Why influencer marketing remains a challenge despite rising brand investments

India's influencer marketing industry has become one of the fastest-growing segments of digital advertising, with brands allocating larger shares of their marketing budgets to creators than ever before. Yet bigger budgets have not necessarily translated into better outcomes.

Industry experts say many marketers continue to approach influencer campaigns with an outdated advertising mindset, chasing views, follower counts and creator volumes instead of trust, relevance and long-term influence. As influencer marketing matures, the challenge is no longer finding creators but understanding what actually drives consumer action.

One recent example was Flipkart's Glam Up Fest 2026. While the event successfully brought together thousands of creators under one roof, online conversations quickly shifted away from beauty products and brand discovery towards overcrowding, long queues and event logistics. For many marketers, it became a reminder that scale alone does not guarantee a positive creator or consumer experience.

Read On: Influencer marketing is everywhere. But how much are brands really spending?

Bigger budgets do not guarantee better outcomes

While influencer marketing is commonly described as a ₹3,000 crore industry, Kalyan Kumar, Co-Founder and CEO, KlugKlug, believes the actual market is significantly larger. "The industry has been calling this a ₹3,000 crore market, but the reality is closer to ₹10,000 crore, with most of it flowing completely outside organised structures."

According to KlugKlug's research, nearly 75 per cent of D2C brands bypass agencies altogether, building creator partnerships directly through Instagram DMs and comments. Several D2C brands now spend over ₹6 crore annually on influencer marketing, while some have crossed ₹20 crore.

Despite these investments, Kumar believes marketers continue optimising campaigns using incomplete audience data. "When intermediaries stack up, only 30 to 50 per cent of budgets actually reach creators."

KlugKlug's research further suggests that only 14 per cent of female beauty influencers actually have a majority female audience, exposing a major gap between perceived audience relevance and actual audience composition. Traditional attribution methods, including swipe-ups and link-in-bio clicks, also capture only a fraction of real consumer influence, leaving much of influencer marketing's impact unmeasured.

Kumar also highlighted the growing importance of credibility, particularly in healthcare and wellness.

"What started as long-form, serious medical conversations on YouTube has quickly moved into short-form, high-frequency content."

According to KlugKlug, more than 70,000 Instagram creators in India identify themselves as doctors. Including fitness creators pushes that figure beyond 90,000.

"Doctor creators operate at a different standard than typical influencers, and that is precisely what makes their endorsement worth something."

Read On: From reach to credibility: How influencer marketing is being rewritten

AI should enhance creativity, not imitate authenticity

Artificial intelligence is helping brands produce content faster than ever, but many are using it in ways that undermine the very authenticity influencer marketing is built on.

According to Viraj Sheth, Co-Founder and CEO, Monk-E, many brands are increasingly relying on AI-generated user-generated content that attempts to imitate real creators. "A lot of brands are using AI to generate UGC-style ads. It makes sense. It's faster, cheaper and easier to scale," Sheth said.

The problem, however, is that audiences are becoming increasingly skilled at recognising artificial behaviour.

"The smile lasts half a second too long. The excitement feels slightly rehearsed. The pauses don't feel natural. The lip-sync is not in sync."

Rather than disguising AI as real people, Sheth believes brands should use it where audiences already expect imagination, including fantasy worlds, impossible visuals and stylised storytelling.

"Don't try to mask off a real human with AI-generated content. That just looks distasteful."

Stop paying for views. Start measuring attention.

Even brands that get the creative right may still be evaluating campaigns using the wrong metrics, according to Vikas Chawla, Co-Founder, Social Beat, the digital marketing agency recently acquired by Cheil Worldwide South West Asia.

Chawla pointed to changes in how short-video platforms count views. Platforms such as YouTube Shorts, Instagram Reels now register views much more easily than before, inflating campaign numbers without necessarily increasing audience attention. 

Instead of celebrating large view numbers, brands should focus on metrics such as average view duration, engaged views and audience retention, which offer a much stronger indication of genuine consumer attention and purchase intent.

"Influencer pricing built on view counts is overstated. You're paying for scroll-pasts," Chawla said.

Read On: How India's influencer marketing is being rebooted from the ground up

Brands are still confusing reach with influence

According to Ayush Shukla, Founder, Finnet Media, today's influencer industry is repeating many of the mistakes traditional television advertising made decades ago. "The creator economy is making the exact same mistakes the TV advertising industry made in the 1990s at 10x the speed," Shukla said.

The biggest mistake, he argued, is confusing reach with influence. Much like advertisers once bought prime-time television slots purely based on audience size, marketers today often prioritise follower counts without asking whether audiences genuinely trust the creator or whether those followers are even relevant to the brand.

Measurement remains another weak link. While platforms provide detailed analytics dashboards, the industry still lacks a common framework that consistently links creator campaigns to business outcomes such as customer acquisition, purchases or lifetime value.

Shukla also believes brands continue to treat creators as inventory rather than strategic partners. "Many brands still treat creators as one-time deals. No long-term partnerships, no real alignment, no shared upside."

He pointed out that several creators with audiences running into the millions still do not have a single long-term brand partnership. "The talent is the asset. Treating it like a commodity produces commodity results."

According to Shukla, brands investing in stronger measurement systems and long-term creator relationships today will enjoy a significant competitive advantage over the coming years.

Stop advertising products. Start creating moments.

Even when brands choose the right creators, many continue producing content that feels like traditional advertising.

According to Shudeep Majumdar, Co-Founder and CEO, Zefmo, this is particularly common among food brands. "Most food brands think influencer marketing equals pretty photos of their product. They're wrong."

Instead of polished product shots and scripted endorsements, creators should naturally integrate products into everyday situations, allowing consumers to picture themselves using them.

Majumdar recalled one campaign where an influencer casually shared a "midnight hunger fix" instead of posting a conventional product advertisement. The content generated four times more sales than eight professionally produced food advertisements.

Why did it work? "People don't buy food from logos. They buy from someone who sounds like their friend saying, 'Trust me, this is good.'"

Rather than focusing solely on ingredients or product features, brands should create relatable consumption occasions that audiences recognise from their own lives.

"Time now to stop selling ingredients. Start seeding moments instead."

As influencer marketing enters its next phase of growth, agencies believe the brands that succeed will be those that move beyond vanity metrics and transactional creator partnerships.

In an ecosystem built on trust, relevance and community, authentic storytelling, credible creators, meaningful engagement and long-term relationships matter far more than reach alone. The marketers that embrace that shift will be better positioned to generate lasting business impact from the creator economy.