Enabling creators and new commerce

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In the news

On Tuesday, Canadian digital marketing company Viral Nation announced that it had received $198 million in equity funding from Todd Bohely’s Eldridge Industries and Maverix Private Equity. The transaction valued the Canadian company at approximately $650 million.

Viral Nation specifically focuses on social media influencers and creators while working with some of the biggest tech companies in the world (Meta Platforms, Tencent, Coca-Cola, Walt Disney, Uber, etc.). The company — which apparently acts like a large agency with a software component handling background checks and creator talent — has been profitable since its inception in 2014.

Viral Nation is also in the NIL game. The company develops brands in conjunction with clients managed by its talent arm, including US college athletes. He also launched two direct-to-consumer cosmetics companies, one of which hit $20 million in annual revenue, according to a Bloomberg report.

The Content Creator Company

Viral Nation is one of the most successful incarnations of the companies that have become increasingly mainstream in recent years. The size of the global influencer market has more than doubled since 2019 — and reached a record $13.8 billion in 2021, per Influencer Marketing Hub.

One of the main concerns of companies is to create a culturally relevant content strategy. In today’s market, content needs to keep pace with culture shifts – which have arguably become faster than ever.

This translates into the need for real-time content strategies that often fall outside the traditional purview (or budgets) of marketing teams. Influencers and content creators on social platforms often solve this problem by trying to reach large audiences through individuals posting culturally relevant content. An example of this can be seen with MLS (TikTok) and the NFL (Instagram):

  • MLS: 2.5 million followers
  • Noah Beck (MLS Social Playmaker): 42 million
  • Washington Commanders: 1.6 million
  • Katie Feeney (social media correspondent): 7.6 million

Then comes the question of personalized content for consumers. According to a Forbes report, many CMOs pressure their organizations to personalize communication with their consumers. Creating consumer profiles for specific consumer targeting requires large data resources and sophisticated labeling.

Consumers differ based on ethnicity, gender, age, occupation, location, and many other demographic and psychographic factors. Developing content strategies for each of these “profiles” can result in massive spending on targeting tools. Instead, marketers can turn to influencers and creators who represent these different demographics to create pseudo-personalized content.

The last few years have accelerated the trend. The impact of the pandemic on the use of social as a form of distribution has seen massive tailwinds as consumers increasingly engage with social forms of entertainment. This led to an increase in time spent on social platforms across the board – and ultimately to an increase in the number of users on the platform.

Trade impact

Like so many other industries, commerce is increasingly moving online. And for many companies, much of that change happened all at once. For context: it took 10 years for e-commerce to grow from 6% to 16% of retail sales, but only eight weeks in March and April 2020 to gain the next 10 percentage points.

The global retail market is worth $25 trillion, with e-commerce accounting for around $9 trillion. For perspective, the global advertising market (impacting companies like Alphabet, Facebook, Snap, Twitter, and Pinterest) is around $700 billion, with digital advertising accounting for only half of that figure.

Many of the mechanics used by creators today are by no means new. Live trading has been around since 1986 when QVC was first launched. Since then, however, we have seen new models for bringing live commerce to the internet. The opportunity is enormous, as evidenced by the way the Chinese market has taken advantage of technology to create a new ecosystem.

In a 2021 consumer survey, two-thirds of Chinese consumers said they had purchased a product through livestream in the past year. Online commerce is already a $350 billion industry in China and is expected to grow 60% in 2021 to $550 billion – with almost half of products falling into the consumer electronics and apparel categories. .

Domestically, an ecosystem of apps has been built around the concept, ranging from standalone streaming apps designed for e-commerce to enabler apps enabling streaming across multiple platforms. Examples:

  • popshop live
  • Talkshop live
  • Shelf
  • Drop
  • CommentSold

TikTok, Instagram, Snapchat and YouTube have all embraced the trend and contributed to its adoption in the West. We anticipate continued growth as more technology is built around social commerce as it relates to live video shopping.

The previous decade saw the rise of influencer marketing – a concept based on the principle that people like to buy things that people they trust recommend. Estimates vary, but most studies find that around 50% of American consumers bought something because it was recommended by an online influencer. The online influencer market has grown 52% annualized since 2016.

The creators as a company

E-commerce has perpetuated another trend – the rise of direct-to-consumer (“D2C”) brands. In 2020, the D2C e-commerce industry was estimated at $111.5 billion and is expected to reach $175 billion by 2023.

Customer acquisition is one of the biggest challenges for companies using a D2C strategy. The average CPM (cost per 1,000 impressions) on Facebook has steadily increased over the past decade.

In order to decrease the overall cost of acquiring a customer, brands are again relying on influencers and creators to sell their products. Although estimates vary, most studies find that around 50% of American consumers have purchased something because it was recommended by an online influencer. This is where brands find arbitrage opportunities by leveraging “micro-influencers”.

These smaller digital influencers maintain highly engaged fanbases compared to their larger counterparts. Capturing specific customer bases through hyper-specific creator followings can significantly reduce equivalent CPM. Brands can then build large “cohorts” of micro-influencers to build a broad and diverse base of targeted go-to-market advertising strategies – all benefit from higher engagement from their respective bases.

An additional industry has grown in conjunction with digital marketing companies such as Viral Nation: marketing technology companies focused specifically on scaling larger micro-influencer programs. Examples include:

  • To smile
  • jules
  • CreatorIQ
  • Upfluence

Entire brands have been built on this strategy, the most recent being Glossier. In a 2019 interview on “Recode Decode” with Kara Swisher, CEO Emily Weiss mentioned that everyone on the Glossier platform is a creator and can act as a marketing channel for their product. This feeling – that anyone, regardless of their number of social media followers, has the ability to be a walking, talking billboard for a product or idea – is a key part of marketing Glossier.

“At Glossier, something we’ve always stuck to, from pre-launch, day one, is that every person is an influencer,” Weiss said.

We expect this trend to continue as legacy platforms (i.e. Facebook and Instagram) continue to see increases in CPMs, and new platforms provide unique opportunities for businesses.

Other related news

In addition to the companies and trends featured in this article, we’ve included a few additional items for context related to the creator economy:

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