Member preview

Welcome to the Influencer Economy

Credit: Mykyta Dolmatov/iStock via Getty Images Plus

Social media has forever changed how we interact with one another personally and professionally. It has also fundamentally changed our relationship with brands. The highest-volume and most-personalized advertising happens over Instagram, Snapchat, and YouTube — not traditional TV or print media. One result of social media has been the democratization of influence and creativity. We no longer need the approval of large corporations to determine what content is worthy of views. We can now simply put out content we enjoy making and let people decide what wins and loses with their views, clicks, and likes — we might even make some money too.

First Steps into the Future

The influencer economy has its roots in the blogging movement. Back in the 1990s, video and image content was not easily captured or displayed online like it is today. As a result, people only really had the option of expressing themselves through written word. Thus “weblogging” began in 1997. However, this first iteration was difficult to use. Only those with the technical chops to program websites could create blogs. This began to change in 1999 when sites such as Blogger were founded. The largest player in this sphere today is WordPress, which launched in 2003. Platforms like these allowed anyone to voice their thoughts, with no technical know-how required.

Of note, Blogger was literally the catalyst for Twitter and Medium, because Ev Williams helped found all three.

The Platform Revolution

As the internet matured and smartphones began their march toward ubiquity, the ability to produce content spread wildly. While the early blogger movement required cohesive stories and plenty of forethought, the next platforms did not. YouTube and Twitter introduced the world to possibilities beyond blogs. Twitter simultaneously expanded the sphere of writing and decreased its civility. While blogging requires hundreds to thousands of words per post, Twitter limited posts to only 140 characters. Anyone can fill 140 (now 280) characters without much thought.

With YouTube, anyone could produce video content about the niche areas they cared about. This had never been done at scale before and was a huge deal. Take Casey Neistat, for example. His life story speaks to work ethic, generosity, and happiness. He is a prolific creator and filmmaker. Today he is a standout in the YouTube community. You may know him for his airline review videos.

With 8,000,000-plus subscribers on YouTube and millions of views per video, he is a perfect example of what platforms have done for content. Is Neistat more talented at creating videos today than he was back in his film festival or HBO days? Yes, he has always been improving, but there wasn’t a sudden increase in skill. He’s been constantly honing his craft and unique style. The difference wasn’t so much the content, but the platform. YouTube provided a new and unique audience while simultaneously ending the dependency on gatekeepers who could nix a project.

Democratizing Content

Today anyone with a smartphone can create content about, well, anything. In the past, traditional TV had to focus on larger interests because it needed many viewers to be profitable. YouTube creators, on the other hand, have routinely produced fantastic content for markets as niche as anime commentary.

Why? For some people, a few hundred followers is huge deal. They don’t need millions of views or significant additional income to continue making content. They simply have a passion and follow it. And because there is a direct, if not always appropriate, feedback loop through comments and direct messages, these creators can tweak their content to better suit their audience on a day-to-day basis. This is a huge advantage over traditional media — an advantage brands took note of.

Top Brands Get Onboard

With the prompting of YouTube in particular, companies began sending their ad dollars to online video. This increased the amount creators were paid, which allowed them to produce better content, which increased the amount they were paid, and so on. This process has led more and more creators to the platform. And once brands got their feet wet with YouTube, they became more comfortable working with influencers, most significantly on platforms like Instagram.

The top earners on Instagram can earn tens of thousands to hundreds of thousands of dollars per post and are achieving fame on par with movie stars and professional athletes. And these influencers may even have more fame since they connect with their followers every single day. Not only that, but they also seem far more relatable and authentic than the majority of celebrities, because many grew up as normal kids who simply had a knack for social media.

Source: Forbes 2017

For the most part, we trust influencers’ opinions and believe them to be sincere when reviewing, recommending, or advertising brands. If they lose this trust, we stop viewing their content and direct our attention elsewhere. Brands (and their ad dollars) quickly follow. This is a fine line, but it provides an opportunity for influencers and brands to work together.

Consumers react best to ads we find personal but not creepy. Thus, connecting specific brands with specific influencers is a better way to make advertisement personal and relevant without the creepiness of targeting ads because we viewed a certain webpage once. If you consume a lot of content about baking through YouTube, Flipboard, and Pinterest, it is much more natural to want to buy brands that your favorite influencers use and trust than to buy the brand of mixers that simply bombards you with the most ads in your newsfeed.

The Future of Influence

In effect, influencers today run their own TV shows, fashion magazines, and newspapers. It may not be talked about like this yet, but it will be. Trends such as cable cutting prove that consumers are replacing traditional media with these newly democratized influencers and creators. But what is being talked about is how influencers are starting their own brands in their area of influence, such as makeup lines. And as it becomes more and more commonplace to produce content and earn money from it, more and more people will turn to influencing as a source of purpose and income. A creator will fill in every conceivable niche.

“You can make $70,000 a year talking about the Smurfs! “—Gary Vaynerchuk

This granularity will be powered by two factors: ubiquitous creation tools on the influencer side and advanced personalization technology on the brand side. These two trends will enable extremely nuanced and frictionless brand and influencer partnerships—a win for consumers, brands, and influencers alike. The end result will be that the majority of people will become influencers in one form or another. It will just be that easy of a process. Algorithms will continuously assess every social media profile’s worth to specific brands. An algorithm might assess that a given influencer’s post is worth $5 today because it is likely to lead to one sale in a certain demographic. Why would someone create a post for five bucks?

Five is better than zero.

And for someone just starting out in the world of influencing, $5 is a big deal.

The majority of influencers in the future may be on a relatively small scale—say, for people who love their city in Texas, but it will still be influence. Many of these people will have day jobs while they build personal brands and share their perspectives with others. Influencing will become the most popular side hustle.

In fact, over the next decade it will become far more common for founders and CEOs to document their personal brand, not just run their business. This is happening today at companies worth more than $100 million and scrappy startups. This is the next step on the path social media started us on.

Welcome to the influencer economy.