When chess was invented the inventor presented it to the king. The king immediately fell in love with the game. 

He offered the inventor whatever he wished. 

The inventor asked that a grain of rice be set on the first square of the chess board then double on each subsequent square. He demonstrated it briefly – two grains on the second square, four on the third, and so on. 

The king agreed. He thought he’d gotten a bargain and ordered his treasurer to pay the inventor.

After a great deal of time passed the inventor returned. He complained to the king that he wasn’t given his reward.

The king called upon the treasurer. 

“Why has the inventor of this brilliant game of chess not been paid!?”

The treasurer explained it was impossible. 

By the time you were half way through the chessboard, the amount of rice required was more than the entire realm had or could even afford. The gift would empty the royal coffers and put the entire kingdom in debt.

What does this have to do with social media and advertising?

The entire industry tends to measure success in large numbers. We launch campaigns and watch to see how many views, comments, engagement, or impressions we generated. How did we do compared to our competitors? 

There’s nothing inherently wrong with this approach, but there is an unintended consequence. 

We never want to start small. We make the same mistake as the king – we can’t believe that starting with so little can lead to so much.

How many times have you heard (or asked for) this? 

“We want at least a million views!”

If an agency ended up getting 10 views on a YouTube video when the goal was a million, I think we all know what would subsequently happen. The agency would be viewed as failing to hit their KPIs and most likely let go.

While it’s counter-intuitive, starting small is the way to generate massive results in the long run. 

The formula is continued attempts + consistent refinement. 

Using the allegory of the king and the chess board, it’s how one grain of rice slowly grew to the net worth of the entire kingdom. 

A group of scrappy filmmakers, i.e. influencers (implicitly or explicitly) understand this. They’ve become one person media juggernauts by implementing it. One of them is ZHC (real name Zachary Hsieh). He’s a 21 year old YouTuber from San Jose, California who’s racked up a billion views and over 15 million subscribers. 

ZHC generates prime time TV level viewership. 

In the last month he’s reached 5x the audience of a typical ‘Monday Night Football’ viewing, 6X the audience of ‘The Masked Singer’ and more viewers than all episodes of ‘The Last Dance’. 

Think about that for a second. In the last month he garnered more views than all ten episodes of the ‘The Last Dance’. That was ESPN’s highest rated documentary of all time. It dominated news and social media for an entire month.

How the hell did ZHC become so huge? His viewership was not happenstance.

ZHC’s success seems deceptively obvious on the surface. His format is MrBeast meets Andy Warhol. Pop art with a stunt. 

ZHC takes high-end devices such as iphones, ipads, Tesla’s, and even a bus then paints them. He gifts these beautiful (and expensive) items to unwitting fans or other influencers. The reactions are always priceless.

There’s a formula. 

The gifts are expensive. The influencer guest appearances are top tier. He’s featured the single largest YouTube creator PewDiePie. Addison Rae who has the second largest following on TikTok. He’s collaborated with Marshmello, as well as, Charli D’Amelio who has over 70 million followers on TikTok. The reactions he captures create a halo-effect of elation.

It all seems very obvious – gather big stars and give them expensive gifts… However, unless you dig into his back catalogue, you won’t see his hundreds of videos that were the foundation for today’s “obvious” success. Like most ‘overnight’ successes ZHC has been grinding it out for years. He posted his first video 4 years ago. By the end of his first year on YouTube he’d posted 50 videos. 

Guess how many subscribers he had? 1,011.

Can you imagine working nights and evenings for a year and only have 1k subscribers to show for your efforts?

ZHC didn’t launch with his format fully defined and community in place. The process took time. Trial and error. We can learn a lot about the process from his work. Zach’s early videos were straightforward tutorials on how to draw various comic book characters. 

Over time Zach began experimenting. 

He slowly inserted more and more of his personality into videos. 

After 40 tutorial videos he finally did a video with himself as the focus (vs his art).  That first video was “3 tips for getting lots of instagram followers”. The video was one take. He was awkward and rambling at times. The backdrop was just his living room with Zach seated on the couch. That’s it. Watch the video. Could you ever imagine that awkward guy would one day have 15 million subscribers?

The experimentation continued. You see an evolution in slow motion. 

He methodically incorporated learnings into his videos. 

Zach’s 50th video was “My Inspirational Artists Journey Story”. It was his first attempt at inspirational content. He shared his struggles with school and how art became his salvation. It gave him confidence.

His 63rd video was a ‘challenge’ video – DRAWING 1000 FIGURES IN A DAY?!. It generated more views than his typical videos and he saw the power of integrating stunts.

A month later he did a reaction video. PewDiePie (who has over 100 million subscribers) had stumbled upon a piece of ZHC’s art. Zach filmed a reaction video to PewDiePie’s commentary. This was Zach’s first time featuring another influencer in his video and it got nearly 8 times the viewership he typically got.

He continued experimenting and applying learnings into his repertoire. It took three years before he’d refined the formula to what it is today. And his views have skyrocketed.

This was not slow linear growth – always a little up and to the right. This was the growth Buffett demonstrated in the allegory of the king and the chess board. 

Small at first, then massive.

ZHC’s efforts compounded. 

He went from averaging ten thousand monthly views in 2017, to one hundred thousand in 2018, to 5 million in 2019. Now ZHC averages 100 million views a month. 

So how does this apply to advertising?

As much as the ad industry is skeptical of influencers, there’s much to learn from them. 

While we want to create a perfect ad that enters into the pop-culture lexicon. The harsh truth is the world is not waiting for our perfectly produced vision. We must start by creating and then applying learnings to improve. 

Rumi, a 13th Century poet said it best “as you start to walk on the way, the way appears.” 

That’s the long-term solution.  Constant refinement and feedback. 

ZHC implemented this process. He consistently created videos. He’d implement small experiments, and apply the lessons learned. He slowly stacked incremental wins on top of wins. Inspiration. Storytelling. Collaboration. Challenges. Surprise and delight. ZHC worked to identify his personal approach.

The formula is continued attempts + consistent refinement. 

Quantity to lead to quality.

Micro isn’t better. Better is better.

Touted as having higher engagement rates, lower pricing, and more credibility than their ‘macro’ counterparts micro influencers are the hottest category of creator to hire.

This is silly. 

Micro-influencers being better or more effective is not a universal marketing principle. Leveraging micro-influencers is a tactic, and one that is far from a silver bullet.  

The rise in popularity of micro-influencers coincides with the rise of influencer marketplaces. Influencer marketplaces are self-service platforms where brands share opportunities for creators to do paid endorsements.

Working with micro-influencers via marketplaces may seem to be a scalable way to do influencer marketing but it is wrought with issues.

First and foremost there is the common misconception that micro-influencers are more engaging. While that is often true that micro-influencers have higher engagement than macro influencers on a per capita basis, that doesn’t mean that engagement translates to a more efficient cost per engagement (CPE) for advertisers.

According to data compiled by Andrew Kamphey of Influencer’s Weekly, it is actually more efficient to work with larger influencers one a CPE basis.

As influencers get bigger their engagement generally declines a bit, but their costs don’t scale at the same rate.

One factor often overlooked in working with influencers is not just the hard costs, but the time spent to manage influencers. Working directly with an influencer that has 10 million subscribers is often just as much work as working with an influencer that has 10 thousand. 

Even if you work with influencers via influencer marketplaces, taking the time to review content and managing quality control becomes a huge issue.

Within these market places brands are asking creators to opt into campaigns based on a brief that has been posted. You are not spending time working closely with a creator via meetings and phone calls. Oftentimes a brief is the only thing the creator gets to their hands on to get to know the brand before going on to develop promotions even without the products themselves.

Credibility is a big issue as well (one that I imagine will become a bigger issue as time goes on). Creators looking to make money will need to go from brand to brand, oftentimes working with competitors in the same category. 

At the same time the inverse approach, of working exclusively with the top tier influencers isn’t a perfect solution either. Just because some has scale doesn’t mean they’re relevant to your audience.

Top tier creators are often bombarded with brand deals and opportunities. Their ability to invest in a partnership is constrained. You don’t want to work with someone that just won’t or can’t make the time for you. 

There is no easy solution and therein lies the opportunity.

Few brands and marketers are willing to put in the time and effort to focus on identifying creators that are truly relevant, then having conversations with them to gauge interest, and then work with them deeply and make them real partners. 

As the saying goes, the last mile is always the least crowded.

None of this is rocket science, but like most good things, it takes patience, focus, and a long-term outlook vs looking for quick fix solutions. 

The impact that the virus outbreak has had on digital and social media behavior in China, likely provides a look into the future of what we can expect here in the states.

People have changed their behaviors worldwide with more time being spent online as people are forced indoors.

Some trends that we’ve seen emerge in China include the following:

Audience Engagement & Viewership Growth:

Creators in China saw a surge in subscribers and viewership.

One top tier live streamer Austin Li drew a record breaking (for him) 16 million viewers on his first stream this February. He’s not alone in generating a spike in viewership.

A study of 574 accounts across popular video apps Douyin (TikTok in China) and Kuaishou showed creators accruing 100k – 500k followers from January 20th thru February 2nd. One food creator  @皮皮教做菜 noted that this time of year he generally sees some growth, but nothing like this. @皮皮教做菜 gained over 1 million followers from a single video.

With people eating out less, food and cooking content saw spikes in demand. People staying at home and wanting to learn to cook lead to Douyin (TikTok) supporting cooking-related content with a Tasty Food Challenge which generated over 10.3 billion views.

Comedic content also saw massive viewership increases. According to data released by Bilibili (a Chinese video sharing site), views of videos tagged with the word ‘funny’ grew by 905 percent between January 23rd to February 5th.

One beauty KOL (influencer) Melilim Fu saw a 10 percent increase in followers over a two week period. According to Jing Daily these aren’t isolated incidents, “those increases are across the board, including engagement and new private traffic followers. It’s very noticeable that people are spending more time bored at home.”

Beyond engaging with influencers, the Covid-19 quarantines resulted in a spike in app downloads. The first few weeks of February resulted in 40% more app downloads than the same time in 2019. Additionally, there were 222 million apps downloaded in China’s Apple app store from February 2nd – 24th. Games topped the list, but educational app downloads doubled as many schools closed down.

Offline Events Come Online

As in person events and social distancing became banned and/or discouraged China brought traditional offline events online.

In February there were at least seven movies slated for theatrical release. With theaters forced to close down due to the virus these releases were moved online. ByteDance, best known as the holding company of TikTok, paid 630m yuan (US$90.8m) for the rights to stream several films across their mobile apps.

Here in the states we haven’t seen the same thing occur yet, but Disney did just announce something similar. Disney is adding “Frozen 2” to Disney Plus three months ahead of schedule.

As people are forced to spend more time indoors they are spending more time online. However, production resources, shoots, some commerce, and brand deals have largely declined or postponed.

Challenges With Content Creation

Because meeting face to face is difficult due to quarantines and social distancing production has been hampered.

People often assume that influencers are one man bands – writing, filming, editing, and participating as talent all on their own. In reality established creators have large teams. 

Elijah Whaley, a manager of beauty KOL’s (influencers) in China recently stated that, “it will undoubtedly affect content creators that rely on teams and studios. The immediate effects are more felt with the planned campaigns, which have already been canceled or delayed, especially offline events.”

Here in the states we’ve already seen top tier creators share publicly the impact Covid-19 has had on their production process. The CEO of The Fine Brothers (of react fame) commented in a recent Digiday article that “Two weeks ago, FBE began actively planning for the possibility that coronavirus may force the entertainment company to temporarily close its 25,000-square-foot studio and have its 105 employees work from home.”

Sales & Brand Deals:

Although this may be a time of investment in community building it is likely that many creators will suffer from brand deals being cancelled and/or postponed. Additionally, with factories shut down getting products to consumers could prove to be difficult for some time.

According to Jing Daily:
“Several influencers have shared that their Q1 brand campaigns have all been postponed — many until as late as May. While this is a big blow to their earnings, they will likely make it all back later in the year if they can hold out until then. But the top influencers aren’t too concerned. The popular WeChat account “GQ实验室” says that there are even some positive aspects to this unfortunate moment. For instance, publishing fewer commercial articles gives influencers a much-needed opportunity to create more and better editorial content.”

Streamers in China with their own brands and products are facing a lack of stock and delivery delays. Many streamers are immediately selling out of what few products they have on hand. As a result, many influencers are selling items as ‘pre-sale’ with the promise that they’ll be shipped when manufacturing resumes. 

Here in the states we’re already starting to see similar effects. Brand deals are being postponed, and travel influencers in particular are the hardest hit. As BusinessInsider reported, “Travel influencer Lauren Bullen, known as @gypsea_lust on Instagram with 2.1 million followers, said all her paid trips had been canceled.”

While these may be difficult times, it will pass. If anything for those of us here in the states, we can look to China and the trends that emerged to help inform our own decisions and preparations.

I’ve been scratching my head about what the big trends within the digital video and influencer marketing space will be in 2019. I have some theories…or one overarching theme rather.

Overall, I think 2019 will be a year of ‘Direct To Consumer’.

I’m not just talking about the rise of Direct To Consumer brands (which has already been a big trend over the last few years), but also Direct To Consumer when it comes to community building.

COMMERCE

As I outlined in a recent blog post, one noticeable commonality from Forbes List Of The Top 10 Highest-Paid YouTube Stars of 2018 was that all of the top 10 influencers had built businesses that live largely independent of traditional ad revenue or brand sponsorships. They’d all created brands and products they were selling to consumers vs relying upon ad revenue.

For years influencers have been creating merch, but until recently that portion of the business was relatively small as creators sought advertising dollars.

I can only imagine that other YouTubers and influencers will see the success of these more entrepreneurially minded creators and follow suit in hopes of replicating their success. There’s fewer obstacles than ever before for creators to sell direct to consumers – they can built up shopify sites within a few hours, outsource production of merch, and leverage their audience to generate the sales.

COMMUNITY

Every time a platform changes its algorithm creators are up in arms about how their livelihood is going to be adversely impacted (oftentimes rightfully so).

In response to the adpocolypse and de-monetization of content a number of creators saw their revenue cut by as much as 80%.

Facebook’s algorithm is continuously reducing earned exposure and according to one study there was a 50% decrease in overall engagement over 2017 and 2018.

These changes have a dramatic impact on businesses and wiped out several publishers.

Changes in algorithms have continued to create issues for creators. More and more have been looking to built up an audience that can live independent platform changes. We’ve seen creators experiment with apps and email marketing, but none of this has gained mass traction. I think all that is going to change this year.

In 2018 we saw Alex Jones get booted from every major social network (and even Apple’s podcast platform). Patreon booted YouTuber Sargon of Akkad.

While most creators would not identify with either Jones or Sargon as a comrade in arms – these high-profile ejections certainly must have a lot of creators wondering whether or not they too could be at risk of being de-platformed as well.

Creators need to own their audiences to build more stable businesses. As a result, I think this is the year we’ll see more businesses that allow creators to go direct to their fans.

I imagine we’ll see creators and companies experiment with everything from apps, to email marketing, text, direct mail and countless other alternatives.

I’m not convinced this means every big YouTuber is going to build a mobile app or become an email marketer. However, I do think that much in the same way the most successful creators have built businesses that are independent of ad dollars, so too will they cultivate their communities so as to not be solely at the mercy of platforms.

Sounds like a sweet gig, but according to Forbes, seven year old YouTuber Ryan’s ToysReviews has the market cornered and generated the most revenue of any YouTuber this past year.

YouTube has become a wealth generator for a new breed of digital stars. Just over ten years ago YouTube didn’t even have an ad product to help creators make any money – now it’s not uncommon to hear of creators generating 7 figure incomes.

In looking at the Forbes list of the top 10 Highest-Paid YouTube Stars of 2018 there are three major trends that really stand out to me.

1) BUILDING A BRAND (VS RELYING UPON BRANDS)

At YouTube’s NewFronts in 2015 John Green (founder of Vidcon and avid YouTuber) spoke to an audience comprised of major brands. He gave them a warning that “YouTube stars are building a world where they don’t have to depend on advertising and they are thriving.”

In short more YouTube stars will find other non-advertising revenue streams like merchandise sales and book deals to replace advertising dollars. It seems as that prediction has largely come to life.

All the influencers on Forbes list have invested in brands that live independent of traditional Fortune 500 advertisers.

Ryan’s ToysReviews partnered with BonkersToys to create an entire product line under the brand, Ryan’s World. Parents can purchase these in any major retailer, and demand is built-in. Ryan’s generated over 20 BILLION views and has over 15 million subscribers.

Ryan’s hardly alone, Jeffree Star, number 5 on Forbes list with an estimated $18 million in earnings, shocked the YouTube community when he unveiled his personal and professional life or Shane Dawson in a 5 part docu-series. In it Jeffree showed the factories producing his massive makeup line.

While most anyone familiar with the YouTube/makeup community on YouTube was well aware of Jeffree’s product line, few knew just how much revenue he was generating and the lavish lifestyle he was living as a result. Jeffree has a mansion in Calabasas, dozens of designer handbags worth hundreds of thousands of dollars, real estate, fancy cars, designer clothes, etc.

Logan Paul, number 10 on Forbes’ list, was once the darling of advertisers everywhere – having done brand deals with Fortune 500 companies Pepsi, Walmart, and Dunkin Donuts. After filming a body found in Japan’s ‘Suicide Forest’ this past year Logan was largely blackballed by brands, but that hasn’t stopped him from earning.

Logan has a massive merchandise business, Maverick By Logan Paul, where you can buy everything from Logan Paul branded socks, hats, posters, pants, shirts, and more.

Beyond Jeffree Star, Ryan, and Logan Paul all the other top earners from Forbes have invested heavily in developing their own brands and product lines.

DudePerfect has a product line with Nerf, DanTDM has done tours and sells merch, Markiplier launched Cloak, a high-end athleisure line for gamers, Jake Paul has created a network of creators, Team 10, and a massive clothing line.

All their businesses live largely independent of traditional ad revenue or brand sponsorships.

2) KIDS ARE FUELING GROWTH

In scanning the Forbes list of YouTube’s top 10 its clear that teens and young kids are fueling the growth of these channels (and the YouTube ecosystem as a whole).

Officially Google only allows people ages 13 and over to create a YouTube account, and the minimum age is as high as 16 in some EU countries.

However, it’s no secret that young kids and teens are making up an overwhelming amount of YouTube viewers.

70% of kids 13-17 use YouTube daily, and there are 8 million weekly viewers of YouTube Kids (YouTube’s app dedicated towards curating children appropriate content). The top 8 most recognizable celebrities amongst teens are YouTube stars, and the number one most desirable job amongst kids and teens aged six to 17 is digital star.

Ryan’s Toys Reviews format is a seven year old boy reviewing and unboxing toys.

Jake Paul has mentioned in multiple videos that his audience is as young as eight. Logan Paul has been nominated for five Teen Choice Awards.

A cursory look at any meetup these YouTubers have shows that the overwhelming majority of fans are young kids and tweens.

In spite of the fact that kids aren’t supposed to have YouTube accounts they’re fueling growth, and revenue for the biggest creators.

3) GAMING

Gaming has gone mainstream.

Six of the top 10 creators featured on the Forbes list of the Highest-Paid YouTube Stars of 2018 built their followings on the backs of gaming content:

• #9: PewDiePie is best known for his ‘play with me’ videos.
• #8: Jacksepticeye is also known for ‘play with me’ content
• #7 VanossGaming plays titles Call of Duty & Assassin’s Creed
• #6 Markiplier is known for his ‘hilarious’ gaming videos
• #5 DanTDM specializes in Minecraft

Furthermore, the #1 most subscribed YouTuber of all time is #9 on this list, PewDiePie. He’s currently racked up 75 million subscribers.

The trend within YouTube is representative of a much larger cultural shift. We’re at the stage where esports athletes are actually getting more recognition and social mentions than traditional athletes. Earlier this year Twitch Streamer, Ninja, actually generated more social mentions than every major, traditional, sports athlete worldwide – more than Lebron, more than Kobe, more than Rinaldo.

The US video game industry generated a record $36 billion in 2017 and esports leagues are generating so much revenue they’re offering $25 million dollar price bags for the winner.

So what’s the key takeaway from all this?

YouTube culture is pop-culture and the biggest earners have invested heavily in themselves. Time will tell if dominating the youth market today will lead to loyalty long-term, but in a future where creators are brands (and companies) what does this then mean for the future of Fortune 500 brands?

There’s a reductive narrative circulating in the advertising world lately: if you need to meet your marketing goals, then you should do influencer marketing.

Want to reach millennials? Influencer marketing speaks to teens! Want to be more efficient with your advertising budget? Influencer marketing is cheap! Want to be ahead of the curve? Influencer marketing is the future!

I understand the allure of this narrative (it’s one I’ve contributed to at length). Influencer marketing is commonly presented as the mother of all marketing shortcuts. But that’s just the thing: there are no shortcuts.

Influencer marketing is sustainable when it’s built on a thoughtful relationship among a brand, a creator, and the fans that consume the content. Like any relationship, it takes time, energy, and money to maximize its potential. Brands are often unwilling or unable to make that kind of investment, so as a result, they engage influencers carelessly and enter a “me-too” race to attempt what is trendy or has worked well for others.

Just because you “did influencer marketing” doesn’t mean you did it well.

Brands often make the mistake of taking a lackadaisical approach, doing just enough required to check the box for hip marketing. They make use of automated platforms that connect them with influencers-for-hire where there’s no relationship to speak of; they’re not even communicating on the phone. This “spray and pray” approach  results in virtual strangers touting brands in which they have no vested interest.

Consider the case of one social agency reaching out to well-followed Instagram user Coltrane Curtis, offering him an influencer gig to promote Dove skin care products. Had the agency done any homework on Curtis ahead of time, they would have quickly learned that he ran his own agency and was, in fact, the competition. He publicly shamed the agency for its carelessness. Thoughtless influencer marketing is a liability, not an asset.

Operating this way dilutes the credibility (for both the brands and the influencers) that makes this tactic work. Credibility is all about representing one’s true values and beliefs. If representing a brand’s true values was as easy as writing an email and signing a check, then everyone would do it. And that’s exactly the problem.

My message to companies adopting this attitude is simple: please, don’t do influencer marketing.

No Fortune 500 company got to where it is today by taking shortcuts. They designed real products, built real infrastructure, and hired high-quality, full-time teams. Thoughtful brands play the long game. Why should influencer marketing be any different?

Having worked on thousands of influencer campaigns, I can say that the best collaborations are those in which the brands have invested in getting to know the creators. They’ve brought the influencers to company headquarters, shared their brand values, outlined the goals of the campaign, as well as the thinking that got them there; they mixed education with entertainment. The face-to-face interaction that is so uncommon these days leads to influencers being invested in the people and campaign in a way that has tangible results — they want to do right by the brand. Because they understand what they’re working on (and care more), they promote it more often and more effectively.

Along the same lines, I’ve negotiated multi-year contracts with creators on behalf of brands — the brands benefit extensively by getting economies of scale, efficiencies and category exclusivity. But, more than anything, the creator understands the brand after working together for so long and his or her audience knows that the creator is more than a paid shill – this is something that he or she believes in enough to work with a brand on an ongoing basis and really collaborate deeply.

Ultimately, if you aren’t willing to invest in meaningful, long-term commitments to influencers, why should the influencers commit to working with you? Influencer marketing can be a silver bullet for messaging — only when there is a deep collaboration at the heart of the brand-influencer relationship. This is why brands must take the time and effort to find creators whose sensibilities mesh well with their goals.

If your marketing goals are qualitative, wanting to see your brand’s message taken to a talented creator’s audience, then influencer marketing is a powerful tool for getting there. If your marketing goals are quantitative, wanting to ensure some number of impressions and conversions without much thought, then please don’t do influencer marketing.

Would you rather have one foot in the past or one in the future?

It’s true that, from the looks of it, Cannes is much more fun – you won’t find anyone popping bottles of champagne on a yachs atVidCon. Instead, you’re far more likely to find a few digital influencers, forward thinking brands, agencies, and talent managers huddling around cups of StarbucksCcoffee in some hotel lobby hammering out a few deals.

That said,VidCon is at the epicenter of what is happening within influencer marketing, social media as a whole, and more importantly – what is happening with culture. Digital influencers are the most recognizable celebrities among teens today, becoming a digital influencer is the most desirable job amongst teens today, and the most engaged athlete online is now an E-Sports athlete, the Twitch Streamer, Ninja.

I personally take pride in the fact that while other agencies send execs to the South of France to hear talks, such as ‘What is Innovation”  myself and my team are on the ground working and meeting with influencers at VidCon.

VidCon is where innovation is happening – even the major platforms understand this and make major announcements there. For example, this year Instagram waited until the first day of VidCon to launch IGTV (instead of doing it during the peak of Cannes). Facebook, Snapchat, and YouTube also followed suit making a variety of announcements around platform updates, features, and partnerships onsite atVidCon.

Looking at the ad trades you’ll see that brands and agencies are struggling to capture eyeballs. Ad formats are shrinking and advertisers are having trouble even watching a 6 second ad. Marc Pritchard, the CMO of P & G stated that they “stopped wasting money on 30-second ads, and we’re designing ads to work in 2 seconds,” and that “it is time for marketers and tech companies to solve the problem of annoying ads and make the ad experience better for consumers,”

I agree with Marc that marketers need to solve the problem for annoying ads – but, the reality is the solution exists, and I think if he and his team spent more time immersing themselves inVidCon, and the ecosystem as a whole they’d have the answer already. While P&G is struggling to get ads to work in 2 seconds, people are watching influencer content that is as much as 6 hours long.

According to recent studies long form video content consumption is up 30% over 2017. The #1 Most subscribed YouTuber (PewDiePie) regularly posts 20 min long videos, and the most downloaded podcasts are all well over 45 minutes on average (with some top podcasters like Joe Rogan going as long as three hours).

Clearly attention span isn’t the issue – most advertisers are just not great at creating content and putting it in front of the right consumers.

My team and I at Epic Signal certainly don’t bat 1000, but getting past two seconds is fucking terrible and certainly the exception rather than the rule. Instead, by having an understanding of these platforms, how to work with influencers, and integrate paid media – we’ve seen fifteen minute long pieces of branded content generate 75% completion rates. On a recent campaign with Boost Mobile we integrated influencers into paid social (in addition to having them create their own branded content) and beat the previous CPA benchmark by 50%. The list goes on.

This success comes from us investing a lot of time with these platforms, ingratiating ourselves in influencer communities, attending events likeVidCon (and a lot of trial and error).

I say this not to brag, but to point out that much of the industry is still caught up in the gigantic circle jerk of trying to impress one another with champagne and yachts – resulting in an inability to communicate with consumers.

Just like anything else you’ve got to put in your ten thousand hours – that means spending a little less money on champagne, Rosé, and yachts in France. Instead, why not invest in listening to people who are able to get millions of fans to hang on their every word for hours on end, like you can at VidCon?

End of rant

While the matches are sure to generate billions of viewers the question remains – in this fractured media landscape will the World Cup, and sports as a whole, manage to remain the media and advertising powerhouse it has historically been?

Initial numbers throughout Europe seem to show that viewership will be down from the last World Cup.

The opening-night match of Russia vs Saudi brought in 9.5 million German viewers – well below the15.9 million that watched the kickoff between Brazil and Croatia in 2014. Similar patterns emerged in France, which had 4 million viewers this year – a decline from 8.7 million in 2014. The British had just over 5 million viewers this year, which was a 7 million-viewer decline from the twelve million fans that watched the opening match in 2014.

Brands are paying big bucks to be aligned with the world’s largest sporting event – according to reports this year’s World Cup show the is set to generate $6.1 billion in revenue, which is $1.3 billion more than the last World Cup in 2014.

The massive awareness and global viewership that the World Cup draws is a unique event and there’s nothing else like it, and, I can understand why brands would tap into these events to advertise. However, I think its clear that the influence of sports as a whole is dwindling – digital influencers, e-sports, and e-sports athletes are chipping away at the market-share of traditional sports.

Sports viewership as a whole is declining (at least on TV).

The NFL saw the 2018 Super Bowl down from a year ago, 8 out of 10 playoff games were down, and pregame viewership was down. Nascar is seeing their fans age out (the average fan is in their late 50’s), and has seen a 45% decline in viewership since 2005.

More than half the MLB’s markets have seen a significant decline in viewers with the Miami Marlins seeing the biggest – a 30% drop. Even the NBA has seen sharp drop in viewership. The 2016-2017 season saw local ratings for 27 of the 30 NBA teams drop and 15 of those experienced double-digit decreases.

Over the years more options have become available to viewers – this could mean that viewers still love their sports and their teams but choose to watch them later or read about them online. However, I think we’re seeing a significant amount of marketshare being wrestled away from sports entirely.

I think that traditional sports are akin to Gillette, before Dollar Shave Club first came on the scene. Previously, they both had a monopoly – then overnight there was a direct to consumer alternative. In this analogy the alternative is e-sports.

More support for this theory is that digital stars have already surpassed traditional athletes in terms of social media popularity.

In April, Tyler “Ninja” Blevins, the famed Twitch gamer/e-sports athlete is now the most engaged athlete on social media. With over 10 million YouTube subscribers and nearly 8 million Twitch followers he’s become a social media phenom, and he’s hardly alone. 8 of the top 10 most recognizable celebs amongst teens today are digital stars. To top it off live sports viewership is declining – the NFL has seen their average per-game audience decline by 17 percent since 2015.

With individual digital influencers building audiences and engagement that rivals traditional celebrity/athletes and TV networks in viewership – this brings up more questions than answers.

What does the mean for the future of sports? Will e-sports games soon overtake the Super Bowl and World Cup in viewership?How will media and advertising dollars shift?

How much money an influencer makes is not a simple question to answer. There are some influencers who make tens of millions of dollars each year, and while they capture the headlines, they are in the minority.

In this post I hope to shed some light on how influencer generate revenue, and what avenues they use to make money.

WHY INFLUENCERS ARE ABLE TO MAKE MONEY
Jake Paul has gone on record that he is going to be a billionaire. I doubt he’ll be a billionaire, although he’s already extremely wealthy; however I have no doubt that some influencer at some point will become a billionaire.

8 of the top 10 most recognizable celebrities amongst teens are youtube stars. These influencers are building (and selling massive businesses). Many are NYTimes best sellers, they’re dominating the box offices. We live in an era where the most engaged athlete in the world (on social media) is a gamer on Twitch.

The scale at which these creators are building audiences is incredible – on Youtube alone there are well over five thousand YouTube channels with at least a million subscribers.

Despite the assumption that being an ‘influencer’ is easy – its not, and even influencers who build large followings can make missteps leading to drastically reduced profits.

There has been a great deal of negative press geared toward YouTube as a result of ads running against content that no brand would want to be associated with – including terrorist videos. As a result, a number of Fortune 500 brands have boycotted the site which has lead to more bad publicity and, undoubtedly, impacted YouTube’s bottom line.

Due to these concerns around brand safety YouTube has clamped down what videos they monetize, and as a result a number of influencers on YouTube have seen their revenue decline dramatically. As part of a number of initiatives to ensure brand safety YouTube has stopped running ads across channels with less than ten thousand subscribers. YouTube has also begun automatically (via an algorithm) demonetizing videos it deems may not be brand safe, and has hired tens of thousands of people to review and vet content. As a result of these measures a number of channels have seen their ad revenue decrease (and in some cases virtually dry up) – resulting in the nickname, ‘The Adpocolypse’.

WHAT PLATFORMS ARE INFLUENCERS MAKING MONEY FROM?
The platforms influencers invest in building an audience on will impact how much money they can make (and where that revenue will come from).

Currently, Instagram is huge for brand placement/brand deals. However, the platform itself doesn’t actually pay influencers a portion of the ad revenue generated by the site. Many influencers, even those with only a few thousand followers, are generating revenue via brands looking product placement integrations. A recent study estimated that there was over $570 million spent globally by marketers for influencer marketing on Instagram last year.

A number of platforms such as Famebit, Reelio, etc have created marketplaces where the long tail of influencers can promote brands in exchange for product or money.

YouTube has consistently been one of the more in demand social networks for influencer marketing. The platform is unique, with ads are run automatically and creators getting a percentage of the ad revenue they generate off their viewers (for channels with over ten thousand subscribers).

The way YouTube ads work is something like this:

• Ad revenue is split 45/55 in favor of the creator
• Most creators generates $2-3 CPM’s
• Generally around half of those views are monetizable
• If part of an MCN, then a percentage is paid to the MCN

It is worth noting that select creators are pulled into ‘Google Preferred’ and their inventory is sold direct by YouTube at a much higher CPM.

I personally have noticed that YouTube lends itself to creating deeper connections between viewer and content creators (something I’ve written about extensively here). As a result, YouTube influencers tend to be able to build up their own brands much easier than other platforms – the connection they have with their audience tends to be much stronger, which allows creators on the platform to better convert viewers to sales.

Twitch is also quickly growing as a profitable platform for influencers. The platform also pays influencers a portion of the ad revenue they generate from viewers, and Twitch streamers can generate brand deals. However, I think Twitch is potentially one of the most ‘creator friendly’ platforms because it has a built in subscription model where they can collect monthly dues from their most dedicated viewers. As a result Twitch is providing a lot more steady income for influencers.

There are other platforms influencers cultivate audiences upon and are monetizable. Blogging was really the first ‘digital influencer’ platform and is still a popular one. There are pinterest influencers who are paid to pin content by the top brands, and recently Musically has grown in popularity – creating a Vine Like resurgence of short form content influencers. Other platforms include Snapchat, YouNow, Tumblr, etc. With the exception of YouNow influencers are not being paid a portion of the ad revenue they’re audiences generate.

YouNow is worth noting because influencers can monetize through a newly launched cryptocurrency, as well as viewers buying digital gifts, of which the influencer gets a portion of the sale price.

Overall, I feel as though YouTube and Twitch are probably the most powerful and sustainable influencer marketing platforms for two reasons:

1) Creators are able to generate revenue from ads and/or subscriptions
2) Content tends to be longer form which leads to deeper connections between viewer and creator. Viewers feel as though they’re much more than ‘just a fan’, that the relationship is akin to a friendship.

Many YouTubers regularly ‘vlog’ and share personal details about their lives – viewers see their friends, family, pets, homes, and even the creator’s ups and downs. Much of the same information is commonly shared on Twitch as a result of so many hours streamed.

AVENUES FOR INFLUENCERS TO GENERATE REVENUE
Regardless of platform, or platforms, influencers build a following upon – once they have an audience there are a number of avenues available to them to monetize their fan base. I’ve written about influencer monetization a bit in the past, and while the assumption tends to be influencers only generate money through brand deals, in actuality there are a number of options out there. Notably, display ad revenue and brand sponsorships are quickly becoming a smaller piece of the revenue pie for most creators.

Outside of direct platform ad revenue, here’s some common ways influencers generate money:
-Appearances and tours
-Building companies
-Merchandise
-Patreon
-Affiliate links/sales
-Writing books
-Making movies (Direct to consumer & studio films)
-Developing apps

APPEARANCES AND TOURS
Much like bands go on the road and sell tickets to concerts to generate revenue, more and more influencers are touring (whether
or not they’re musically inclined) and charge fans to come join them. Most recently YouTuber power couple Trisha Paytas and ason Nash will headline a show dubbed Trisha & Jason Are In Love – according to Tubefilter, “tickets begin at $20, though all-access VIP seats are available for $250 — including a pre-show pizza mukbang (or binge-eating session) with Paytas and Nash, exclusive merch, a photo, and autographs. $60 and $150 ticket options are also available.”

Trish and Nash are hardly alone – vlogger Tyler Oakley launched they wildly popular  “Tyler Oakley’s Slumber Party” tour featured Tyler entertaining audiences in various skits and interactive audience segments. The Digitour has been ongoing for nearly a decade and featured a number of musician influencers touring together and performing. Influencers with older demographics have even been celebrity guests at nightclubs – for example Dom Mazzetti of BroScience fame hosted ‘Girls Night’ at a nightclub in Orlando.

BUILDING COMPANIES
Some influencers have tapped into their vast, and highly engaged, audiences to help launch major companies. Michelle Phan, a well known makeup and beauty YouTuber built a beauty subscription service to launch iPsy which has raised $100M. Director/Vlogger Casey Neistat went so far as to build his own Snapchat like social network, Beme, which he sold to CNN in a deal reportedly worth $25 million.

MERCHANDISE
Virtually every major influencers is selling T-shirts, hats, hoodies, etc. Merchandise has become so big many influencers have begun to expand their product lines beyond simply promoting their channels and built out full fashion lines. Tubefilter did a great post covering influencer clothing lines here.

It is worth noting merchandise can expand well beyond clothing, with many influencers have expanded to a variety of products. For example fitness influencers are selling supplements, workout gear, and even fitness program. YouTuber/surfer Ben Gravy even collaborated with Catch Surf to create his own signature surfboard. Whatever and influencer is interested in, odds are they’re productizing it somehow.

PATREON
Patreon has quickly become an alternative platform for influencers to generate revenue. Patreon is a platform that empowers creators to run a subscription content service – It allows artists to receive funding directly from their fans, or patrons, on a recurring basis or per work of art. A number of creators are using the platform to ensure a steady stream of income and enticing fans to subscribe (and donate) but providing exclusives only for Patreon users.

AFFILIATE LINKS
Amazon has an affiliate program for influencers to promote any products posted to Amazon. They generate a percentage of sales revenue with any referral resulting from the traffic they drive.

BOOKS
From Lilly Singh to iJustine, Tyler Oakley and countless others influencers have been flooding the book market – over the last five years, over a dozen major YouTubers have hit the NYTimes best sellers list. Influencer book deals have become so common that the publisher at Atria launched Keywords Press, a partnership with United Talent Agency to showcase digital influencers.

MOVIES
Influencers developing movies really kicked off with Camp Takota in 2014, starring the ‘holy trinity’ of Hannah Hart, Mamrie Hart, and Grace Helbig – the straight to digital movie kicked off a wave of influencer driven movies. Today, with the advent of YouTube Red, influencers starring in movies has become commonplace. A few other examples include The Vlogumentary, Smosh: The Movie, and The Thinning.

Perhaps, most notably John Green, one half of the VlogBrothers, co-founder of Vidcon, and YA author has had several of his books optioned and produced into major motion pictures. One book of his – ‘The Fault in Our Stars’ which was made for just $12 million and opened number one in the box office with a $48.2 million opening weekend. TFIOS went head to head with Tom Cruise’s Edge of Tomorrow, the same weekend, and beat out the sci-fi thriller that cost 15 times as much to produce.

THE ROLE OF FTC AND DISCLOSURE GUIDELINES
Regardless of who an influencer may work with it is incredibly important for them to know that they must disclose any relationship they have with a brand – this is the law.

According to the FTC:

An endorsement must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer couldn’t legally make. In addition, the Guides say, if there’s a connection between an endorser and the marketer that consumers would not expect and it would affect how consumers evaluate the endorsement, that connection should be disclosed. For example, if an ad features an endorser who’s a relative or employee of the marketer, the ad is misleading unless the connection is made clear. The same is usually true if the endorser has been paid or given something of value to tout the product. The reason is obvious: Knowing about the connection is important information for anyone evaluating the endorsement.

Transparency between an influencer and their audience is critical. If an influencer is being paid or given free product they must make their viewers aware of this relationship. Historically, what qualified as disclosure was a bit murky – influencers didn’t know whether simply saying that a brand provided them with free product, if it had to be written, etc.

Luckily, platforms have since stepped in to help standardize things. Facebook, Instagram, and YouTube have all developed tools to simply automate disclosure.

WHAT’S NEXT FOR INFLUENCERS?
Like I said at the top of this post – I think we’re not far off from seeing the first influencer billionaire. Digital influencers have a direct line of communication to fans and their rapidly exploring monetization models. With their lean, startup-like approach, where they are acting as talent, distributors, and producers they’re able to move swiftly and potentially outpace much larger corporations. Furthermore, with the rise of ecommerce and a multitude of monetization opportunities they’re able to launch brands quickly, generate revenue, and apply learnings to get better and better at making money.

Some of the major points we covered were:

• Subscription video on demand (SVOD) and YouTube competitors
• YouTubers “making it” on television
• YouTuber revenue streams
• How much money his top creators are making in a year
• How creators can better work with brands, and vice versa

The Confessional is a series of anonymous interview with influencers, brands, marketers, agencies, and MCN executives to get honest, no-bullshit opinions on working in the space — the biggest gripes, the toughest lessons, the most valuable advice.

The following has been edited and condensed for clarity.

You’ve been on YouTube for a very long time. How did you first get started?

I got started back in 2009, and I got started because I actually went to high school with another YouTuber. He’s still got pretty large following to this day.

I saw what he was doing and how we was building a community around himself. It seemed like a huge opportunity. So I started working with him a bit, and I was introduced to other creators and collaborate with them. I was able to turn YouTube into a career in about three months.

How has the community evolved since those early days?

What was really interesting about the early days is that once you hit a certain number of subscribers you were immediately part of the community. People had a sense of respect for you and vice versa. Once you hit that level, you could really approach just about anyone and do collaborations, or just strike up conversations and friendships.

As this community of a few thousand people exploded into the millions of creators you now have today, a bunch of micro-communities developed. Now, it’s like everybody sticks to their own clique. It’s almost like high school. So if you’re a beauty guru, you collaborate with other beauty gurus and you don’t really step outside that.

There’s just not as much cross-pollination as there once was.

I think a lot of the playfulness has disappeared as well. Now, we jump onto each new platform – push our audiences to them (the platforms), and then immediately we ask, “How do we monetize this?”

Speaking of fans, you’ve got a sizable following. What’s it like having fans?

It’s actually really interesting. I rarely use the word “fans,” I’ve allowed myself to use it as of late. This is something that I and a lot of my other YouTube friends struggle with.

We want to be humble, but also want to be respected in the same way that Hollywood celebrities are respected and perceived.  

Do you want to be put on the same pedestal as “traditional” celebrities?

Being labeled as a “celebrity” pigeonholes YouTubers because you can be recognizable without being a “celebrity.” I think it goes beyond celebrity. I think it’s about being a public figure.

There’s a new generation of influence sprouting up as a result of social media. You have people that may be an entertainer-creator or maybe they’re a body-positive influencer. There’s people with influence across spheres — politics, entertainment — you can be an influencer around anything now.

Whatever name we end up giving this new type of public figure, I think they are definitely going to be held to a higher esteem and value than they are today.

How has the perception and attitude towards YouTubers changed among brands and agencies?

The marketers have done a lot to catch up these last few years and they value what we do a lot more.

They’re beginning to recognize that we influencers are not a simple plug-and-play, where they can just say “Let’s put our bag of chips in this,” or “Let’s give them a bottle of water.”

They’re starting to take a step back and invite us in as collaborators. They’re asking what excites us and what ideas we have. It’s becoming a bit more of a conversation than it used to be.

Also, it’s interesting — as demand has increased, you see influencers being represented by four or five different managers and talent agencies. You don’t quite see that in the traditional talent world.

The fact that an influencer can be so freely represented and not be limited to one representative shows me that in some ways the influencer has more negotiating power than traditional celebrities.

I hear from a lot of the creators that “brands don’t get it.” To your point, and in my own experience, it seems as though brands are “getting it” more and more. Do you feel like creators are doing more to adapt and empathize with the brand’s perspective?

Yes and no. You and I have known each other over the years, we’ve seen people come and go.

For the most part, the ones that we’ve seen go are the ones that didn’t develop much business etiquette, or, even just the willingness to put aside some of their stubbornness to be open to some of those brand conversations and feedback.

The ones that have stayed around have been able to have conversations. They don’t just say no to an idea, they offer up solutions.

You have to be able to adapt and work towards a solution where everyone is happy with what they’re getting. It’s only a success if the creator is happy, the audience is happy, AND the brand is happy.

Some creators not willing to put forth the effort, and aren’t open to ideas or build off of ideas that are not their own.

Are you still with an MCN or are you independent?

All my channels are within different MCNs.

The deals I’ve structured are different than what most creators get. They’re in my favor more so than most of the contracts that these MCNs have with the 40,000 other people who signed with them.

What advice would you give to an up and coming creator? What kind of things would you advise them to keep an eye out for?

The first thing to keep in mind is that you’ve got a lot more negotiating power and leverage than you think.

In some cases I get 100% of my revenue. Oftentimes the MCNs will try to offer a revenue split over a certain amount of views. They say, “Hey, look, we did our math and over the last 12 months you averaged out this amount of views. We’ll do a rev-share split of this amount of views over your average amount of views.”

I say no to that because the last 12 months doesn’t mean anything to me. The last three months are going to be the most important numbers to me. And when you go down that math, you’re not going to come to an agreement.

I would also say if you’re going in with an MCN or any other company, you should do it with the idea of getting them to invest in you and your content (whether with upfronts or production support). By having them support you in creating more content, they’ll be invested in your success.

Also, limit your deal to no more than a year in length. Lastly, make sure you’re not just joining

for brand deals. Brand deals are great but you can get multiple managers and agents to represent you to get you those deals.

Where do you see the future of YouTube going? How do you juggle all these different platforms, and does YouTube have staying power?

I feel that YouTube is going to have staying power because of its massive library of content.

Facebook doesn’t have that much content, and I’m not sure if they are ever going to have it.

I think Facebook is similar to what YouTube was back in 2005-2009 — there are a lot more amateur videos and far fewer professional creator videos. YouTube on the other hand has really matured, and is closer to Netflix in the sense that the content has really developed and become more professional.

I feel that YouTube Red is a step in the right direction. And honestly, I think video platforms are going to evolve across the board between Twitter and Snapchat and everything else. We’re going to see different platforms cater to different types of content. I may go to Facebook one day to find a new viral video, but I’ll got to YouTube Red to watch something from a premier independent creator.

How do you as a content creator juggle all of these new platforms? How do you decide where to invest your time and develop an audience?  

It’s actually really natural.

I produce my content with the idea of being able to repurpose it for different platforms. So if it goes up on YouTube, it’s going to go up on Facebook. If it’s going to go up on Instagram it can go up on Vine.

Getting that content distributed across each platform isn’t really hard. I play around with each for a bit and figure out what works.

I took a great deal of interest in Facebook over a year ago and I played around with my content there and it did pretty well. Now I’m playing around with Instagram and it’s doing well there too.

I think people are thinking of their audience as being on every platform. The reality is that if it’s on YouTube, put it up on Facebook too. Put it up on Instagram. Put it up on everything you can. Do a quick edit and cut it down a little bit. Do whatever it takes. The amount of time that you’re going to put into repurposing and customizing content for each platform is going to show a return.

What’s the formula for success on YouTube? What does it take to build a successful channel?

It’s a combination of having fun and being logical. Everything I’ve ever done had to excite me and that doesn’t necessarily mean I didn’t get frustrated with it or I wanted to not do it at some point. You’re going to have speed bumps. But I was very excited to start. Very inspired. And I was very logical. I asked myself, “Okay, how much time am I putting into this? How much money am I putting into this? If this was money, how much money is this of my time? And how quick of a return can I get off of this?”

So when you go from being a personality on camera to investing into content and putting a team behind it, the decisions you make are all about ROI.

So I would say, if you want to be successful, do what you love but put some logic behind it. Put some business sense behind it.

Anything else to add?

The one thing that I will say that I’ve noticed over the years within this industry is that publicly we all say, “Yeah, everything’s all great and dandy.” But, privately you turn to your friend and you’re like, “F this. This does not make sense. This is so stupid. This is terrible. This is horrible.”

We’re all having these private conversations with each other, but we’re afraid to have them openly because we think we’re going to make people feel bad or it’s going to turn into some sort of World War III.