YouTube stars: Influencer marketing industry grapples with growing pains
Credit to Author: Cheryl Chan| Date: Fri, 27 Sep 2019 10:00:30 +0000
Justin Tse is living the dream.
The 22-year-old produces videos and reviews the hottest tech products for his YouTube channel’s 477,000 subscribers, jets around the world for product keynotes and events, and says he earns a cool “high six figures” doing it.
Last year, he dropped out of the University of Victoria’s business program, hired his first full-time staffer, incorporated his own media company and is now expanding into travel, lifestyle and fashion.
It’s a far cry from when, as a 13-year-old, he had to borrow a camera and gear to shoot his first YouTube video, send out up to 100 emails to companies every weekend begging for products to review, and spend every waking moment outside of school filming and editing videos.
“It’s easy to say I’m getting paid too much to do this,” said Tse, who has produced content for tech giants like Amazon, HP, Sony, Google and Intel. “But, as my mom reminds me, I have not stopped working for a decade.”
Justin Tse, who dropped out of UVic to become a full-time media influencer.
Tse is an influencer, a booming profession that didn’t exist a decade ago. With the rise of social media, influencers are a new breed of celebrity, often ordinary people who have built a large online following and can use their position to market products for companies.
Influencer marketing exploded about five years ago as companies and brands started to realize the power and reach of influencers. According to media agency Mediakix, the industry was worth about $500 million in 2015, and is expected to skyrocket to between $5 billion and $10 billion by 2020.
Along with growth, however, come growing pains. Concerns over fraudulent followers, authenticity and transparency continue to dog the industry.
Influencers usually have a mix of revenue streams, such as brand sponsorship, ad revenue, affiliate links, product sales, licensing and paid appearances.
The biggest earners — celebrities such as Kylie Jenner or soccer player Cristiano Ronaldo — can earn $1 million per Instagram post. One of YouTube’s highest-paid earners is an eight-year-old named Ryan who has been reviewing toys on channel Ryan ToysReview since he was three. His family earned $22 million last year, reported Forbes.
But there have also been anecdotal stories of big companies pouring money into an influencer marketing campaign without getting a return on investment.
Adam Ferguson (right) is co-founder of Ellify Talent Agency, which specializes in representing creators and influencers on YouTube. He’s shown here with one of his clients, Derek Gerard, a YouTube star with 1.8 million subscribers. Photo: Francis Georgian/Postmedia
“Influencer marketing had a bit of a negative connotation,” said Adam Ferguson, co-founder of Ellify, a Vancouver-based influencer marketing agency that specializes in YouTube stars. “But that’s changing.”
A few years ago, if a company budgeted $250,000 to spend on an influencer campaign, agencies would throw their biggest channels with the highest subscribers at it.
“But the (demographics) didn’t fit, the click-through rate didn’t fit, and the brand walked away spending a quarter-million dollars and got zero return on their investment,” he said.
Today, brands and agencies are savvier: It’s not just about the numbers, but also about demographics, engagement, quality and how the influencer aligns with the brand.
Influencers should also be smart about whom they partner with, said one veteran YouTube star.
“If you’re in this business, it’s not a sprint, it’s a marathon,” said Vancouver’s Derek Gerard, whose YouTube comedy channel has more than 1.8 million subscribers.
The 24-year-old, who has worked with companies like Audible and Squarespace and gaming apps, declined to say how much he earns, except to say slightly bashfully that it’s “too much.”
“An influencer who accepts a partnership deal that’s not a good fit may earn a quick buck, but their viewers aren’t going to be happy and brands aren’t going to be wanting to work with you in the future,” he said.
Maintaining authenticity is crucial to a successful influencer campaign. But as influencers get bigger, it could be a bit of a tightrope act staying true to themselves while accepting advertising bucks to earn a living. Too many paid posts, especially if they’re the wrong ones, could cause them to lose followers.
Hilary Johal and Jessica Thomas Cooke are business partners in the INF Influencer Agency, which represents social media influencers.
“It’s hard to navigate as a consumer as to what influencers actually like, or if they are just cashing in on a paycheque,” said Hilary Johal. With business partner Jessica Thomas Cooke, she established Canada’s first influencer marketing agency in 2014.
Their agency, INF, manages a roster of influencers, mostly in fashion, beauty, lifestyle and motherhood. It also has a casting division, which works with brands and agencies around the world to cast talent for influencer campaigns.
A win-win is for companies to be matched with influencers who have already expressed an interest or passion for their product — a genuine user, said Thomas Cooke.
“So when they partner with a company or becomes the face of the brand, their audience won’t be shocked or feel deceived when they see #ad or #sponsored,” she said. “They’ll be like, wow, here’s something the influencer has been talking about for months, and it attracted the company, and now they’re working together, and that’s really cool.”
Nadine Sykora in Thailand.
The industry was like the Wild West just a few years ago, said Nadine Sykora, a 31-year-old travel vlogger who described herself as an “OG YouTuber” (meaning original gangster) who joined the platform in 2007.
“There was no disclosure; you can get products for free and be paid to feature a product, and you never had to legally say you were being paid to do that,” she said.
Regulatory bodies such as the Competition Bureau in Canada and the Federal Trade Commission in the U.S. that protect consumers from false advertising require influencers to clearly disclose their business connections with a brand, including receiving free or discounted products or having an endorsement deal.
Earlier this year, U.S. watchdog Truth in Advertising filed a complaint with the FTC against 20 celebrities and social media influencers alleging they violated federal guidelines by not clearly disclosing their connection with brands. It is unclear if any of the influencers or companies has been penalized.
The group also filed a deceptive-advertising complaint recently against “kidfluencer” YouTube channel Ryan ToysReview.
Sykora, who has partnered with Best Western Hotels & Resort, airlines and tourism boards, said honesty is always the best policy.
“It’s being honest with your audience,” she said. “It’s your job as an influencer to pick brands and companies you enjoy and like so it’s not just pay-to-play — at least that’s not me. But there are people who will do that.”
Sykora discloses paid partnerships using a tag Instagram provides that’s visible at the top of the post, and uses hashtags #ad or #sponsored. On promotional YouTube videos, Sykora announces the partnership verbally, and repeats it in text that appears on the screen.
Steve Kates, associate marketing professor at the SFU Beedie School of Business, said the appeal behind influencers is that they are seen as more relatable, believable and credible than celebrities like Brad Pitt or Jennifer Lawrence.
“It comes down to authenticity,” said Kates. And just because there’s money involved isn’t necessarily a deal breaker. “You can have an authentic social influencer who is also being partly funded by companies but seen as authentic by the way they come across, and may even point out faults of the product they review.”
Johal said brands also have a role to play.
“We’ve seen this before where there’s a page of talking points the influencer is expected to incorporate in their 45-second mention,” she said. “That’s not realistic. It does not sound organic.”
What’s better, she said, is if the brand picks its top three messaging points and allows the influencer to incorporate them with their own voice into the content.
Derek Gerard may be making big bucks on his YouTube channel, but he laments that prospective influencers have to be largely self-taught because post-secondary institutions haven’t caught on to the trend.
Whether you embrace it, or roll your eyes at it, experts agreed that influencer marketing is here to stay.
New social media platforms are popping up regularly, opening up more avenues for creators to find fans, fame and fortune. Established platforms like YouTube and Twitter are also putting in more safety and quality-control protocols that could make brands less skittish to advertise on them.
Experts predicted influencer marketing to head toward more long-term partnerships between brands and influencers; bigger collaborations; and the growth of micro- and nano-influencers, who have smaller, more dedicated niche followings.
The new wave of content creators and influencers tend to be “more candid and real” and less curated in their presentation, said Thomas Cooke — something she believes will also be a shift in the industry.
Meagan Faye, who left a well-paying job at a top accounting firm three years ago to become a full-time fashion and lifestyle influencer, says people want authenticity, not perfection.
“In the current realm, everything is a lot of happy all the time, but I’m sharing personal things, showing my vulnerability to the audience,” said Faye, who has talked about her difficult childhood and other struggles on her channels.
“Even though what I do is aspirational, realizing that people struggle and go through the same things makes them relatable. And I think it’s good for people like us to share that more, open up, and let it out.”
Even as surveys found that being a YouTube star is the top sought-after job among kids, trumping traditional favourites like astronauts or doctors, educational institutions are not meeting the demand.
Some post-secondary institutions or adult education programs offer courses that teach aspects of how to be an influencer, but they are few and far between.
The current generation of influencers is mostly self-taught.
“I’ve never taken an editing course,” said Gerard, who attended college at his mother’s insistence, but dropped out after he gained 1,000 subscribers. “Ironically, everything I ever learned was from YouTube.”
Gerard said schools should consider offering courses that can help prepare kids who want to become influencers.
“Online video production now, more than ever, should be a viable option,” he said. “There are YouTubers who are making more money than teachers, doctors or lawyers, but there’s no real place to learn.”
Ferguson, who represents Gerard, said he constantly fields questions from youngsters about how to make it in the industry, and that he is working with a post-secondary institution in B.C. to launch a course later in the fall that’ll teach people how to build a social media brand.
“Fame nowadays has become so much more attainable because of social media,” he said. “You can throw whatever you want out there, and it might click.”
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