The Dark Side of Influencer Marketing - the Role of Impulse Buying and Product Returns

Influencer marketing has grown into a $16.4 billion industry by 2022. More than 90% of companies consider influencer marketing as a critical advertising channel to promote their products and services. Identifying influencers who can authentically represent the brand and drive positive ROI remains the biggest challenge for marketers wishing to take advantage of this opportunity (Influencer Marketing Hub, 2023). However, influencer marketing, as well as other advertising channels, lead to product returns which can harm the profitability and sustainability, especially, for fashion retailers. For example, the perceived credibility and authenticity of influencers induce impulse buying behavior and often result in perceptions of regret and dissatisfaction towards the purchased product. Consequently, we expect for such perceptions higher return rates. To test this expectation, we combined sales data from a leading European fashion brand resulting from Instagram postings (with unique and directly attributable discount codes) of about 5,000 influencers with more than 45,000 sponsored postings leading to a preliminary revenue of €160,000,000 and product returns worth €89,000,000 resulting in a revenue of €71,000,000. By analyzing the textual components of the influencers’ postings for the brand we explore the sentiment and its impact on impulse buying behavior and product returns. We contribute to the marketing literature by investigating the effect of both the influencer and the sponsored posting characteristics on downstream return rates for the brand. Based on that, we derive recommendations for not only effective but also sustainable influencer marketing strategies.