Powering the Influencer Economy in Southeast Asia

PuiYan LEUNG

Published in

Vertex Ventures

11 min readJun 15, 2021

Evolution of the Influencer

“What do you want to be when you grow up?” Some answers to this question are timeless — or so we thought.

If the question was asked one or two decades ago, popular choices would include doctor, teacher, banker, lawyer or even astronaut. However, this seems to have changed. A 2019 survey by toymaker Lego amongst 3,000 children between the ages of eight and twelve in the US, UK and China revealed that 1/3 of them aspires to be a Vlogger or YouTuber, and these roles are ranked as the top career aspiration in both US and UK [1]. While the survey cannot necessarily be applied to all children globally, the results demonstrate an undeniable influence of social media and digital technologies, as well as the increasing significance of the influencer economy at a broader level. And that is not surprising. Globally, there are around 50 million influencers or creators on YouTube, Instagram, Twitch, TikTok and other social media platforms today [2]. News of influencers (from nine to ninety years of age) raking in millions of sponsorship dollars are no longer raising an eyebrow.

This concept of leveraging the power of influential figures to promote an idea or a product predates the modern era. In 1765, British potter and porcelain maker Josiah Wedgwood made and received recognition for a royal tea set for Queen Charlotte. The royal endorsement propelled the Wedgwood brand to luxury status instantly and its products are still considered fit for the royals today [3]. Since then, brands have worked with a variety of fictional characters (think Santa Claus) and celebrities (think Michael Jordan) to sway consumers’ decisions in their favour.

The word “Influencer”, however, only entered the modern vocabulary in the past decade. In fact, it was only officially defined in Dictionary.com in 2016 and the Merriam-Webster dictionary in 2019 [4][5]. Today, influencers can be seen as individuals who have the ability to change people’s minds, or affect purchasing decisions because of their authority, knowledge, position, or relationship with their audience. Driven by advances in digital and mobile technologies, shifts in pop culture and consumer preferences, the role of an influencer has evolved significantly in the past decade. WGSN, a trend forecasting and consulting company, elegantly summarised this shift where influencers today are no longer just social media stars but advocates (Figure 1) [6].

In the early 2010s, influence was top-down and aspirational, driven by the celebrity culture and empowered by visual platforms such as Instagram. Since mid-2010s, new consumer attitudes have emerged. An increasing awareness of social issues and inequalities, coupled with the rise of participatory platforms (i.e. TikTok) and proliferation of misinformation, consumers today are seeking substance and authenticity over superficial voices. At the same time, the lines amongst celebrities, creators and thought leaders are blurring. Touted as advocates, these individuals engage their audience through a mix of information and entertainment; and play their role in influencing with authority, expertise, authenticity and values.

Influence today is more long-tail, peer-driven and horizontal, rather than hierarchical as compared to a decade ago.

The Influencer Economy : East and West

The Influencer Economy can be interpreted as a model where influencers leverage their influence to make money. The term Influencer is used interchangeably with Creator in this article, although it is worth noting that various opinion leaders have also put forward specific definitions to distinct the two.

A classic approach for brands to collaborate with influencers is to leverage them as media channels, paying them for their reach, typically based on an agreed number of social media posts. While it was a nascent concept a decade ago, influencer marketing has gone mainstream and worked its way into the toolboxes of major brands and corporations today. In 2021, a survey done by Influencer Marketing Hub amongst 5,000 marketing experts revealed that 40% of respondents allocate at least 20% of their total marketing budget on influencer marketing [7]. Globally, the influencer marketing sector is expected to grow at a CAGR of 32% to reach USD 24B by 2025 [8].

That is just the beginning of the Influencer Economy’s growth. What is more interesting to note is the traditional approach in monetising influence may represent only a slither of the true potential of the Influencer Economy.

Looking east, Chinese internet users have developed their own take on the social media ecosystem and influencer market. Firstly, Chinese social media platforms truly embrace the mobile-first philosophy and are optimised for instantaneous sharing. Secondly, China’s influencers have developed a unique ability to provide immense entertainment to their audience through content and real-time interactions. In return, these influencers enjoy handsome rewards in the form of tips and virtual gifts. Also, the Chinese tech companies have successfully blurred the lines between social media and e-commerce. The highly interactive nature of live streaming commerce provides brands and influencers with real-time insights of viewer’s preferences, and allows shoppers to enjoy spontaneous shopping experience (Figure 2) [9].

This phenomenon has enabled influencers to create their own brands and sell their products directly to their fan base, and also paved the way for an entire new class of tech-enabled companies capitalising on this growing opportunity. China’s live commerce market have exploded from under USD 3B in 2017 to over USD 144B in 2020 and is showing no signs of stopping [10].

Southeast Asia : Fertile Ground for the Influencer Economy

Home to over 650 million people and drawing influences from both East and West, Southeast Asia is a fertile ground for the Influencer Economy [11]. According to the 2020 e-Conomy report, Internet usage in the region continues to multiply, with 40 million new users added in 2020 alone. The digital economy remains resilient in the face of a global slow down and the growth of eCommerce and online media sectors were in fact accelerated by the COVID-19 pandemic. As countries reopened, churn from new users have not increased significantly, indicating that many of the customers are here to stay [12].

The regional demographics is also young and being true digital natives. These Gen Zs have little or no memory of what the world was like before smartphones, social media and instant access to information.

There are more than 380 million social media users in the region spending an average of 2–4 hours a day on various social media networks. Similar to their global counterparts, consumers in this region are actively seeking out reviews and trusted voices when making purchasing decisions, with around 40–60% of the Southeast Asian internet users using social media as a main source of information when researching into brands [13].

Although English is widely spoken and understood across Southeast Asia, localised content thrives, especially in countries like Indonesia, Vietnam, and Thailand [14]. In addition, while Facebook, Instagram, YouTube and up-and-coming TikTok are wildly successful in the region, other platforms like LINE and Zalo are enjoying a strong reach and engagement in specific markets.

Given the above, the macro conditions are favourable to propel the Southeast Asian Influencer Economy into a multi-billion-dollar industry within the next few years [15]. Ample opportunities will rise for local influencers and enablers to advance in this growing sector.

The Influencer Toolkit

The Influencer “stack” have been illustrated in numerous ways by industry experts, both from the brands’ perspective and the creators’ point of view [16][17][18]. The figure below summarises the toolkit empowering these creators. The assumption here is that if a creator is able to create high quality content and build a growing and engaged audience base, then monetisation opportunities — including brand dollars — will materialise.

There are several key steps in the creator’s lifecycle [16]:

Create Content — Companies in this space are building stand-alone tools to help creators produce quality content in more efficiently. An abundance of tools is available globally for every content format, including photos, videos, audio, livestream and gaming.
Build Audience — Creators typically leverage mainstream social media networks and aggregators to find their audience, including international platforms such as Instagram and Facebook, or regional platforms like LINE and Zalo.
Monetise Audience — These companies focus on helping creators extract a financial value out of their audience. Players in this space include the traditional talent representation agencies and influencers marketplaces that source brand deals and appearances for the creators, as well as newer players helping creators monetise through the sale of online courses, members-only content, fan interactions and donations. 17Live, a Vertex Ventures Southeast Asia & India (VVSEAI) and Vertex Growth portfolio, enables creators to monetise through in-app gifts, amongst other methods.
Manage, Measure and Analyse — These tools are designed to help creators run their businesses. Some are focused on specific functions (i.e. CRM and analytics) while others aim to provide creators with an all-in-one platform to run their entire business. For example, “Link in Bio” is increasingly seen to be crucial for creators who build their influence on social media platforms and monetise off-platform. Andreessen Horowitz Partner Andrew Chen tweeted in late 2020 that “Link in Bio” will be the new battleground for start-ups targeting creators [19].

Beyond that, the creator economy also includes vertical creator platforms that are purpose-built for a specific medium, and many of them are well funded. These include the likes of TikTok (short-form mobile videos), YouTube (longer-form videos), Instagram (photos and stories), Masterclass (online courses) and Clubhouse (audio conversations). VVSEAI led the Series A funding of KukuFM, an audio content platform that empowers creators to publish and monetise audio-based entertainment and knowledge-related content.

What will the future hold?

When the COVID-19 pandemic began to spread across the globe in early 2020, many believed that would ignite the end of the global Influencer Economy as brands slashed marketing budget to conserve cash. The opposite was true — globally and in Asia.

The pandemic accelerated digital consumption and purchase, resulting in brands, big and small, adapting to the new normal. Marketers expect this trend to continue post pandemic, driven by a combination of factors such as changing consumer behaviour, growing sophistication of data and analytics, and tighter overall advertising budgets [20][21][22].

In the face of the pandemic, there has, however, been a subtle shift in the style and tone of influencers and brands. As travel plans, parties, dining and glossy lifestyles were put on hold, brands and influencers alike are becoming more authentic and purposeful in their communications. In US, Procter & Gamble collaborated with a creator to choreograph a dance that promoted safe distancing practices like self-quarantine and social-distancing. In Singapore, a similar #DoTheLifebuoySG campaign ran on TikTok, where influencers performed a dance routine to remind their followers to wash their hands [23][24]. WGSN forecasts the rise of a new class of influencers (the “Genuinfluencers”), will offer a more genuine source of information and inspiration to their followers. As consumers expect more authenticity, brands and organisations will utilise Genuinfluencers as their advocates for transparency to provide clarity on thorny topics [25].

The ways in which creators will monetise their influence will also continue to evolve. Members-only content, fan interactions, virtual goods, online courses and commerce only represent what we know today. One can only be assured that the sky is the limit as far as how creative the industry can get in developing new revenue streams.

Los Angeles based start-up NewNew launched a “human stock market” where fans can pay to vote on a creator’s day-to-day decisions. PearPop is a platform where fans and aspiring creators can pay TikTok influencers to collaborate on content. The company recently raised a USD 16M Series A in Apr 2021 with Hollywood celebrities joining the round [26].

Moving over to the cryptocurrency side of things, we note the rise of Non-Fungible Tokens (NFTs), which are one-of-a-kind digital certificates of ownership representing a specific good or asset. NFTs promise the potential to create an entirely new world of intellectual property and copyright royalties for creators. Not only does a NFT provide a creator with direct access to their fans without middlemen, it also provides creators the possibility to continue earning a share of any profits every time an NFT is sold. Digital artist Beeple famously sold a collage of 5,000 digital images for USD 69M.

To the sceptics, these shiny new ideas may look like speculative gimmicks rather than legitimate business models. Even before the wild ride of NFTs began, many have raised ethical concerns over the practices in the influencer industry, ranging from the fraudulent use of bots to fake followers, to spreading misleading information and the failure by brands and influencers to clearly identify sponsored content. Due to these concerns, authorities have established guidelines around influencer marketing and some markets, like China, have further tightened them [27][28]. As the sector continues to develop, we expect the regulatory landscape to mature, demanding accountability from both brands and influencers and offering more protection to the consumers.

Summing it up

The Influencer Economy is here to stay and will continue transforming and morphing as technology, consumer preferences and values evolve. As NotBoring author Packy McCormic — a creator in his own right — puts it, “People follow people, not companies” [29]. As human beings, we have the innate desire to follow people we trust. There is a market for influencers of all types, regardless of the size of their audience. As investors, we continue to pay attention to how companies are enabling influencers and creators to turn their skills, expertise and passion into scalable businesses.

Enjoy what you’re reading? Stay tuned by signing up below.