The dawn of a new influencer economy
Influencers, creators, marketers and social platforms exist in a symbiotic – and largely profitable – relationship. Yet if we follow the money, the next decade of influencer marketing looks quite different from the last.
A new influencer economy for the 2020s is emerging. And with influencers starting to make money via direct selling, subscriptions and membership models, tipping and gifting, the pressure is on brands to keep up.
Social commerce is transforming platforms into the new mall. Instagram already enables brand owners to sell directly within the app, and now influencers are looking to get a slice of the action. Soon, influencers will be selling directly on established platforms – either their own products or products from preferred brands. Instagram is already testing ‘Shopping from Creators’ with select influencers having access to its ‘checkout’ feature to make transactions easier and save influencers’ time. If the traditional social platforms don’t provide the right experience, or if commercial arrangements aren’t attractive enough, other platforms will. Some, like Depop, already are.
Depop is a social app where users can see what clothes their friends and people they are inspired by are liking, buying and selling. It offers social shopping for second-hand clothes with users reselling items, many of which are barely or never worn. More than this, however, sellers can put together a whole look for someone. Depop has 13 million-plus users and it has handled $500m-worth of gross merchandise value since launch.
Storr, developed to facilitate peer-to-peer retailing, has a different model. It enables users to buy new, brand-name products directly from their friends or from people they follow. Brands handle shipping and returns and people make a 15-25% commission instead of traditional retailers earning the commission. It’s free to open a store and people can buy from each other directly within existing channels like Instagram, Twitter, or Facebook as well as on the web and on the Storr app.
Adidas has used Storr to enable its Creator Club members – an exclusive club for influencers which it provides with exclusive deals and first drop products and works with as retail partners – to resell its products.
As well as selling things, influencers are also exploring ways to sell access to themselves, or their content and creative output. Some are charging people to be added as ‘close friends’ on Instagram, for example. But there are also platforms that enable influencers and creators to build membership-based business.
BuyMeACoffee, for example, is a way for creators to receive support, share exclusive content, sell digital downloads and more. The central idea is that if enough people can pay the price of a coffee each week or month, then the creator or influencer can make a living and continue making their artwork, video, writing or music without the need for sponsorship, or another job.
BuyMeACoffee offers a range of templates to help creators promote themselves and set different membership tiers for different levels of access. Other platforms have a similar approach – Patreon, for example, which claims it is on track to pay out around $1bn to creators this year.
Tips and gifting are another monetisation opportunity being explored by influencers active in more of an entertainment environment, including social entertainment platforms such as Twitch or TikTok.
On Twitch, the Amazon-owned platform which allows its 15 million-plus active daily users to watch live streams of other people playing video games, those watching can tip players for good game play. They do so using Streamlabs, an app which also helps live streamers monetise via tips on Mixer and YouTube. Between 2017 and 2018, Streamlabs estimates the tips it paid out on Twitch alone rose 40% to $141m.
On TikTok – which does not enable creators to earn money from views, as YouTube does – a group of creators selected by the app can make money in a similar way by asking viewers watching that creator for a virtual gift. Between August 2018 and October 2019, $22m was spent by TikTok audiences gifting TikTok creators in the US, according to Apptopia.
What’s interesting about all this is how traditional social platforms are responding. YouTube, for example, announced that users could buy virtual stickers to give to YouTube creators – a direct response to tipping on TikTok and Twitch.
As influencers monetise by becoming retailers and creators through tips and gifts, or paid membership businesses, the obvious question is: where’s the opportunity for brands? The answer lies in updating their understanding of and approach to the influencer economy.
Until now, brands have helped influencers, creators and the social platforms monetise by using advertising-style metrics, paying for reach or perhaps an agreed number of posts. If brands are not able to sponsor content or have paid partnerships with influencers and creators, they will need to think about how to truly add value to a membership circle.
Or perhaps a retail partnership model will emerge, with brands providing exclusive products to individual influencers. Exclusive access to specific products that other influencers don’t have adds value to an influencer’s community and retail offering. The opportunity for brands in tipping and social entertainment is less clear-cut. But brands could ask creators to integrate their brand, product or message into the entertainment itself.
Recently, we engaged the gaming community on Fortnite on behalf of WWF by creating an in-game challenge that reflected the environmental message of WWF. Wendy’s, which doesn’t use any frozen beef in its burgers, created a character who roamed the world of Fortnite smashing up the freezers wherever they found them – another example of successful in-game integration.
Without doubt, the influencer economy is changing. For brands wanting to continue to harness influencers’ power, fresh challenges must be addressed. Advertising metrics will be needed that are more appropriate to influencers’ emerging monetisation strategies. But make no mistake, new opportunities await those that understand and respond to the market’s shifting dynamics.
This article by our Co-Founder and Group CEO, Nathan McDonald, first appeared in WARC.