There’s a very real dichotomy going on in the creator economy—brand dollars are increasingly being poured into influencer deals, while at the same time agencies centered on influencer brand partnerships are struggling. 

Take Sway Group, for instance. The influencer marketing agency laid off seven people (or about 30% of its small staff) in March, “due to changing business needs,” Danielle Wiley, its CEO, said in an email. 

And Sway Group isn’t alone. Others, such as Hermana and MG Empower, have also recently had to consolidate or significantly pivot their business models to stay afloat. For some influencer marketing agencies, that means adding new services for clients such as user-generated content (UGC) and affiliate capabilities. Others have scaled back their brand partnership services, or have been acquired by larger agency holding companies.

“What brands are looking for is this one-stop-shop destination, because influencers touch upon every part of the business,” said Lindsey Gamble, associate director of influencer innovation at Later Influence, an influencer marketing platform previously known as Mavrck. It merged with social media management platform Later (now called Later Social) in January. 

“Now, you’ve got to do more than influencer marketing,” he said. “Brands want that creative strategy—they don’t just want execution. They want to work with the team to come up with a creative strategy, not just look at a database of influencers. And that’s why a lot more agencies that historically just focused on your traditional creative shops and paid media are now launching influencer marketing, too—because those brands not only want them to handle their social presence, but their influencer marketing as a whole.”

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Mattress brand Naturepedic is one such brand. “We found it easier to consolidate our marketing strategy under one partner agency that could do it all well, versus having several disjointed agencies that aren’t aligned on strategy and execution,” Arin Schultz, VP of marketing and sales, wrote in an email. 

Naturepedic hired its PR agency, SolComms, in May 2023, and since then has expanded the agency’s remit several times, including for influencer marketing services, affiliate marketing and events, Schultz said.

“Now, all of our strategies sing from the same tune,” Schultz continued.

Consolidating influencer efforts

DTC hair color brand Hally Hair previously worked with influencer marketing agencies such as Intern Queen and Kyra for its influencer marketing activations, including its college ambassador program and Barbie influencer campaign, respectively. It has also opted to consolidate its influencer marketing operations, Kathryn Winokur, its founder and CEO, said in an interview. 

Hally has since taken some of its influencer capabilities in house, but Winokur said that the brand plans to work with its PR agency for future larger-scale influencer activations rather than contracting an external agency again.

“That is a trend that we’re seeing more and more, because PR has also changed so much that a lot of the firms have dedicated influencer resources as well,” Winokur said. Hally started working with Foundation for its influencer services late last year, per Winokur. 

“Before, you had separate influencer marketing agencies and platforms where brands would go for dedicated services related to influencer marketing,” Later Influence’s Gamble said. “But now, influencer marketing is touching pretty much every aspect of digital marketing.”

That desire for consolidation is impacting smaller influencer marketing agencies that once focused on influencer-brand partnerships. Influencer agency Hermana, for example, over the past year made the switch from being an influencer marketing company that worked primarily with brand clients to a talent management company that works primarily with creator clients, said Kayley Reed, its founder and CEO.

While both arms of the business previously existed in tandem, Hermana has opted to do away with its influencer marketing arm and go all-in on its talent management arm. “We noticed that we were making a lot more revenue managing influencers directly,” Reed said.

The change came after Reed noticed a lot of smaller brands starting to take their influencer marketing efforts in house as influencers started charging more money for their content. As rates rose, small-to-medium-sized businesses (SMBs) started “focusing more on UGC content and partnerships versus investing in influencers posting to their audiences, because they were getting way more value out of that,” Reed said.

That trend spelled trouble for an agency like Hermana, which spent years developing a specialty in influencer marketing for SMB clients, including the meditation app Calm—hence the talent management pivot. Since pivoting away from influencer marketing and going all-in on talent management, Reed said Hermana’s primary clients are large brands with the budgets to use influencers as brand awareness levers, including Nintendo, Microsoft and Amazon. 

While there’s “more money than ever” in the creator economy, Reed said, at the same time, the needs of brands have shifted. “Agencies really need to keep up with those needs in order to be competitive,” she said.

Influent—the TikTok influencer brand partnership agency that got founder Julia Montgomery on the Forbes 30 under 30 list for marketing and advertising in 2023—recently shut down, Montgomery (an influencer herself) confirmed to Ad Age. 

Look back: Agencies adapt to brands’ focus on creators

Until recently, brands chiefly turned to influencer marketing agencies for help connecting them with creators who could turn around sponsored social media posts, a process that was often siloed from the rest of their marketing strategy, said Keith Bendes, VP of marketing, strategy & growth at influencer marketing agency Linqia. Now brands are putting more of their marketing budgets toward creators and increasingly extending those influencer partnerships beyond social media posts to mediums such as digital out-of-home and connected TV, he said. 

“The need for a partner who understands that [creative marketing] ecosystem—who even has production chops to understand how to film content or how to adapt creator content for those different placements—is becoming way more extensive,” he said, “versus [an influencer agency] just finding talent and having them post and execute an influencer campaign.”

For Linqia, surging interest from brands looking to weave creators throughout their marketing has translated into an increase in agency-of-record relationships between Linqia and its clients, Bendes said. “Now, for most of the RFPs that come in, there’s an element of AOR to them,” he said, which was rarely the case just three years ago. 

The majority of those requests for an influencer AOR have been from larger, enterprise brands that lack an in-house influencer marketing arm and are looking for assistance with everything from social listening to talent sourcing, Bendes said. And though a handful of clients began entering AOR relationships with Linqia in 2022, the volume of brands working with Linqia as their influencer marketing AOR accelerated dramatically in 2023, he said.

Influencer marketing agency Obviously has also seen a recent spike in the number of clients seeking AOR relationships and working with them on an RFP basis, said Mae Karwowski, founder and CEO of Obviously, which was acquired by WPP last year.

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Karwowski attributes part of the shift to brands looking to “standardiz[e] influencer marketing” and structure their influencer agency relationships in the same way as more traditional creative or media agencies. 

“[Influencer] budgets have grown so significantly,” Karwowski said. “Before, we could be kind of under the radar because [brands] weren’t investing to the level they are now. Now, they’re like, ‘Okay, we’re planning on investing several millions, and we need to make sure that we’re really correctly vetting, and procurement’s involved now.’ It’s just, I think, part of the standardization now that influencer marketing is a clear part of the overall marketing mix.” 

Linqia has expanded its business model in the past two years to keep up with the demand for an influencer agency that can also handle creative strategy and areas of working with creators beyond just sponsored posts, Bendes said, from creator content produced for clients’ social channels to additional mediums such as CTV and experiential marketing. 

“The agencies that are pure execution, their margins are getting squeezed, [and] the agencies that don’t have strategy, they’re getting in trouble because the creative agencies are taking their business,” said Jamie Gutfreund, founder of influencer marketing consultancy Creator Vision. “Brands don’t want a creator agency and a creative agency if they can help it. So, the creative agencies are just adding influencer [capabilities].”

With brands investing more in influencer marketing, “what’s really important [to them] is to have strategy,” Gutfreund added. “If you don’t have strategy … it’s just a human banner ad, basically.”

Holding companies have increasingly snapped up influencer marketing agencies to work alongside their creative agencies. In March 2023, WPP acquired two different influencer agencies within five days: Obviously and The Goat Agency. Obviously’s team joined the VML network, while Goat merged with GroupM’s existing influencer marketing offering, INCA. And in February 2022, WPP acquired influencer marketing agency Village Marketing, which joined what was previously Wunderman Thompson.

“Clients no longer need to be convinced that influencers can provide a real ROI,” Mona Munayyer Gonzalez, chief growth officer of independent creative agency Pereira O’Dell, told Ad Age in November. “They’re now much more interested in how an agency partner can help find authentic macro-micro influencers and build a collaborative dialogue with them.”

Adapt or struggle 

Influencer marketing agencies that haven’t kept up with brands’ growing demands for agency partners that can incorporate creators into their overarching marketing strategy have struggled. U.K. influencer agency Tailify, for example, announced last month in a note that it was “seeking advice from insolvency practitioners”—or, in simpler terms, working to figure out how to pay its debts. 

Some influencers say they are still waiting to collect outstanding payments from the agency for work they did months ago. When one nano-influencer said in a TikTok video that she hasn’t been paid the $5,000 she’s owed for content she created for a brand through Tailify, three other creators chimed in, saying they’re also waiting for their pay.

Tailify did not respond to a request for comment. 

And in February, another U.K.-based agency, MG Empower, was acquired by the DXG Group after the agency entered into administration—something a company does when it’s unable to pay its debts or other expenses.

“This decision translates into the commitment to safeguarding a vision and nurturing and evolving MG Empower’s position as a driving force in the marketing industry,” an MG Empower spokesperson wrote in an email. “The partnership with DXG is expanding the impact of our service offerings and fostering a culture of innovation while MG Empower continues to provide wider support to global brands’ challenges and goals.”

Other agencies have restructured their offerings to meet shifting client demands or expand into other business areas in the influencer industry. Whalar Group, for example, recalibrated its U.S. brand partnerships division in late 2023, cutting 17 positions focused on new business acquisition and replacing them with new creative strategy roles. The company is leaning heavily into adding creative marketing capabilities to its offerings this year, as reflected by its hiring of its first chief creative officer, Christoph Becker, earlier this month.

Adjusting for slower growth

Forh, an influencer marketing company founded in 2012, has worked with clients including Sephora. At the start of 2023, it determined that it would have to make some adjustments to its business.

“We realized that last year was going to be unpredictable, and that it was unlikely that we would experience the large growth that we had historically [experienced] basically every year since we started the business,” James Nord, Fohr’s founder, said in an interview.

Fohr’s revenue “nearly doubled” from 2021 to 2022, a company spokesperson said. And from 2022 to 2023, annual revenue grew somewhere between 50% and 70%, according to Nord’s rough estimates.

But that kind of strong double-digit revenue growth didn’t continue in 2023: Nord referred to year-over-year revenue growth from 2023 to 2024 as “negligible.” He claimed that this stagnation happened for a few reasons, including the advent of AI and the general economic uncertainty in 2023 that caused brands to stop spending on influencer marketing services and consolidate agency relationships. 

As a result, Fohr has adjusted its services and offerings to better meet clients’ new needs. Updates include expanded services around content creation and UGC, affiliate and bottom-of-funnel tracking and a new campaign structure that the company asserts allows quicker turnarounds to meet of-the-moment trends.

Thus far, Fohr feels confident about the pivot. The company just had its biggest quarter ever, with first-quarter revenue up 25% from a year earlier, a spokesperson said.