Influencers are out

The economics of celebrity partnerships and the rise of UGC
Now Reading:  
Influencers are out

Influence is, and always has been, an enigma. The concept dates back to the eighteenth century, when a potter named Josiah Westwood created a tea set for the Queen and branded himself as the “Potter of her Majesty” and gained the Royal Family’s first stamp of approval for a product. Coco Chanel was an influencer in the 1920s with her little black dress and pantsuit, and Michael Jordan proved the lucrative nature of celebrity partnerships when he endorsed Nike in 1984, increasing their sales by $70 million in the first year.

Pre-internet and through the read-only era of web1, the original influencers were top-down. Glossy magazines and brands dictated the trends, and the conversation and had the clout to tell us what we should be stanning when it came to fashion, lifestyle and everything else. But they quickly noticed the value of putting a face to a brand and transferred the responsibility of influence over to celebrities. 

Then Web2 arrived, and the everyday person was suddenly able to publish their thoughts and opinions online. We saw a counterculture arise in bloggers to challenge the media, press and celebrities that were dominating the public opinion.

The biggest bloggers were mums. Their online reviews of products for babies and toddlers proved more effective (or devastating) for brands than any other form of marketing or comms. This emergence and success of these kinds of bloggers scaled and transferred across industries, becoming what we now know as the influencer economy. 

In 2020, Rex Woodbury wrote about the evolution of influence, and why brands should be focussing on micro influencers. In it, he outlined the economics of influencer marketing:

So the cost of hiring 1,000 micro influencers performs way more efficiently than hiring 1 Kim Kardashian. This realisation that brands needed to focus on authenticity, intimacy and creativity over reach brought us the creator economy - further pushed by platforms like TikTok democratising content creation and virality. But the online generation are hypersensitive to the #ad, and many are still viewing brands leveraging creators as clunky and inauthentic. The key reason? Because most creators aren't actual customers of the brands they promote.

The rise of web3 has brought a new solution, empowering individuals to create and retain ownership of their content. And it could bring us ordinary people a new bag 💸 

Platforms like Kale and SwayPay are incentivising the creation of UGC, giving real customers the chance to earn just by talking about their favourite brands. It doesn’t matter how big your influence is or how many followers you have. In short, anyone can buy stuff, post about it, and get paid through one of these platforms.

People are 90% more likely to purchase a product that’s been recommended to them by a friend, and scalable, peer-to-peer UGC content 'engines' lean into this. Here’s why I think this is a very opportunistic space for brands:

1) Real customers become influencers and advocates

2) The content is culturally astute and feels native to the platforms and audiences, because it's made by people that know them best

3) There’s more trust in UGC marketing, because of the personal, intimate relationships between the creator and their audience

4) Brands can buy well-performing content to power ads, creating a new content creation channel and giving creators (customers) a new income stream.

5) Platforms like Kale incentivise trial of brands amongst new audiences (by looking at their algorithm and suggesting brands they might like), giving you a whole new tactic for acquisition that's mutually beneficial.

As we linger in limbo between web2 and web3, there’s more and more interesting things happening at the intersection between creators and commerce. But the definition of a ‘creator’ is shifting. Social media is free because everybody’s influence is invaluable to businesses and brands. So why not get paid for our contribution?

But we know marketing moves slowly, so I think we’ll most likely see the creator economy continue to dominate. Most brands will continue to focus on the largest, most influential creators and ignore the real consumers right in front of them. But the brands that will win will recognise that reach doesn't necessarily equate to influence, and bring a new layer of incentivisation and remuneration for brand and product advocacy online.

But will this result in a full circle back to the content style of OG social media content? Gnarly, lofi pictures of our breakfast? Dry, slow product unboxings? Clothing haul mirror selfies? As ordinary people are publishing more and more content under these incentive schemes, we should expect to see a huge variety in effort levels, content quality and levels of chaos within UGC creativ