For years, the influencer and creative sector has suffered from limited investment from traditional venture capital firms.
But in the past 12 months, that has taken a sharp turn as more established firms have put their chips on the table. There is now a powerful and supportive group of voices emerging from the pool of existing investors and notable new entrants.
Creators & influencers are now seen as startups. They answer a problem, addressing a market in the same way as startups. In this sense, they are also subject to the same growth factor as startups:
More cash = More growth
So we see more and more platforms developed around the investment of creators & influencers. It’s finally human investment. People can invest on graduates of great schools who launch an entrepreneurial project but they can also now invest on people who manage to federate, reunite and engage a community on a certain topic.
We tried to understand how the system works and how to invest on influencers & creators to earn money, here is our analysis:
Understand the size of Influencers & creators
Finance departments may soon see a lot of influencer marketing show up in budgets. “Brands are allocating more of their budgets to influencer marketing because they are seeing the trackable and reliable business value that the channel has,” said Arron Shepherd, co-founder of London-based The Goat Agency, an influencer marketing agency.
Research from a May 2018 survey by the World Federation of Advertisers (WFA) found that 65% of global companies surveyed planned to increase their spending on influencers in the next year. Financial investment will be migrating from traditional ad buys and celebrity endorsements into more targeted, nuanced campaigns requiring a new set of key performance indicators (KPIs).
Influencer marketing is no longer only consumer-facing. Companies such as American Express, IBM, LinkedIn, PwC, and SAP all have B2B influencer programmes aimed at business decision-makers. No matter the business, or the consumer, companies will need to invest in influencers, according to one expert.
Business Insider Intelligence estimates that total global spending on influencer marketing could reach between $5 billion and $10 billion per year by 2022. Influencer marketing is rapidly gaining importance in markets such as India, China, and the US.
Influencers & Creators are essential to society
Twenty years ago, when brands wanted to partner with celebrities for marketing campaigns, the options were pretty simple. They could hire a famous athlete to promote a sneaker, or a movie star to promote a drink. The campaigns of yesteryear reached wider and less defined audiences than today.
Social media channels like Facebook, Instagram, Sina Weibo, Snapchat, WeChat and YouTube have divided audiences into smaller online communities, grouped by common interests and demographics. And they now offer an increasingly accurate view of audience behavior. Its micro communities have the ability to have complete and accurate data of their audiences, especially with analytics tools integrated or not in the platforms / social networks used.
Today, it is much more relevant (and cheaper) to work with an influencer specialized in cosmetics with 1 Million views rather than with an actress on Instagram with 3Million views.
Financial relationships with influencers don’t follow a single structure. There are as many ways for brands to engage with influencers as there are business objectives. Influencers & creators are the media of tomorrow, they are essential to society.
Identify the right influencer
Now that we have understood that influencers & creators have the same profile as a startup, that they are indispensable in our society and that they are destined to grow more and more, it’s time to turn to investment. How to find the right influencer. First of all, there are several types of influencers, there are influencers for all subjects. Each influencer can monetize their audience and influence in a certain way. To identify the right influencer, you will have to identify his influence (community, engagement, topics) but also his monetization opportunities.
A very simple example, an influencer talking about space and topics around space conquest will have difficulty launching a brand on the subject if not a book or accessories. A cosmetic influencer will be able to launch his own brand, launch a book, a trade show etc.
How to invest in an influencer & creator
To invest in creators, the best way is still to contact them directly by proposing a deal, a financial aid, a collaboration, help. In exchange, you can create a company together or take shares in an existing structure, used by the creator.
There are more and more platforms that are developing around the subject of investment in creators like Creative Juice of Hypeeo.