The Rise of Influencer Marketing: Reintroducing Competition - Hannah Crystal '25

While the internet has revolutionized communication, access to information, and commerce, it has also consolidated power into the hands of massive companies across varying industries. In the tech industry, Microsoft, Apple, Amazon, Alphabet, and Facebook are collectively worth over $4.3 trillion dollars, comprising over 15% of the total value of the S&P 500.¹ In the beauty and fashion industries, LVMH (Louis Vuitton Moët Hennessy), owning over 75 luxury brands including Dior and Fendi, reported revenues of €86.2 billion ($98 billion) in 2023.² Fast fashion companies also dominate, with Shein bringing in $32.2 billion in worldwide sales in 2023³ and Zara’s parent company Inditex earning €35.9 billion ($40 billion) in 2023.⁴ Similarly, L’Oreal, owning over 35 beauty brands such as Maybelline and Lancôme, reported a revenue of €41.18 billion ($47 billion) in the same year.⁵ This unprecedented level of monopolization has created an uneven playing field, limiting opportunities for small businesses, and stunting the growth of startups. However, the recent rise of influencer marketing is contributing to a significant shift in power–raising the question: can it reintroduce competition into monopolized markets? Influencer marketing reintroduces competition by lowering barriers to entry, shifting consumer trust from corporations to individuals, and enabling small businesses and startups to thrive. In doing so, it democratizes the marketplace, making it more dynamic, efficient, and responsive to consumer needs. 

While often seen as a product of the new digital age, influencer marketing has actually been around much longer than it may seem. Long before social media, brands relied on influential figures such as royalty, celebrities, and athletes to shape consumer behavior and boost the appeal of products. In 1950s print, radio, and television advertisements, Hollywood stars such as Marilyn Monroe and Audrey Hepburn pitched cosmetic products. Even earlier, luxury fashion brands such as Hermés established their reputations by dressing European royalty, using elite endorsement as a marketing tool. The concept of leveraging personal influence for commercial success is not new, yet the democratized, scalable, and targeted approach is. 

The influencer marketing strategy involves a paid collaboration between brands and influencers to promote a good or service. Platforms such as Instagram and Tik Tok have paved the way for many to gather a large following of their own and engage with audiences on an authentic and personal level.⁶ Unlike traditional broadcast advertising which enabled large corporations to dominate primetime television slots, the internet has spread the attention of consumers across platforms, forming individualized communities. As a result, influencer marketing has emerged as a cost-effective way to access audiences of all sizes at once. The influencer marketing industry is set to reach $32.55 billion in 2025, compared to $24 billion in 2024 and only $1.4 billion in 2014.⁷ This shift has disrupted traditional marketing models and has provided opportunities for smaller businesses to compete with long established corporations. With lower costs and the ability to directly target consumers, influencer marketing provides companies of all sizes with a greater competitive edge. 

By lowering barriers to entry, influencer marketing allows small businesses to challenge incumbents without needing massive budgets, breaking up concentrated power in the market. Despite skepticism about influencers’ credibility, influencer marketing delivers a higher return on investment (ROI) than most other types of marketing, generating an average of $5.20 per dollar spent.⁸ As a result, companies that do not engage in influencer marketing risk falling behind their competitors who capitalize on the cost-effective strategy. Although critics may argue that this strategy consolidates power within a group of select influencers and large, powerful brands, more influencers does not equal heightened monopolization, rather it equals more choice for brands and consumers. Influencer marketing offers flexible payment structures that make it accessible to businesses of all sizes, unlike traditional advertising, which often requires large upfront costs. The three main structures are: flat fee, performance-based, and affiliate commission. A flat fee structure allows businesses to pay influencers a fixed rate per post, while performance-based ties an influencer’s compensation to specific metrics such as engagement. Affiliate commission models enable influencers to post a promo code or link to a purchase gateway, earning a percentage of the sales they generate.⁹ These varied pricing structures allow small businesses to choose which format aligns best with their budget and goals, making influencer marketing an adaptable and scalable strategy. 

In addition to cost flexibility, influencer marketing provides small businesses with direct access to niche markets, something that is often too inefficient or expensive to achieve through traditional advertisements. In the pre-digital, mass-market advertising era, reaching the last marginal customer, especially those with specific needs, was rarely worth the high cost of finding and acquiring them through print or television. However, influencer marketing has radically changed this approach. Brands can now collaborate with micro (10,000 to 100,000 followers) and nano (1,000 to 10,000 followers) influencers who engage directly with targeted consumers, allowing businesses to pay creators in proportion to the revenue they generate. These influencers have been shown to produce significantly higher engagement rates (6%) than celebrities (1.7%) as their audiences trust their opinions and view their recommendations as authentic.¹⁰ This level of engagement allows emerging brands to build a loyal customer base without mass exposure through expensive ad campaigns. While nano influencers charge between $500 and $2,000 per post and micro influencers charge between $2,000 and $8,000 per post¹¹, a celebrity such as Kylie Jenner charges an average of $2.3 million per branded post.¹² Yet 82% of consumers are more likely to trust a recommendation made by a micro influencer due to their tight knit and fiercely loyal followings.¹³ 

In response to this growing industry, an anonymous social marketing executive confessed in an interview, “The influencer marketing business as a whole is challenged. The barrier to entry is zero,”¹⁴ complaining about the market’s oversaturation. While this comment raises valid concerns regarding the increasing numbers of influencers entering the industry, it fails to account for the fact that this very oversaturation fragments, allowing countless small businesses to compete where only major players once stood. By making it economically possible to connect with specific groups of consumers, influencer marketing provides niche brands the opportunity to gain an equal footing with industry giants, not only empowering businesses of all sizes to establish themselves in the market, but breaking up the internet-backed cycle of anti-democratization.

Beyond economic accessibility and targeting, influencer marketing disrupts monopolistic control by shifting consumer trust from faceless corporations to personal, relatable individuals. Recently, traditional advertising has struggled significantly due to consumer skepticism, as the Edelman Trust Barometer shows that only 8% of respondents automatically assume the information in advertisements is true.¹⁵ In contrast, Nielsen’s Consumer Trust Index reports that 92% of consumers trust influencer marketing over traditional advertising.¹⁶ This shift in trust forces brands to compete not only with new businesses, but with influencers themselves, who now hold significant power in affecting consumer decision making. Influencers greatly reduce search costs by carefully filtering and curating products for their audiences, leaving consumers with no reason to sift through impersonal ads, rather they can look to influencers they already trust. 

The effectiveness of influencer marketing in building trust between consumers and companies is evident in the rise of direct-to-consumer (DTC) brands, which refrain from using traditional retailers and advertising at all. DTC brands such as Fashion Nova and Gymshark have leveraged influencer marketing to achieve rapid growth and dominate their respective markets. Fashion Nova’s success is largely attributed to their large network of micro influencers whose authentic, relatable content has enabled the brand to maintain a strong social media presence and create a sense of community. As a result, Fashion Nova’s instagram following has grown to over 20 million.¹⁷ Similarly, Gymshark intentionally collaborates with popular bodybuilders, CrossFit champions, and other fitness influencers in order to directly target their products at consumers. By consistently partnering with respected athletes and fitness influencers, Gymshark has positioned itself as a leading brand in the industry, with the company reaching £400 million ($520 million USD) in annual revenue in 2020.¹⁸

Moreover, this power shift has led to increased transparency in marketing, as influencers are held accountable for the products they promote. Unlike traditional ads where companies can control the messaging entirely, influencers must maintain the trust they have built with their audience. Their engagement relies heavily on authenticity and credibility which means that endorsing a subpar product can lead to backlash, loss of followers, and damage their reputation. This dynamic helps to reduce information asymmetry as influencers are incentivized to only endorse high-quality goods. A study in the Journal of Business Research states, “These elements [the type of content produced] not only foster stronger engagement but also build greater trust in the brand, further amplifying the persuasive power of influencers.”¹⁹ Influencers are not merely promoters, but figures who shape consumer perceptions through engaging content. As trust is a critical factor, brands must ensure their products reach consumer expectations before seeking endorsements from influencers. Therefore, brands are incentivized to prioritize product quality and transparency to uphold strong relationships with both influencers and consumers. This concept traces back to the fundamental nature of competition–influencer marketing forces corporations to constantly adapt to changing consumer expectations. In turn, the marketplace is no longer static as consumer loyalty shifts quickly, promoting the need for constant innovation. Influencer marketing removes power from the hands of the marketplace giants as consumers are looking more towards authenticity and trust rather than solely price and visibility.

In the Motive PR article titled “Can Influencers Actually Harm Your Brand?” the potential risks of influencer marketing are highlighted, particularly how quickly influencer’s actions can damage a brand’s reputation. When influencers become involved in scandals or misrepresent products, it can cause consumer distrust and public relations crises for brands. However, rather than undermining the effectiveness of influencer marketing, this concern only reinforces the necessity for brands to carefully select influencers whose values align with their own. While influencer marketing introduces an aspect of unpredictability, that quality is what makes this strategy so powerful.²⁰ Not only does it have the ability to build genuine trust between producers and consumers, brands can no longer rely on long-term dominance. Rather they are forced to frequently monitor their partnerships, adding a complex layer to the market that makes it more dynamic and competitive. 

Due to the trust built through influencer marketing, the time it takes for consumers to move from product awareness to a completed transaction is accelerated. According to The 2024 Influencer Marketing Report conducted by Sprout Social, “49% of all consumers make daily, weekly, or monthly purchases because of influencer posts, with 30% trusting influencers more today than they did just six months ago.”²¹ A notable example of this impact is the success of TikTok’s shopping feature: TikTok Shop. During the 2024 holiday sales season, TikTok reported $100 million in sales in a single day on Black Friday, tripling 2023’s figures. TikTok facilitated over 30,000 shopping livestreams on that day, demonstrating the effectiveness of influencers prompting quick consumer action. Max Benator, CEO of the social-shopping agency Orca, told Business Insider, “We've now been on TikTok Shop since the very beginning, and we've seen successes gradually and consistently increase month over month…The numbers are serious.”²²

As brands scramble to accommodate rapidly increasing demand driven by influencer endorsements, the beauty industry has become more competitive than ever. Vogue Business reports, “The beauty industry has entered an era where virality drives sales at an unmatched speed — one beauty product is sold every two seconds on TikTok Shop, per the social media platform’s data.”²³ Brands such as Sacheu Beauty and Wonderskin have leveraged social media to turn single-hit products into booming DTC businesses almost overnight.²⁴ With beauty influencers regularly testing and reviewing products in real time, consumers no longer rely on in-store sampling or traditional advertisements, rather purchasing decisions can be made often within minutes of seeing a post or livestream. Furthermore, any new, viral product could disrupt the industry in just one day, forcing even the largest of brands to stay agile. According to Statista, TikTok Shops across the world achieved a GMV (Gross Merchandise Value) of about $2.5 billion in 2024 from beauty sales, making beauty products the merchandise with the highest amount of total sales made on the platform.²⁵ In response, established beauty companies are forced to partner with influencers to maintain market share as the industry is rapidly shifting.

Lastly, influencer marketing has fundamentally changed the competitive landscape by driving the market into smaller, more specialized niches. Traditionally, large corporations could easily dominate entire market sectors by utilizing mass media advertising and attempting to reach the widest possible audience. However, the rise of influencer marketing has made it much harder for these companies to control the market in the same way. Instead of leveraging one-size-fits-all campaigns, influencer marketing thrives on catering to specific, small groups of consumers. This shift has empowered niche brands to thrive, and shed light on groups of consumers that may otherwise have been overlooked. 

In the fashion industry, the rise of influencers with targeted styles has led to the creation of certain brands that focus on specific aesthetics or consumer needs. For instance, influencers promoting sustainable or ethically sourced fashion have paved the way for brands such as Reformation to grow. Reformation, with more than $350 million revenue as of 2023²⁶, caters specifically to conscious consumers, making it harder for fast fashion giants to maintain such large market shares. Reflecting this shift, the Global Sustainable Fashion Market is on track to reach a value of $33.05 billion by 2030 compared to $7.8 billion in 2023, with a compound annual growth rate (CAGR) of 22.9%.²⁷ Consumer awareness of environmental sustainability has shifted the market away from fast fashion oligopolies and toward products made from eco-friendly, organic materials. Reformation’s rise inherently forces fast fashion brands out from under the spotlight, demonstrating the democratizing effects of growth due to influencer promotions. It is clear that this strategy does not only pave the way for up and coming businesses, but redistributes power from the hands of industry giants. 

Similarly, a beauty company, Glossier, valued at $1.8 billion as of 2021²⁸, has capitalized on influencer marketing to separate themselves from larger beauty corporations. From the beginning, Glossier became highly engaged in a community of beauty enthusiasts through the founder’s blog “Into The Gloss”, and on platforms such as Instagram, that largely contributed to shaping the brand’s niche identity–promoting its minimalist, skin-first approach to beauty.²⁹ Now, Glossier’s products have become synonymous with the natural, dewy looks that many beauty influencers promote. By using an influencer-driven strategy, Glossier was able to carve out a specific niche in the highly competitive beauty industry. Glossier’s success exemplifies how influencer marketing can upend corporate monopolies, not merely coexist with them. These cases demonstrate how influencer marketing has fragmented the market, leading to higher levels of competition within industries and making dominance far harder to maintain. Traditional companies now face the challenge of not only competing against each other, but with an increasing number of smaller, highly targeted brands that are better equipped to meet the needs of their consumers. 

While influencer marketing has undeniably revolutionized advertising and is bringing competition to new heights, some experts argue that the fashion and beauty industries are inherently resistant to monopolistic control due to the low barriers to entry and their fast-changing nature. Social media often fuels the rapid shift in trends, and therefore consumer preferences, making it difficult for single companies to dominate for long. For example, Shein surpassed Zara in 2022, becoming the most searched fashion brand globally, topping the searches across 113 countries, despite Zara’s long-standing dominance.³⁰ Additionally, Gen Z, arguably the most influential consumer group, is known for its low brand loyalty and tendency to favor socially conscious companies that align with their values over established industry leaders. According to Forbes, only 37% of respondents referred to themselves as brand “loyalists”, and many said they would switch brands if another company aligned better with their values.³¹ This behavior demonstrates a high level of competition and market fragmentation rather than a cycle of monopolistic control. However, while these shifts suggest a disruption of traditional monopolies, they often result in the rise of new dominant players. Brands like Shein may challenge competitors such as Zara, but their overwhelming digital presence, as well as fast-fashion structures, reflect a reshuffling of monopolies rather than an entirely open, competitive market. Large corporations still maintain control over supply chains and advertising networks, which are areas smaller companies often struggle with. Even in a trend-based market, influencer marketing’s low barrier to entry and affordable prices open up opportunities for smaller businesses to gain exposure and credibility, sustaining competition without the resources used by massive corporations. 

Influencer marketing has played a significant role in reintroducing competition to the modern market by introducing an aspect of democratization, redistributing power from the hands of monopolistic companies. Through lowering barriers to entry for smaller businesses, shifting consumer trust from corporations to individuals, and accelerating decision-making and purchasing behavior, the market has become more fragmented and dynamic, as well as competitive. Looking ahead, the influencer marketing economy is on track to evolve dramatically with the rise of AI-driven content creation, virtual influencers, and the integration of new technologies such as virtual reality. These advancements could fundamentally disrupt the creator-brand relationship that has developed over the course of recent years. Corporations may begin owning digital avatars, blurring the line between authentic influencers and manufactured personas, potentially reconsolidating the power that influencer marketing once decentralized. Amid these transformations, new compensation models are emerging in which creators are not just getting paid, but securing equity stakes in brands they help build. This model shifts the influence of creators from sponsored voices to strategic partners. In a world where technology is revolutionizing at a rapid pace and social media is redefining the corporate landscape, it is crucial that influencer marketing is understood not just as a tool, but as the future of digital marketing.

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