Creator advertising is a clusterf*ck stuck in a bygone era.
It’s time to step up and fix it.
Today, 78% of creators rely on brand-partnerships as their primary revenue source. To keep their income flowing, they must oversee every aspect of their business from sales to legal, production, and finance. The harsh reality is that most creators spend more time in their back-office than on all other aspects of their business combined.
As many of you know, this problem is very close to me and, especially, my spouse, Samantha.
Sam had quit her full-time marketing role at Canada’s largest luxury retailer to fulfill her goal of being a professional creator. After growing her audience to 30k, nurturing relationships with brands, and developing a reputation for quality content, she quickly reached and then surpassed the income she was making in her former day-job — all through brand partnerships.
This is every creators’ dream come true and millions of creators aspire to follow in Sam’s footsteps. However, despite all of her success, Sam was on the road to burnout and on the brink of giving up.
Fixing the creator back-office
After knowing each other for years and hearing dozens of similar stories from Sam’s peers, we decided to build a solution to help fix the creator back-office. Earlier this year, we launched Clout Jam, a tool that used machine learning to take unstructured data from a creator’s inbox and transform it into actionable insights and organized CRM records.
Our hypothesis was that by removing ambiguity and surfacing the right information at the right time, we can take the pain out of back-office management, help creators win more brand deals, and enable them to earn more revenue.
In the first 6 months since launching, we analyzed 20k messages, documents, and contracts between creators and brands, only to find that mission-critical information, like content specifications, usage permissions, and key deadlines was often missing from transactional correspondence.
This was a discouraging find. After all — how can creators be expected to meet deadlines that weren’t communicated? How can they produce content to specifications that are not defined?
The short answer is: they can’t.
The “back-office problem” for creators is not so simple. Yes, creators are constrained by their ability to process the volume of transactional data arriving in their inboxes, but the real problem is something much bigger and more insidious.
Marketplace mechanisms are not designed to scale
Sponsored content from smaller creators outperforms trad digital by 10x, and larger creators’ content by 4x. This makes sense — smaller communities tend to be more authentic, more intimate, and more engaged than larger ones. I’ve seen this first hand with Sam personally replying to hundreds DM’s from members of her community on any given day (it’s hard to imagine a Kardashian doing the same).
All of this is why, although a few years ago marketers could work with a handful of influencers. Today brands connect, collaborate and transact with hundreds, sometimes thousands of creators at a time.
Obviously, processes designed around dealing w/ 1–5 creators does not work when you’re activating hundreds of influencers at a time. Every deal is a one-off and requires negotiating dozens of commercial parameters, which consumes countless hours of back and forth and makes contract lifecycles impossible to manage.
Influencer Contracts are antiquated, confusing, and often downright exploitative
It’s hard to imagine anyone with less empathy towards the realities of running a creator business than the legal teams who are responsible for drafting influencer campaign agreements for marketers. As a consequence, these agreements (if they exist at all) tend to be inadequate, asymmetrical, and oftentimes downright exploitative.
Most are repurposed from antiquated freelancers agreements and not remotely suited to define or enforce the terms of engagement between marketers and creators. In addition to being exhaustively long, they are filled with complex legalese and irrelevant requirements. Nearly all of these agreements lack terms essential to the fulfillment of a creator’s responsibilities. Things like production timelines, revision procedures, and content usage rights are either absent or exploitative.
As a result, it’s nearly impossible for creators to negotiate for their interests without outside legal assistance, which is prohibitively expensive in most cases. Instead, they end up signing terms that take significant value and leverage off the table.
The flow of marketplace funds leaves creators strapped for cash and sometimes footing the bill
Finally, let’s take a look at the flow of money through the ecosystem, which leaves a lot to be desired — especially for creators. What follows is the sequence of events required for a creator to get paid after collaborating with a brand via an agency.
The steps to getting paid:
- Creator signs contract for sponsor content campaign
- Creator produces and posts work for campaign
- Creator sends invoice to partner agency (T +0 days)
- Agency invoices marketer/brand client (T+ 7–30 days)
- Marketer/brand pays agency (T+ 37–120 days)
- Agency cuts paper check and sends to creator (T+ 45–150 days)
- Creator receives + deposits paper check (T+ 48–155 days)
There’s a lot wrong with this equation, but the first thing is time-to-payment. At best, it takes creators over 1.5 months between completing the work they were contracted for and getting paid. At worst, it takes a minimum of a half a year to get paid. Clearly there’s room for improvement here.
Secondly, creators are still getting paid via paper check (yes, you read that correctly). Why would marketers prefer such an antiquated payment method? It comes down to two things:
1). The legal structure of most creator businesses
2). Agency cash flows
Most nano- and micro-creators are not incorporated as businesses. As a consequence, marketers must go outside of their normal process and cut a check on a one-off basis to each creator on a campaign. The vendor payment and TRP systems that agency AP teams typically use to pay vendor invoices simply don’t work for creators.
Now let’s look at agency cash flows. It’s hard for agencies to pay for campaign costs incurred on behalf of their clients that are yet-to-be paid by brands. Although manual, cutting, and sending paper checks by mail gives agencies another 7–30 days to recoup their costs from clients, providing a much-needed buffer to prevent checks from bouncing.
We can’t continue to treat these market-wide problems at the symptom level. We must fix them at the source.
The industry is either at a breaking point, or an inflection point. We believe it’s the latter.
Today marks the first day of a new chapter for our team and the next phase of our journey as founders. Clout Jam (as we knew it) is dead.
I am proud to introduce Cloutdesk, the first platform that helps the 50 million creators connect, collaborate, and transact with the 10 million digital marketers around the planet. The launch of Cloutdesk is the just first phase of building the infrastructure layer for creator marketing. What comes now is even more exciting:
We’re building:
- Standardized Protocols to replace: one-off processes
- Smart Contracts to replace re-purposed Freelancer Agreements
- Payment & Cashflow Solutions to replace Paper Checks & Paypal
Our mission is to enable a world with more meaningful, accountable, and equitable relationships between creators and brands.
