Influencers have changed the ad industry. Now what?

The following is a transcript of the video.

Narration: Do you struggle to keep up with all the latest memes and internet trends?

Tania Bryer: Before 2020, Munya Chawawa was a relatively unknown comedian.Â

But that changed quickly, as people were forced to stay home, and inevitably spend more time online.Â

Chawawa’s news parodies and satirical characters on TikTok and Instagram made him a viral sensation – and some would even say, an influencer.Â

Munya Shawawa: The word ‘influence’ is quite interesting, because there’s a slight stigma attached to it. Some people sort of associate that word with a certain level of being vacuous or superficial. But if anyone refers to me with that term, I’m sort of thinking about the 10 years before I built a profile where I had to learn to edit, to write, direct, to act. And so in that sense, it’s quite reductionist.

Tania Bryer: The creator economy is expected to be worth $528 billion by 2030. And at the root of that economic boom is their relationship with the advertisers.Â

Munya Shawawa: The creative economy is booming. So, everyone’s releasing stuff all the time.Â

We’re now sort of recognizing them as sort of key pawns on the chessboard of marketing.”Â

Tania Bryer: So how did we get from this to this?Â

Do you remember this Coca Cola commercial?

Commercial plays

Tania Bryer: In 1994, it was considered groundbreaking – using an ad to flip gender roles on their heads.

Ads had already been around for a long time, but initially, were informative and dry. Then they started to become more entertaining, and by the 1980s and 90s, they hit their stride, using jingles, catchphrases, and story arcs that permeated pop culture.Â

Commercial plays

Tania Bryer: Until recently, ads exclusively appeared across traditional media channels: radio, TV, print and billboards. Which meant if you wanted to get your product in front of a lot of eyeballs, you were going to have to go through mass media companies to do so.Â

Richard Edelman: The idea somehow that information comes from top down is done.

Tania Bryer: Richard Edelman is the CEO of the world’s largest publication relations agency, Edelman.Â

Richard Edelman: They’re no longer just watching mainstream media. They’re on their phones. They’re somehow interacting with brands through the prism of influencers, and it gives them a way to talk back. They’re not just talked at.

A consumer is now really considering what his or her friends are doing, what impact it means to carry a brand badge around, fashion, food and beverage.

Tania Bryer: Joe Gagliese is CEO of influencer talent agency Viral Nation.

Joe Gagliese: There’s been a very large media establishment that’s worked really well for a long time globally, and I think that creators are the largest disruption to it.

So, I believe that, yes, in the long-term perspective, large media organizations are going to have to adjust just to go to where the people are, not necessarily just creators themselves.

Tania Bryer: While it may seem like the creator economy sprung up overnight, it’s actually a story two decades in the making. Â

At the turn of the century, internet connections began to speed up, enabling platforms like YouTube and Twitter to pop up. These platforms made sharing content with a mass audience accessible to anyone with the internet, and some of these users found stardom. And it wasn’t long before advertisers wanted to tap into their influence.

Still, the bar for becoming a creator was high – often requiring expensive camera and editing equipment.Â

That is, until TikTok further leveled the playing field, building basic editing capabilities directly into the app. The platform popularized short-form, vertical video, most of which was shot on a mobile. Competitors like Instagram and YouTube built out similar products too.Â

Blake Chandlee: Everybody’s a creator on TikTok. Like, if you think everyone can be a creator, we have such simple tools for people to do. I can even be a creator.

In the US, the economic impact that TikTok is having is roughly $24 billion into the US economy, and 225,000 jobs. We think the economic impact of TikTok especially, is significant.

Tania Bryer: Today, there are an estimated 50 million people working as creators worldwide, according to Goldman Sachs, and the firm expects this number to grow another 10-20% in the next five years.

So why are brands turning to influencers and content creators? Edelman tells me it’s all about trust.Â

Richard Edelman: Trust is actually local. Trust is the third most important factor, price, quality and trust. And so I trust an influencer, someone who I actually feel is close to me, because he or she or her values ​​are like mine.

Tania Bryer: A 2019 Edelman study revealed that consumers’ trust in the brands they purchase from had declined, but trust in influencers was up. Â

Richard Edelman: You’ve got to talk about what you’re doing in the community. You’ve got to have local people in your ads or as spokespeople, as influencers. You got to make sure you’re actually doing something in each local market.

Tania Bryer: And Chawawa says that trust also extends to the type of influencer brands work with.Â

Munya Shawawa: Kids can smell a rat. They can detect when someone’s lying. And I think that sort of spreads to consumers as well. Consumers know when a brand is just working with someone for the numbers, and they also know when talent is just working with a brand for the money.

I really make sure to curate my comedy so that it’s not offensive, it’s just smart, hopefully. And, you know, the second thing is that, you know, brands appreciate authenticity. I think I’ve had a couple of times where brands have sort of tried to steer me away from satire, but then there’s this realization that that’s what my audience love.Â

Tania Bryer: The cost of working with an influencer can vary wildly. A micro influencer, with five to 50,000 followers, could charge as little as $10 per post. On the other end of the spectrum are mega influencers, with a TikToker with 14 million followers, for instance, reportedly making $10,000 per post.

While brands have largely embraced the idea of ​​working with influencers, the process of identifying and reaching out to these individual creators can be time-consuming and cumbersome for advertisers hoping to reach a large audience.Â

In the past, the advertising ecosystem was controlled by agencies, famously brought to life by the hit AMC series Mad Men. But today, your creative directors, copywriters, account managers, and media buyers are often joined by teams focused on social media and influencer marketing – like in Netflix’s Emily in Paris.

Jamie Gutfreund: The industry is not really set up to work with individuals, because the large brands and the large agencies are traditionally more comfortable with arranging deals with bigger entities who have big legal departments. That’s not what the creator economy is.

Tania Bryer: And while that may be convenient for brands, creator economics strategist Jamie Gutfreund says it can hurt influencers.

Jamie Gutfreund: Typically the way it works is a brand will contract with a creator through an agency. However, the payment terms are typically around 120 days. So if a big brand is not paying an agency for 120 days, that agency then can’t afford to float money and then pay the creators. So, the creators are waiting 120 days to get their finances, to get their money. This is an unbelievable challenge.

Joe Gagliese: We think about influencer marketing and social marketing at scale, unlike traditional means of advertising, where you could plan in advance and plan a year out, social media moves at the speed of light. So when you think about activating creators who are human beings, just like you and I, and activating content around key trends, brands need to change the way they’re approaching it to be able to be nimble and fast.Â

Tania Bryer: And while there are issues that still need to be ironed out, one thing is for sure. Influencers have changed advertising – and they aren’t going anywhere.Â

Munya Shawawa: The creator economy can be sort of every man for themselves. But what we really should be doing is sort of building cushions around creators or people who have the press expertise, the industry knowledge, and actually investing in longevity.

Joe Gagliese: For such a long time, social media has truly been the Wild West, and it lacks consistency in a lot of ways. So, the best thing a brand can do is really understand the space, start meeting with creators.

I do believe that at some point creators are going to be valued as the highest media that you can buy in the world. I think we’re on our way there.