may feel deceived or manipulated by interactions with non-human influencers. Addressing these ethical issues is crucial to maintaining consumer trust and avoiding damage to your brand's reputation should you engage virtual influencers. It's vital to maintain transparency about the nature of virtual influencers to avoid misleading consumers. To prevent allegations of deception, you should clearly identify virtual influencers as computer-generated. Any perceived misuse of virtual influencers can lead to consumers scepticism and a loss of trust, which is particularly sensitive in industries like retail and hospitality where customer loyalty is vital.
Representation and diversity – Ethical considerations around representation and diversity are crucial as some virtual influencers may perpetuate unrealistic beauty standards, negatively impacting the self-esteem of consumers. However, some virtual influencers, like Brenn, have been designed to reflect more realistic body types and promote body positivity.
Data privacy – Virtual influencers rely on detailed data about consumer preferences to personalise interactions effectively. Ensuring the privacy and security of this data is essential to maintaining consumer trust. Accidental breaches or misuse of data can leave you exposed to significant reputational damage, harming sales.
Employment impact – The rise of virtual influencers might impact the job market for human influencers and related professions, raises concerns over the responsibility of brands to balance innovation with societal impact.
Cybersecurity vulnerabilities – Like any digital asset, virtual influencers are vulnerable to hacking. Unauthorised access to a virtual influencer's account could lead to the posting of brand-damaging or offensive material. Criminals can also use AI to create deepfake videos or audio clips that impersonate virtual influencers. Implementing robust security measures to counter these threats is critical for protecting your digital assets and maintaining your brand's integrity.
For a smarter way to maximise the risks and opportunities of new technologies for your retail brand, get into touch with our industry specialists.
