Economics of Influencer Ventures

Let’s reveal different ways a creator can monetize its brand influencer, and see what the future of influencer ventures looks like.

As a very immature YouTuber with 3 videos to date. I have always found the idea of content creation to be very fascinating and is often misunderstood to a large extent. Having watched a good amount of Youtube channels vary from HK creators (Manner Production, FH Production) to UK (Ali Abdaal) to US (MrBeast, Emma Chamberlin, MKBHD, Graham Stephen, David Dobrik).

It is intuitive to conclude that Youtubers, creators on the Youtube Platform are extending their presence and creating new ventures beyond Youtube’s AdSense monetization program. The rising trends in social commerce, increasing leisure time (screentime) and more affordable content creation technology (cheaper and better) have paved the way to Influencer Ventures.

Source: Elliot Choy Twitter

Youtube was started with the idea to let ordinary people share their “home videos” online with other people. And now translated to its mission to give everyone a voice and show them the world….. share and build community through our stories. Youtube now has grown into a platform with over 2 billion monthly active users when an average adult spends 41.9 minutes on Youtube daily — and it has shown no signs of stagnation but acceleration only.

The breadth of content has also extended way beyond Hollywood as it is made from ordinary people for ordinary people, some popular categories include:

  • Gaming — 201 billion views in 2020 on Minecraft
  • Exercising — 72% of people used Youtube to exercise in 2020
  • Music — Top 40 Most Views Videos are all Music
Youtube Business Model

Being a Full-Time Youtuber today is much more acceptable and feasible than 3–4 years ago given the current traffic and technology. And in fact, most YouTubers do not monetize their content and brand through Youtube’s owned AdSense, Youtubers always try to diversify their revenue streams through other avenues such as brand partnerships and merchandise.

Merch: Speaking of merchandise, most people will be able to associate with Merch, clothes that are designed by the Youtuber and are sold to subscribers who feel aligned with the Youtuber. It is often very effective for relationship-driven content creators, who is able to share a personal connection with the audience. Merch is able to generate one-time revenue for content creators and is often most widely applicable to all types of audiences.

Merch Examples

Physical Products: Outside of merch, creators often release products that are directly associated with their channel and interested audience. For example Amanda Rach Lee creators journalling and calligraphy vlogs, it is intuitive for her to release stationery products for sale, the same applies to Peter Mckinnon for Videography. For FH Production HK, they leverage their symbiotic headset and created products using that imagery, similarly to merch.

Courses & Mentorship Program: The second most popular monetization method is through courses and mentorship programs. Youtubers aim to convert subscribers into paid members with their courses, coaching contents and facetime. It is very effective because the most audience already has a great understanding of the creators through their contents on Youtube, in addition to the sentiments they have towards the Youtuber — the barriers to purchase a creator that you subscribed to is much lower to a stranger who is selling you a course based on his paper credentials.

Another benefit of courses and mentorship program is that it is very high margin and can easily scale. These content-driven monetization methods helped creators to generate a more sustainable revenue stream and also another avenue for creators to interact, coach, build relationships with loyal members.

Courses & Mentorship Examples

Now things are getting a little more strange, as the creator economy continues to grow, creators are exploring other avenues than the two mentioned above to monetize their influential power and brand. It is also something that I am personally very excited about Youtubers in the future.

Food & Beverage: Food and Beverage is a very interesting breakthrough for creators, beyond the aforementioned products/services. It involves supply chain operation and sophisticated distribution strategy within the product itself, however, the products themselves are more versatile than any of the products mentioned because of their commoditization nature. These products are available both online and brick-and-mortar, customers of these products do not necessarily have to be subscribers of the creators, but the creator brand will have substantial influential power towards customer preferences.

Emma Chamberlain began a coffee brand and have included the brewing process in every single vlog — making million impressions for the brand, subtly delivering a message, “buy this chamberlain coffee, then we can share a routine together, you can be more like Emma Chamberlain!”. On the other hand, Josh Richard, as a TikTok influencer who had conducted multiple deals with energy drinks companies (G-Fuel and Redbull), he decided that he might be better off just creating an energy drink company himself, so he could fully capture the value he created as a teen man who lives a crazy lifestyle. Manner Store has introduced pistachio for audiences who enjoyed their short funny videos, leveraging the strong health snack culture in Asia.

Apps: For even larger scale Youtubers, especially channels with gaming-focused creators. A mobile application comes off very effective in extending the relationship-building process beyond the Youtube platform. These apps are created based on the channel’s aspiration and built with their channel terminology/language. Which has helped creators to further monetize their audience with their screen time spent on the app. Most apps held on a freemium model and creators are not directly involved in it.

Others (Mr Beast Projects): MrBeast, as one of the largest YouTubers in the platform, spending millions and millions of dollars into creating superlative content — share a goal to become a philanthropist to address poverty and inequality existed in the society through donations and giveaways.

After the rapid failure of negotiating a deal with brands like McDonald's, Burger King to establish MrBeast branded products. MrBeast launched their own delivery-only-fast-food restaurant chain MrBeast Burger with over 420 stores across the United States. The success of the influencer-branded food has once again manifest by the partnership between McDonald and Travis Scoot. MrBeast’s Youtube’s followings have granted the chain an unfair advantage to combat existing competitors and the process is likely to replicate itself in other B2C industries in the future.

On the other end, MrBeast launched Creative Juice, an equity-financing platform network for creators. MrBeast will invest up to $2M, cutting check sizes from $25k to $250k to qualifying Youtube creators. The venture assimilates Y-Combinator startup models but specifically for Creators, through a combination of mentorship, minority investments and community support. Creative Juice strives to address the knowledge gap for amateur YouTubers to help them grow and scale their platform.

In 2021, there is a substantial increase of venture capital and technology startups in the content creation space — capitalizing on the rising importance of creator’s brand value. As Youtube continues to cannibalize and combat Hollywood, the Youtube platform has become a gold mine for investors to capture. However, there are a few key differentiating factors and underlying rules for content creators.

Source: Colin & Samir (MKBHD Interview)

The key difference between Youtubers and Hollywood Stars is that Youtubers are the central and heart of the channel and operate like an octopus with arms (editing, marketing, planning, executing, etc), in contrast to Hollywood stars who are skilled in specific areas (action, emotions, appearance, etc). As the channel scales, Youtubers do not move up the ladder but begin to outsource their work to other people. However, because the execution, content planning and editing part are so essential for the creators, they cannot afford to outsource their content creation part, but rather the strategic planning plan of the business — leading to this creator-centric organizational structure, much different than any companies with a top-down hierchary.

Source: Elliot Choy Youtube (How Much Youtube Paid Me For 23 Million Views)
  1. With Youtube’s current volume of advertisers and audience, there will be an emerging working class of Full-Time influencers who can sustain themselves financially without an astronomical number of subscribers (e.g. Elliot Choy, CantoMando, Daniel Schiffer, etc)
  2. Brand collaborations are much more common on Youtube and is appreciated by large household brands outside of Skillshare, Grammarly, VPN etc. (David Dobrik’s partnerships with Seatgeek (Tesla Giveaways), AmandaRachLee’s partnership with Samsung, MrBeast’s partnership with Honey.) There will be more branders chasing fewer YouTubers, increasing Youtuber’s scarcity and reducing reliance on social media advertising.
  3. There will be a greater supply and demand for creative jobs such as editors, scriptwriters, videographers, and creators — implying a need for an influencer-exclusive professional network.
  4. More examples of Youtuber-found companies are expected sooner, in many forms beyond merch and courses. It will increasingly become a threat for giant corporations if they don’t establish relationships with content creators now before they come against you. Especially in consumer businesses.

Personally, I believe content strategy is going to be the future of retail businesses. The impact from direct advertising seemed insignificant comparing to direct brand endorsement by influencers, for both brand lift and direct action purposes.

Corporations should also learn from influencers that the benefits of developing a strong association with day-to-day objectives and lifestyles have a hugely significant impact on brand value. And also to realize the market strategy shift has changed from physical (flyers) to remote (radio/TV), remote to digital (social media), digital advertising to content creation (original contents available on platforms).

If you have any comments about the content, don’t hesitate to reach out at aha.hba2022@ivey.ca. I am more than happy to adjust the content above if anyone brings a new viewpoint to the table.

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