Influencers have changed the ad industry. Now what?

Do you struggle to keep up with all  the latest memes and internet trends? Before 2020, Munya Chawawa was  a relatively unknown comedian. But that changed quickly, as people were forced to  stay home, and inevitably spend more time online.

Chawawa's news parodies and satirical  characters on TikTok and Instagram made him a viral sensation, and  some would even say, an influencer. 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. 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. The creator economy is booming. So, everyone's releasing stuff all the time.

We're now recognizing them as sort of key  pawns on the chessboard of marketing. " So how did we get from this. .

. . .

. to this? Do you remember this Coca Cola commercial?

In 1994, it was considered groundbreaking,  using an ad to flip gender roles on their head. 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.

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 had to go through mass  media companies to do so. The idea somehow that information  comes from top down is done.

Richard Edelman is the CEO of the world's  largest publication relations agency, 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 badge  brand around, fashion, food and beverage.

Joe Gagliese is CEO of influencer  talent agency Viral Nation. 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.

While it may seem like the creator  economy sprung up overnight, it's actually a story two decades in the making. 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. 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. Everybody's a creator on TikTok, right.

If you think everybody can be a creator, we have such simple tools for people  to do, even I can even be a creator. In the U. S.

, the economic  impact that TikTok is having is roughly $24 billion into the  U. S. economy, and 225,000 jobs.

We think the economic impact of  TikTok especially, is significant. 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. 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. A 2019 Edelman study revealed that consumers' trust in the brands they purchase from had declined, but trust in influencers was up. 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've got to make sure you're actually  doing something in each local market. And Chawawa says that trust also extends to  the type of influencer brands work with.

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 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. 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  trying to reach a large audience. 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. 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.

And while that may be convenient for brands, creator economy strategist Jamie  Gutfreund says it can hurt influencers. 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 money. That is an unbelievable challenge.

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. 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. 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 of people who have the press expertise, the industry knowledge, and  actually investing in longevity.

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.