What is the creator economy?
Creator economy is the system built by independent creators on social media platforms such as Instagram, Youtube and TikTok, in which the content creators get the monetary compensation in exchange for their follower’s engagement. They design, create, and distribute their own content to the audience, with the goal of gaining more followers and engaging the followers they already have with their socials. The monetization of social media platforms has created a whole new working class of people who make their living out of producing content and accumulating followers.
The type of content and platform varies depending on the field of expertise of that creator, and each creator chooses the social media platform that suits them the most. Although they mostly have a main platform, in which they are most present, they are usually present in all the “big ones”, and motivate their followers to follow them on all the different socials. But followers and views aren’t enough, they need to be constantly active and engage with their audience, through comments and sharing.
How does the creator economy actually work?
The “creator economy” creates a mutual relationship between content creators, their audience, advertising brands and platforms. Those are the main stakeholders of this ecosystem, and together they generate value for each other. Each one plays an essential part in the relationship, either producing, consuming or paying for the content.
It’s a symbiotic relationship, none of the parties can survive without the others, and they all give and take something. The creators need the audience to consume their content, and the platforms and the advertising brands to support their content. The audience exchanges their time and attention for good content. The brands use the creators as a tool to get to the audience. And the platform needs them all to have a purpose to the existing. It’s all a delicate balance.
The creators are the creative side of the equation. They come up with their own content and develop personal branding to attract the attention of a specific public. Their content can vary between a range of topics and motivations. The most popular, the vloggers will document their daily life and show it to the internet. There are teachers and experts who will dedicate their lives to spreading information and educating others. Some will dedicate their time to niche content, like fashion or gaming.
Brands will look for these influencers to establish partnerships and sponsor their content, and this plays an important part in the brand’s online marketing strategy since they make use of the relationship of trust the creators established with their audience to sell their products. In exchange, these brands will send them samples and freebies of their products in the form of PR packaging or pay them for a sponsored video.
The audience will sign up and create their own account on the social media platforms, and use it mainly to consume the content the creators produce. They are the reason for the success of their favourite creators and support them by engaging with the content, liking, commenting and furthermore, buying the brands that those creators advertise.
The brands are the monetizing motor of this whole circular economy. They make partnerships with influencers and pay for their time and content, and in exchange the influencers use their -well- influence, to motivate people in favour of that brand.
The platforms are the place where this whole ecosystem works. Sometimes, the platform itself will reward the content creators for their followers, likes or views. They do this for two main reasons. First, to keep the content more organic and less influenced by brands, and second, to give all creators a fair chance of making a living out of their platforms, encouraging people to join their community.
The multiple social media channels and their monetization systems
Different media channels move the creator economy and reward their creators in different ways. Some a view based, some a like-based. And creators can use these platforms in three main ways: the platform gives them money, sponsoring from brands, or promotes their own businesses and products.
Youtube was the first platform to motorize the creator economy and give creators compensation for their views. This is called “monetized content” and will motivate creators to keep up with the good work. Youtube calculates how much a creator will get based on their views and engagement rate. If the engagement is high enough, this is enough to support one person and be their only font of income. However, many influencers take advantage of the sponsoring opportunities and make extra cash from partnerships.
Differently from other platforms, Instagram will now reward its participants with monetization. The main way of making money out of Instagram is called affiliate marketing, and it’s based on the partnership between brands and content creators. The creators will look to create an “aesthetic pleasing” feed and stories while posting frequently and interacting with their followers. Once a certain number of followers and engagement is reached, they will start getting offers from brands wanting to collaborate. This moves the creator economy in a different way than other platforms. In this one, since creators depend on brands to give them revenue, the content is a lot less organic and looks more fabricated, since creators want to please brands.
On TikTok, the most recent of them all, making money out of the platform is something quite new. There are three main ways to make money on TikTok:
- Branding themselves and attracting sponsoring brands
- Using it as a tool to promote their own business
- Being part of the “creator fund”
TikTok is a little different from other socials. Others will pay a small amount per view or per engagement, while TikTok basically created a huge account of money that is distributed among creators. When they hit the mark of 10K followers and 100K views in 30 days, along with other qualifications, they can apply to be part of the creator found. The amount you receive depends on a series of factors, such as views, engagement rate, likes and comments.
However, the most viral and popular creators will receive, at best, a couple of thousands of dollars, and smaller profiles can’t make a living out of it. Consequently, they search for other forms of revenue income, such as brand sponsoring or opening their own small business and using the platform to promote it.
Influencers: social media as a work tool
Instagram, Facebook, TikTok, and YouTube started as fun websites to post pictures of our pets or to share memes with our friends, but quickly became powerful tools to promote your private label business inside the creator economy. Over the years, having a social media presence has become one of the most important things both for big personalities and growing companies, and the search for a better social media marketing strategy has been growing exponentially. Now, it’s a pillar necessity for every brand that wants to have a close and trustworthy relationship with its customers.
We are in the era of digital natives, with 84% of adults from ages 18 to 29 being active on social media, and most of them being online daily, it can also be used as a searching tool to discover new trends and private label brands, and 55% of customers stated that they learn about new private-label brands on the internet, via ads, influencers, social media profiles or just organic engine searching. For private label brands, this means a whole new way of doing market, and a new tool to explore.
Influencer Marketing: a powerful tool for businesses
What are influencers?
By definition, an influencer is someone who has the power to affect others’ decisions (more specifically, purchasing decisions), given to their position and relationship with their audience. An influencer usually has a following on social media, such as Instagram, YouTube, or TikTok and uses, intentionally or not, their influence to motivate behaviour in their audience, and can be a powerful tool of influencer marketing.
Anyone can be an influencer, makeup artists, gamers, moms, athletes, private label brand owners, and many others, as long as you have a charming personality and something interesting to share, you can find a following online of people with the same interests as you.
Recently, with the growth of the internet and social media, influencers have become more and more common. Because of the opportunity for monetization, provided by the biggest social media platforms, it turned into a profession that many people seek. Because of this, other jobs have also come along, such as social media manager, copywriter, app developer, graphic designer, and many others.
How to use influencers in your favour
Influencer marketing can happen in many ways, and it’s part of the marketing strategy to choose what are the best tools and actions, and what personalities to choose to be the face of their branding.
Sometimes, a brand will send a one-time PR package for a known influencer for a genuine review on their platform, or they will contact the influencer previously to have a paid appearance on their videos, asking the influencer to say something specific about them. Even more, a big brand can have “brand ambassadors” with whom it has a long-term relationship, frequently sending products and PR packages to review and participating in events under the brand’s name, documenting every step of the process on their social media, and engaging their followers.
A swimwear brand might want to connect with athletes, beach enthusiasts, surfers, and people close to the beach or that have a pool. A vegan protein powder line will want to associate with bodybuilders, fitness influencers, and people that exercise a lot. No matter what products and services you sell, there is always an influencer waiting to collab and make partnerships.
How big is the creator economy?
It is a very known fact that the creator economy is big – and growing. But how big is it? It’s hard to imagine since there are so many platforms and creators out there, but according to the 2022 State of the Creator Economy Report, the market is bigger than we all imagined. It’s not an easy job to quantify the number of creators in the creator economy, but the Influencer Marketing Hub estimates that 50 million people out there consider themselves content creators. Of those, 93,4% consider themselves amateurs, while the remaining 6,6% -that sum up to two million- consider themselves as professional creators, making enough revenue for this to be their only source of income.
Since Youtube was the first platform to pay its creators, it’s normal that more than half of those 50 million have youtube as their main social media platform. Right after, 12,5 million consider themselves Instagram influencers, and 300K are professional twitchers. The rest is spread across multiple platforms and types of content. In total, it’s estimated that the size of the creator economy is over 104 billion dollars. It’s hard to estimate how much each influencer makes, since they all have multiple sources of income, and once the millions are hit, they get showered with brand collaborations and partnerships. However, Fortune Magazine reports that the top ten YouTubers, alone, made from 30 to 50 million dollars in 2021 alone.
TikTok was the social platform with the biggest growth internet has ever seen. Because of the pandemic, the dancing app had a growth of 45% between the years 2020 and 2021, reporting more than 1 billion users in September 2021. In a matter of two years, TikTok has reached what Instagram, Facebook and Youtube took decades to conquer, and is here to stay.
Where is the creator economy heading?
It’s no secret to anyone that “influencers” and “creators” are here to stay. Social and video platforms play an important part in the 4.0 era, and as long as the internet exists, they aren’t leaving any time soon. In fact, today, instead of dreaming of being astronauts or firefighters, kids today are three times more likely to say they want to be Youtubers when they grow up. The monetization has grown as well, ten years ago, the top 0,5% of YouTubers would be lucky to make $1 million a year, and now the same top 0,5% are easily making $20 to $40 million a year.
These personalities not only are a success on the screens but are also starting to invest all this money they collected and open their own startups, with the potential to be the next generation of unicorns. I mean, if you give an insane amount of money and resources to people that were creative enough to accumulate millions of followers, it’s only logical that they will have some creative ideas on what to do with it.
TikTok is the next big hit. In a year, the platform managed to compete with decade-long established competitors. The short videos and funny comments are an infinite font of serotonin, perfectly engineered to maintain its target stuck to the screen for hours. Generation Z and generation alpha, already highly affected by the current happenings of the world, had to go through, at a very young age, a global pandemic that forced them to stay locked inside with only their devices to entertain.
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