Business Analysis: The expanding “Influencer” economy

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Influencers have never been hotter: The social platforms want them, and marketers want to work with them. But influencers also have more ways than ever to monetize, many of which bypass brands and social media.

How are influencers generating income today?

Brand partnerships are still the No. 1 revenue stream for most influencers, but a growing number are also earning money through alternative means like affiliate marketing, sales of physical or digital products, and ads. New(er) influencer economy platforms and tools, like tipping or subscriptions, provide more options for creators to directly monetize their communities. 

How and why are social platforms helping influencers monetize?

Influencers are major drivers of engagement, so keeping them happy (and making money) is paramount for the social platforms. YouTube, Instagram, and TikTok are the platforms of choice for most creators, but Facebook, Snapchat, Twitter, and even LinkedIn have also rolled out new tools to woo them. 

How will the diversification of influencers’ revenue streams impact brand-influencer partnerships?

The new monetization options are likely to be supplemental, rather than primary income sources, for most influencers. There are few other revenue streams that generate as much money as a brand sponsorship without requiring a heavy lift. Plus, influencers say sponsorships help deepen audience engagement in a way that is difficult to replicate through other monetization techniques.

How should brands engage influencers today?

Influencers are becoming brands in their own right, and marketers should treat them as such. Think of influencers as publishers: Focus on finding relevant audiences and building relationships. 

What social media influencers use today?

There are a handful of social media an influencer can use. Here is list of them,

  • Facebook: In March 2021, Facebook rolled out a suite of new services and features for creators, including expanding its Stars tipping program on live videos o more markets; enhancing its ad revenue share program through sticker ads in Stories; and allowing in-stream ad formats in videos that last 1 minute or longer, down from the previous minimum of 3 minutes.
  • Instagram: In an April 2021 Instagram Live discussion with Adam Mosseri and Mark Zuckerberg, they teased 3 new ways for influencers to generate revenues on the platform: making Shops available to more influencers so that they can use the virtual storefronts to sell their products directly to their followers on Instagram; introducing a marketplace to help match brands with creators for partnerships; and developing an affiliate marketplace to help more creators get a cut of sales from the products they recommend. Zuckerberg did not provide a timeline for the rollout of these new features.
  • LinkedIn: In March 2021, LinkedIn launched “Creator Mode,” a new setting that allows influencers to select hashtags related to the content they post most about on the platform, so that LinkedIn can share them with interested audiences. It also replaces the “Connect” button at the top of user profiles with “Follow” to help influencers grow audiences.
  • Snapchat: In November 2020, Snap announced that it would pay $1 million per day to the influencers of the top-performing videos on its TikTok-like Spotlight feed. During its NewFronts presentation in May 2021, Snap also said that it will launch an influencer marketplace to help connect creators and brands for sponsorships. The marketplace will be available to businesses that want to partner with augmented reality (AR) Lens makers starting late in May, and to all influencers in early 2022.
  • TikTok: In July 2020, TikTok launched a $200 million Creator Fund to pay US influencers on its platform. As of late March 2021, influencers need at least 100,000 views in the past 30 days to join the fund, which TikTok said it expected to grow to $1 billion by 2023. TikTok also has an influencer marketplace to help match influencers with brands, as well as an in-app currency called Coins, which viewers can purchase and use to buy virtual gifts for creators. Influencers can then exchange those gifts for cash.
  • Twitter: The platform’s recent investments into the influencer economy include its acquisition of Revue, a newsletter publishing platform, and the launch of Clubhouse competitor Spaces. Its new “Super Follow” feature also allows creators to charge followers for access to exclusive content. In May 2021, Twitter also launched “Tip Jar,” through which users can send money to the influencers of their favorite tweets.