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Influencers are putting up paywalls. What does that mean for brands?

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By Kati Chitrakorn.

Influencers are charging fans for a more intimate social media experience, calling the future of brand partnerships into question.

Key takeaways:

  • Influencers with big followings on Instagram and other platforms are starting to put up “paywalls” by charging fans for exclusive content.

  • Some charge a monthly fee to become a “Close Friend” on Instagram, while others are trialling WeChat’s new paywalls. In effect, content quality is becoming a focus.

  • While these payments add another revenue stream for influencers, analysts say brand partnerships will remain as a source of credibility.

Caroline Calloway, a 28-year-old internet personality known for her lengthy Instagram captions, and, more recently, the controversy surrounding her workshops and her relationship with Natalie Beach, started offering her 717,000 Instagram followers the option to sign up for paid access to her “Close Friends” list in August 2019. She decided the content on her Instagram was personal enough to warrant paying for.

“What I do provides value and I should be compensated for that service, just like anyone else,” says Calloway. “A stranger is not entitled to consume what I make, just as I am not entitled to reap the benefits of whatever job they are employed at.”

Patreon, a membership platform that launched in May 2013, lets creators set up pages for subscription payments from patrons by offering certain perks or incentives, and donors can pledge certain sums of money based on those tiers and perks. Today, it counts over 150,000 creators and more than 4 million patrons.

Fans of Calloway can pay a monthly fee of $2 via Patreon to see her “Close Friends” Instagram Stories, or $100 for exclusive content plus a monthly 25-minute FaceTime session with the influencer herself. “Because my content is monthly, I want what I make to be really special and meaningful,” she explains. For Valentine’s Day, she planned to share with her 419 Close Friends the details of her secret boyfriend.

Caroline Calloway

© Caroline Calloway

Gabi Abrão has used Instagram’s Close Friends feature in a similar vein. The 25-year-old Los Angeles-based artist behind the popular meme account @sighswoon, which counts over 104,000 followers, discovered Patreon last summer. “It was a lot of people wanting more from me. They wanted more things about my life and more content,” she says. “I thought about how I could make content that was more personal but have a guaranteed income.”

Abrão currently has 415 subscribers on Patreon: for $3.33 a month, she’ll add users to her Close Friends list on Instagram. For $9, she’ll share a vlog every week on a password-protected Vimeo site. For $55 a month, users can receive merch. Fans who pay the highest tier — $222 a month — receive personal emails from Abrão every week, answering questions, giving advice or just talking about their lives.

Calloway and Abrão aren’t fashion influencers, but the industry has a collection of Instagram personalities who have massive, monetisable audiences: Chiara Ferragni has over 18.5 million followers on Instagram; Aimee Song has 5.5 million. There’s also opportunity for magazine publishers like Vogue — 26.2 million people follow US Vogue on Instagram alone — to offer exclusive behind the scenes content for a fee. (Vogue Business and US Vogue share a parent company, Condé Nast.)

Influencer marketing is a growing industry. The global influencer market is expected to reach $15 billion by 2022, up from $8 billion in 2019, according to Media Kix data. But it’s nascent, and any shift can spell change for the entire category. Last year, Instagram experimented with hiding the number of likes on posts, with the intention of minimising the social pressures that come with social media. Some experts believe if this becomes a permanent feature, it could incentivise brands to spend more on ads and less on posts that feature influencers.

Influencers who develop a second revenue stream through the monetisation of close friends and private groups could be seen as a threat to brand partnerships, as they can drive their own income and might be less likely to want to introduce ads or sponsored content to an already-paying audience.

But it could also be a benefit for brands, as the influencers they work with could be more likely to develop stronger partnerships and produce higher quality content. “It will enable influencers to avoid having ‘one night stands’ with brands and rather focus on creating long-term ambassadorships with brands that are truly authentic to their lifestyle,” says Krishna Subramanian, CEO of influencer marketing and branded content firm Captiv8.

Private subscriptions for fans

“It’s the way of the future,” says Subramanian. “If you look at these fan clubs or VIP memberships that have launched, it’s tied to exclusive, specific types of content being provided by influencers and celebrities.” Erotic models have paved the way here by offering private subscriptions for their most loyal fans on platforms like Onlyfans.

Instagram introduced its Close Friends feature in November 2018 as a way to give users a space to post less curated content, similar to what has become increasingly popular with secondary “Finstagram” accounts. (The launch of Close Friends was a transparent move to recapture the interest of younger people, who were turning to platforms like Snapchat and TikTok for content they don’t want parents, teachers or any unapproved eyes to see.)

According to a spokesperson at Instagram, the Close Friends feature is used by millions of people worldwide today, with the average Close Friends list being around 20 people.

While influencers like Calloway use the Close Friends feature as a hack to charge money for more intimate access, others ask that their fans fund and support specific projects. Former venture capitalist Jenny Gyllander, who runs the product-review Instagram account @thingtesting with 42,700 followers, charges a one-time fee of $100 for a spot on her Close Friends list, which includes exclusive content such as a behind-the-scenes look at her product review journeys. (Three hundred people have been granted access so far, and Gyllander says there’s currently a waitlist.)

Gabi Abrão of @Sighswoon

© Gabi Abrão

This gives creators a way to monetise their work without relying on brand-sponsored posts. It also incentivises them to make more quality content. Millennial astrologer Aliza Kelly charges users anywhere from $5 to $200 a month for varying access to The Constellation Club — which she describes as “a private virtual community built around astrology, magic, spirituality and esotericism”. Of her 28,500 Instagram followers, about 300 have signed up for a paid subscription, which at its most basic level offers access to the chat group on Discord and private Instagram account @constellationclub.

“I’m trying to provide a balance of free content for people to enjoy on my Instagram, while also being able to give paid-for, personalised attention,” she says, like providing birth charts or answers to questions about compatibility.

For Tribe Dynamics president Conor Begley, the opportunity for influencers to monetise their fans “should give more freedom to post content that their audience will find interesting rather than purely branded content. We’ve recently seen a decline in the volume of branded posts being created by influencers that this could be connected to”.

According to Kelly, her fans are global, with most being in the US, followed by Canada, Australia and the UK. She says that the paywall approach has been a significant way to “build a community, scale my business and offer my true dedicated fans the type of quality content they wouldn’t be able to receive on a free basis”.

New forms of social media transactions

While Patreon has helped build out this model, other platforms enable similar transactions. On Twitch, people can buy virtual goods as gifts for creators. TikTok allows users to “tip” live streamers (although some creators have been linking their Venmo handles in their captions so fans can send donations directly). YouTube quietly rolled out a subscription-inspired “join” button in 2018 where fans can pay creators a monthly $4.99 fee in return for rewards such as members-only content, early access to new videos and merch discounts.

In January 2020, WeChat — China’s most popular social messaging app, with over 900 million users — began rolling out optional paywalls on a trial basis. According to the platform, articles published by its 500 most popular accounts received 39,000 views on average in 2019.

Li Huanxin, a content creator with over 500,000 followers on WeChat, was among the first to introduce a paywall to his account, where he publishes commentaries on social issues. His article about WeChat’s new paywalls costs RMB 1 ($0.15) to read and has been purchased over 5,000 times since it was published on 15 January.

The Constellation Club founder Aliza Kelly

© Bridget Badore

Meanwhile, Li Jianqu, who runs a history and politics-focused account, with 33,480 followers, normally has an article open-rate of 37 per cent, far above the industry average of 1.2 per cent. On 17 January, he posted an article discussing issues in Iran that was available to read for RMB 3 ($0.43). Nearly 700 readers paid for the post, accumulating him RMB 2,064 (about $295).

These paywalls don’t always pay dividends. According to data from Tom Boruta, a developer who tracks Patreon statistics under the name Graphtreon, only 2 per cent of Patreon’s creators — 1,393 people — made the equivalent of federal minimum wage of $7.25 an hour, or $1,160 a month, in October 2017, indicating that in this network initially designed to support creatives, most of the money is still concentrated at the top.

If influencers make money directly from their followers, it would be an added revenue stream, but it doesn’t mean they won’t still go after brand partnerships, says Harry Hugo, co-founder of influencer marketing agency Goat, because being associated with brands like Mac or Gucci still represents a level of clout.

“As influencers get larger, they can monetise in a variety of ways that don’t involve brand partnerships, whether it’s launching their own brand, getting a cut of advertising revenue through YouTube or paid subscription services to exclusive content,” adds Tribe Dynamics’ Begley. “But brand partnerships will continue to be a part of the equation because these brands can have a positive impact on an influencer’s credibility and audience.”

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By Kati Chitrakorn

Sourced from Vogue Business

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Payment instalments are now a fashion marketing play

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By Maghan McDowell.

Brands are advertising partnerships with startups like Klarna, Affirm and Afterpay to acquire customers.

Key takeaways

  • As customer acquisition costs climb online, brands are treating payment instalment services as a marketing tool.

  • Deferred payment options are attractive to younger, price-sensitive customers who are new to the concept of layaway.

  • While positioned as an alternative to promotions and credit cards, brands are treading carefully.

SAN FRANCISCO— Style360, a New York Fashion Week event organised by publicity firm A-List Communications, is known for hosting celebrity fashion presentations. Last autumn, Serena Williams’s S by Serena collection made its debut; Kim Kardashian West, Eva Longoria and Ashley Graham came before her.

This season’s featured star is decidedly more technical. Klarna, a Swedish bank that partners with brands to let e-commerce customers pay for goods through instalment plans, is hosting the Klarna Style360 shoppable presentations and pop-up event. Klarna clients including Saski Collection and Just Drew will debut collections that guests can then buy. It’s similar to the “see now, buy now” retail model that designers like Rebecca Minkoff and Tommy Hilfiger have adopted, the difference being that customers don’t have to put down the full payment at once. In lowering the barrier to purchasing, the marketing message is “buy now, wear now — pay later”.

Klarna’s fashion week sponsorship is part of a surging courtship between payment companies and fashion. Online retailers already offer an assortment of services like Paypal, Shopify Pay and Apple Pay that help customers breeze through checkout. Now, retailers are partnering with companies that let customers pay in instalments, sometimes with no interest, including Affirm, Afterpay, Four, Quadpay, Viabill, Sezzle and others, in addition to Klarna. Investors are fuelling competition in the category: in 2019, payments-related companies accounted for $12 billion of the total $40 billion in financial tech funding in 2019, tripling in the last five years, according to Venture Scanner.

A modern spin on layaway, these payment instalment startups are being used by retailers as a marketing tool. They serve a similar function to promotions, but without the discounts: a Revolve shopper considering a $140 Jeffrey Campbell shoe, for example, will see that it can be had for four monthly instalments of $35, securing a purchase that otherwise might have been out of reach. And they can help draw customers in at a time when dollars spent on social media are getting brands less visibility. Women’s footwear startup Birdies shouts out Affirm in its online ads; when Kylie Jenner’s cosmetics brand began offering instalments, she enthusiastically promoted it on Facebook to her 22 million followers.

A different customer acquisition cost

Klarna, used by brands and retailers globally including Farfetch, Marchesa, Givenchy and Burberry, charges retailers between 4.5 and 5.9 per cent of each transaction depending on each retailer’s negotiated rates; in exchange, the retailer is paid upfront, and Klarna assumes the risk of collecting payments.

This is more expensive than credit card companies, which typically charge up to 3 per cent plus 30 cents per transaction. Klarna head of US David Sykes says “community” benefits are built into the cost. When Klarna onboards a major retailer, it will typically invest in a co-marketing campaign, he says. When the company launched with watch brand Daniel Wellington in New York, for example, it contributed to funding a campaign wrapping the city’s subways. It also promotes brand partners to customers, targeted based on shopping history, and emails relevant discounts to its 70 million US users.

He says Klarna can drive new customers to stores thanks to its marketing effort, which Sykes compares to the cost of paid social media, adding that partners should think of it as an affiliate marketing channel. One apparel startup CEO says that some of these platforms will go so far as to supplement advertising costs, depending on the size of the business, with the stipulation that the payments platform is mentioned.

The cost of paid social customer acquisition is on the rise, and it’s squeezing margins for fashion and direct-to-consumer brands, says eMarketer principal analyst Andrew Lipsman. The RealReal’s CAC, for example, averaged $139 per person in 2018. Norwest Venture Partners general partner Sonya Brown, whose firm has invested in Birdies and luxury handbag brand Senreve, says investors are looking for increasingly diversified customer acquisition strategies.

Senreve, which offers instalments through Quadpay, has been “extremely scrappy” when it comes to paid marketing spend, says CEO Coral Chung, adding, “We also realise it’s really important not to be too reliant on any single platform.”

Los Angeles-based workwear brand Argent partnered with Afterpay before scaling its digital advertising efforts this year. Founder and CEO Sali Christeson says that an instalment service is complementary to digital marketing because it might be more appealing to a customer who discovered the brand through a Facebook or Google ad.

“We made Afterpay a priority because we know that more new shoppers mean less familiarity with our brand and price point, and for some of those shoppers an instalment-based payment lowers purchase barriers,” Christeson says.

The Klarna Style360 is one of many recent fashion marketing partnerships.

© Klarna

Klarna

Conversion without discounting

With instalment payments, brands can lower the barrier to making a purchase without relying on discounting. This format is particularly appealing to young consumers who may not yet be able to afford upfront the fashion brands they aspire to buy but are wary of credit cards.

Jamie Slye, founder and designer of an eponymous Seattle-based hat brand, recently began offering instalment payments through Miami-based Four in part to appeal to younger, price-sensitive customers. The payment option is promoted in a banner on her brand’s website. While payments haven’t typically been part of her marketing strategy, she wants customers to know that they don’t have to pay full price, which can range between $140 and $225, upfront. Otherwise, she says, someone who is price-conscious might be deterred. “I really like the idea that I can expand my audience,” Slye says.

Birdies wanted a pay-over-time provider after learning that 65 per cent of shoppers avoid credit cards for retail purchases. Co-founder and CEO Bianca Gates says that the brand ultimately chose Affirm because it offers customised repayment options; Birdies customers often prefer to divide payments over three months, she says. Birdies promotes Affirm on product pages and in its online advertising, emails and social campaigns. Gates says it’s especially popular with the brand’s younger demographic.

Younger customers see new payment options as “ubiquitous and necessary”, says Gartner senior director analyst Derek Stubbs. “Consumers are going to places to make a purchase and not necessarily thinking about payments. But if a purchase can’t be made by the platform they expect to use, they just won’t go there.” That includes offline purchases. Klarna has now expanded into physical retail, including H&M and trials with Good American, and is seeing comparable traction there, Sykes says.

While younger customers are a primary target, Revolve co-CEO and co-founder Mike Karanikolas says that customers who use Afterpay on his site are not exclusively of a younger demographic. “We find it’s universally appealing,” he says. Revolve has promoted Afterpay through its influencer network, and during marketing moments throughout the year.

In addition to promoting Afterpay on product pages, Revolve has promoted the partnership through its influencer network and in other “key marketing moments,” such as #RevolveSummer.

© Revolve

Revolve

Credit with caution

For its deferred payments option, Canadian apparel brand Kotn chose New York-based Quadpay, which Kotn’s chief digital officer Ben Sehl says has led to better conversion and a slightly higher average order value. But the brand doesn’t actively promote it, in part because of concerns that customers will use deferred payments as a “try before they buy” service while only having to pay for a quarter of the merchandise upfront.

Others have criticised instalment plans for encouraging financial irresponsibility and disguising the fact that many still make money off of customers who are unable to pay their balances in time. Afterpay, for example, made about 19 per cent of overall earnings from late fees in 2019.

Ultimately, fintech startups hope that fashion brands will increasingly see pay-over-time services as a way to make high-value purchases more accessible; Shopify director of product Andre Lyver anticipates that merchants will increasingly diversify payment methods with instalments, micro-payments and split payments in the years ahead.

But while Klarna might sponsor the fashion week shows of emerging brands, a luxury brand might be less inclined to broadcast instalment plans with a splashy marketing campaign. “Brands are, quite rightly, very conscious about how they position their brand,” he says. “It’s going to be a slow process, and there’s always going to be hold-outs, but when you think about so many of these retailers, they’re chasing a millennial audience.”

Correction: An earlier version of this article stated that Afterpay made 25 per cent of overall earnings from late fees last year. That figure was from 2018, not 2019.

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By Maghan McDowell

Sourced from Vogue Business

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PostcardMania Offers Triggered Direct Mail

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Brands that use direct mail as well as email can send triggered postal campaigns, thanks to a new integration between PostcardMania and Zapier.

The service is available to users of over 238 CRMs and marketing platforms, including Salesforce, Hubspot, Pipedrive and Acuity Scheduling, PostcardMania says.

Brands can add trigger-based direct mail to marketing pipelines and funnels on an ongoing basis, the company says.

Zapier allows users without technical skills to connect unrelated web applications such as their chosen CRM and PostcardMania’s API, it adds.

Presumably, a triggered direct mail campaign would work best when done in tandem with a triggered email effort.

In one potential use cited by PostcardMania, a local gym can send a triggered postcard to someone who signed up for a free one-day trial pass, saying, “John, here is your 1-day trial pass to your local gym. Thanks for signing up!”

Such businesses can send such personalized postcards for $0.55 to all new leads added to their CRM, regardless of low numbers. This would have been impossible in the past, the firm claims.

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Sourced from MediaPost

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Brands of the Future Will Thrive By Operating With a Higher Perspective

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It’s the most efficient route toward long-term success

When was the last time you looked up? That’s a question I’ve been asking myself a lot lately.

Amid endless to do lists and nonstop distractions, we spend our days overwhelmed with urgency. We’re so focused on what matters right now that we rarely take the time to look ahead and consider what will matter next.

What we all need is more time to spend thinking, to prove an idea, to do the things that inspire us. But time is the one thing that we’re not often afforded.

As business leaders, our success is often measured by delivering immediate results. So it’s no surprise that we spend the majority of our time focused on the day to day. According to a recent CMO survey, two out of three marketing leaders tend to focus on “managing the present” rather than “preparing for the future.”

Of course, we all know we need to look further ahead to promote long-term success for our businesses. History has proven this again and again.

Think of Disney. The company that launched as an animation studio took the notion of entertainment and film and brought it to life across experiences from theme parks to travel to stores. Today, nearly 200 years after launching, Disney is one of the most successful companies in the world. Or consider IBM. A decade ago, they made a decision to stand apart from competitors and stop selling hardware. Instead, they focused on their intelligence products like Cloud and Watson that imbued that hardware with value and functionality.

Disney and IBM have one thing in common. They looked up from the present, and in doing so, they charted a path to long-term success. This is what I mean by having a higher perspective and how you can apply these principles to your own ways of working to drive success in the decades to come:

Investigate deeper human truths

It’s easy to get caught up in trends, but brands of substance that endure can separate fads from fundamental shifts and uncover the underlying drivers of change.

We can all do this with a mindset shift. Rather than fixate on the present, create space for higher order thinking. Get into the habit of asking why an issue or story is resonating, why certain behaviors are changing. What you are missing about your audience and how their attitudes are evolving.

Find the answer to these questions and apply the learnings to evolve your brand to meet consumers’ changing needs.

Stand apart from competitors by taking a bolder, unconventional approach

A recent study shows that 63% of global consumers prefer to purchase products and services from companies that stand for a purpose. That shouldn’t surprise anyone reading this, as purpose has become paramount across the industry.

However, it’s becoming increasingly harder to stand out. Only 12% of consumers can link brands and the causes they support.

Purpose-driven brands need to take a bolder point of view and apply unexpected perspectives or lenses, to stand apart, even on mainstream issues.

Remember the medium is the message

In 1964, Marshall McLuhan coined the phrase “the medium is the message.” The media landscape is vastly different today than it was 50 years ago, but we’d all be wise to remember McLuhan’s advice. The channels through which a message is shared can say a lot about a brand. Choose credible partners that not only elevate the perception of your brand but connect with an audience using a conscious, engaged mindset.

Create time for clarity

As leaders, we need to create space for our teams for higher perspective thinking. An average worker spends 1,700 hours a year in front of their computer, but great ideas don’t come from sitting still. They come from experiencing the world, collaboration and cultural insight.

Encourage your teams—and give them the time—to leave the office. Schedule an offsite devoted to hacking an issue that’s been unsolved. Go on a field trip to inspire more creative thinking.

The beginning of a new decade creates the opportunity to look up and look ahead. It is essential we not only make the time do so but absolutely hold ourselves accountable; we are creating and living our own future now.

Feature Image Credit: Getty Images. The beginning of a new decade creates the opportunity to look up and look ahead.

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Hayley Romer is the publisher and chief revenue officer of The Atlantic.

Sourced from ADWEEK

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Gideon Spanier: Booming advertising world is riding high

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By Gideon Spanier

Growth is forecast to rise 6% in 2020 and digital promise fuels confidence in the future…

Get Brexit done — Boris Johnson’s election-winning slogan, proved the power of an effective marketing message and the UK ad industry begins the new decade in optimistic mood. Rapid changes in technology and consumer habits caused huge disruption in the last decade but digital advertising has been a growth engine as the UK, enjoying ten years in a row of rising ad expenditure. Here are some key trends for 2020:

A Boris ad bounce?

Even before last month’s decisive election result, leading agency groups were forecasting ad growth of around 6% in the UK in 2020 — in line with recent years, and ahead of most Western countries.

Advertisers keep ploughing money into search and social media as the UK is a leader in ecommerce and mobile.

Outdoor billboards are also generating more revenue as poster companies invest in digital screens. Greater “certainty” at Westminster could boost confidence, according to WPP’s media-buying arm, Group M, which sees “some potential for unlocking of advertising budgets — at least in the short-term”.

Brands are still obsessed by digital disruption

Some agency folk say the ad industry should stop talking about “digital” because it is no longer a silo and should permeate everything, but plenty of clients disagree as they grapple with transforming their businesses. Unilever has just appointed Conny Braams as its chief marketing and digital officer — with “digital” added to her job title as the FTSE 100 company behind Dove and Marmite emphasised it wants to become a “future-fit, fully digitised organisation at the leading edge of consumer marketing”.

Similarly, drinks giant Diageo is in the final stages of a global review of its ad-buying account as it seeks to be “at the forefront of media planning and data-driven marketing”.

The rise of streaming and “chasing the missing viewer”

The streaming wars will hot up when Disney+  debuts in the UK on March 31 as a rival to Netflix and Amazon Prime Video. Subscription video on-demand is a worry for advertisers because many of these services carry “no ads”, as the marketing for BritBox, a joint venture between ITV and BBC, boasts.

Zenith, a media agency whose clients include RBS and Disney, has warned “available audiences” for advertisers are shrinking as consumers “replace television viewing with non-commercial video”. One marketer talks about “chasing the missing viewer”, who is now on Netflix, surfing the web or playing video games.

Too much targeting?

Another worry is getting the balance right between mass marketing to big audiences and data-driven targeting of niche groups. Some brands, including Adidas and TopShop, have admitted in recent months that they have focused too much on digital, performance marketing to drive sales, and neglected brand-building. Truth is, advertisers want both. ITV, led by Carolyn McCall, plans to launch a targeted, online video ad-buying service, Planet V, in February.

Holding tech giants to account

Governments and advertisers have struggled for years to hold Google and Facebook to account but the UK’s Competition & Markets Authority could take a lead when it completes a big inquiry in July — with the potential to recommend regulation. The CMA warned last month that “a lack of real competition” in the digital ad market could be harming consumers and other media companies such as news publishers.

Agencies must adapt

Ad spend is rising but some clients are using technology to bypass agencies and “legacy” players are struggling to adapt. Publicis Groupe, Dentsu and M&C Saatchi all warned of poor trading before Christmas. The future for agencies is to be nimbler, more consultative and more strategic, which is creating room for new entrants.

Luke Smith, co-founder of Croud, a Shoreditch-based digital agency that has just sold a £30 million stake to private equity, says bullishly: “There are very few industries globally that have as much energy as the digital marketing space in London.”

London versus the regions

The number of people working in UK creative industries grew 30% in the past decade to two million — with half of them in London and the South East. However, some rebalancing away from the capital towards the regions is likely to be a theme in post-Brexit Britain.

Channel 4 will complete the opening of its new, national headquarters in Leeds this year, Dentsu is to move hundreds of jobs out of London in a cost-cutting move and WPP is planning a “campus” in Manchester to drive expansion.

Advertising matters

All of this change and growth is exciting because new, British disruptors from Starling Bank to On The Beach are using advertising to build their brands and it can add value. Shares in US exercise bike company Peloton, another “new economy” brand, slumped after the poor reception for its “sexist” Christmas ad campaign.

Ultimately, advertising matters because it is how a company communicates what it stands for. And, unlike Brexit, it’s a job that is never done.

Feature Image Credit: Gideon Spanier: Brands are still obsessed by digital disruption when it comes to advertising ( AFP/Getty Images )

By Gideon Spanier

Sourced from Evening Standard

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Why brands can’t keep consumers in the dark on data tracking

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By Thomas Hobbs

Marketers are still not doing a good enough job explaining to consumers how their data is being tracked.

Speaking on a panel at The Drum’s Programmatic Punch event earlier this month, Belle Cartwright, director of data strategy for EMEA at Essence, said that even though GDPR is changing how brands approach data, many are still banking on consumers being willfully ignorant. She argued that this was the “wrong strategy.”

“You have to inform consumers properly on how their data is being used. How many of them know, for example, that their device ID on their smartphone is being stored so brands can look at their viewing habits to programmatically target them in the future? My guess would be not many,” Cartwright explained.

“We need to do a better job explaining why this data is collected and what the value exchange is to the consumers. Banking on them to not ask any questions is the wrong strategy and will only cause more damage in the future.”

Yet Tim Hussein, managing principal at Ebiquity Tech, questioned why marketers would heavily invest in this kind of programmatic advertising in the first place. He called out “mistruths”, likening them to lies told on the infamous ‘Vote Leave’ bus in the Brexit campaign, which give marketers a false impression of the true power of programmatic.

“Generally programmatic ads perform worse than other types of media. A lot of advertisers can pull back from programmatic and it won’t effect their ROI at all,” he claimed. “Publishers are selling programmatic with mistruths. Big DMP companies say it will make your efficiencies go up X amount, but then their cookie pools are inaccurate or these projections aren’t applied to all campaigns. There’s a lot of half truths being told.”

He added: “Right now there’s two extremes out there: you either get told programmatic is the best thing since slice bread or it’s a disaster. The reality is it’s somewhere in the middle.”

Also on the panel was Nick Stringer, vice president of global engagement and operations at Trustworthy Accountability Group, who claimed marketers should brace themselves for even more changes around data and GDPR.

“Yes, in theory, GDPR should cover the challenges we face around data, but it was only six years in the making and with the rapid rate of change we’re seeing technologically, it will almost certainly be altered soon,” he advised. “You would hope policy makers would put something in place that is more robust and covers things like the privacy directive, and reforms electronic communications much more deeply.”

The biggest looming threat approaching programmatic advertising will be the California Consumer Privacy Act (CCPA), which comes into place at the start of 2020, according to Jacob Eborn, privacy consultant manager at OneTrust PreferenceChoice. Although it won’t affect the UK, it could well set the tone for global changes.

Echoing Stringer’s comments, he concluded: “Everyone needs to be aware that how you define requirements for GDPR today probably won’t be the same in 18 months time. Thanks to the CCPA, it could soon be a lawyer who makes the case that a brand has been doing some unlawful. If you are a marketer and not comfortable with privacy litigation then you need to get comfy, and fast.”

By Thomas Hobbs

Sourced from The Drum

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Brands have new ways to measure the success of influencer marketing campaigns now that fake Instagram followers are so easy to buy

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By Amanda Perelli.

  • On Instagram, influencers can buy followers, comments, and likes on a post.
  • So instead of using these metrics to measure the success of an influencer marketing campaign, many brands are instead focusing on other metrics, like saves and comment sentiment.
  • Influencers also promote products on YouTube, and on that platform, many brands want to see how many viewers are engaging with a product’s website link, which points they are watching at, and where they are from.
  • But even with these new measurements, some influencers have figured out tricks for inflating the numbers.
  • Click here for more BI Prime stories.

As concerns about fake Instagram followers grow, many brands working with influencers are focusing more on performance metrics like saves and comment sentiment, which are harder to manipulate and can more accurately reflect the impact of a campaign.

Evan Asano, the CEO of the influencer marketing agency Mediakix, told Business Insider that many brands were looking at the quality of comments left on a sponsored Instagram post and the level of engagement from an influencer’s fans.

“As influencer marketing has exploded, brands are looking less and less for the biggest influencer, as they don’t always have the highest engagement or have time to engage with their fans,” Asano said. “Brands are starting to evolve their strategies to do longer-term partnerships with influencers who they consider ambassadors and love the brand. They are looking for a balance of influencers who engage with their fans, create authentic content, and partner with brands authentic to them, rather than anyone who will just pay them.”

Brands will usually come back after a campaign is over and ask for certain performance metrics from the influencer. These metrics vary based on platform, like YouTube or Instagram, and will often determine whether or not that brand will continue a relationship with an influencer.

 

Performance metrics on Instagram, from saves to comments

On Instagram, brands often want to see that an influencer’s followers are engaging with the post. They can measure this by asking for metrics like saves, comments, and likes.

Katy Bellotte, a YouTube creator (470,000 subscribers) and Instagram influencer (166,000 followers), earns money through a variety of ways online, with brand sponsorships at the top, she told Business Insider. In Bellotte’s experience, brands pay more for a package than a single post, she said. A package typically includes one post on Instagram, a story, and sometimes a 30- to 60-second mention in a YouTube video.

Bellotte said that after she posts sponsored content to Instagram, a company typically comes back and asks for specific performance metrics, and recently, she has noticed companies asking for how many views a story got and how many people saved the post to their personal account.

“You’ll notice there are some creators out there who are getting smart about this,” Bellotte said. “Saying, ‘To enter my giveaway, you have to save the post and then do X, Y, Z.’ Then, when brands ask for the save numbers, they have an inflated number because they’ll do things like that.”

Asano said brands were now looking at comments as a part of engagement, and if a majority of the comments are in a different language, then it’s possible the influencer bought comments. He said brands also track if followers are mentioning the company within the comments, or have any intent on purchasing the product mentioned.

Performance on YouTube, from links to viewer demographics

Another way influencers earn money is by promoting products within a YouTube video. In a YouTube sponsorship, a brand can request a timed mention (typically 60 seconds) or a dedicated video.

Dan Levitt, the CEO of the digital-talent management firm Long Haul Management, told Business Insider that he has noticed more brands tracking how many viewers are clicking on a brand’s website after a YouTube video sponsorship.

“Let’s say a creator is doing a video about new product X. In the past, the brand might only care about views, especially in the demographic they care about,” Levitt said. “Now, in addition, they might include a trackable Bitly link to the brand website to buy the product and would track how many visitors to the website the link brought, and how many of those visitors actually made a purchase.”

Mathew Micheli, a cofounder and managing partner at the influencer marketing agency Viral Nation, said brands still have a hard time understanding the value they are receiving from an influencer campaign. He said Viral Nation provides tools to measure in-depth video and post information, like which platform a viewer is watching from, where they are, and which point in a video they are dropping off at.

Other industry insiders told Business Insider there has been an increase in brands asking about the geographic information of an influencer’s audience. Typically, a YouTube manager or agent will send the brand their client’s demographic percentage from their YouTube analytics page. US brands are looking for a majority of viewers to be from the US.

Reed Duchscher, the CEO of the digital-talent-management firm Night Media, told Business Insider that brands ask his clients for channel demographics.

“Most want to see the percentage based in the US,” he said. “A few have also asked for the mobile watch time, like on apps. We get a lot of inquiries about case studies and past brand collabs as well.”

For more on the business of influencers, according to YouTube and Instagram stars, check out these Business Insider Prime posts:

Feature Image Credit: Shutterstock

By Amanda Perelli

Sourced from Business Insider

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New study shows culturally relevant brands are more relevant to consumers

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By E.J. Samson.

A new study shows just how much consumers want brands and culture to mix

Commerce and culture have always intersected—even though it can be a fine line for brands to walk. But what surprised the research team behind MAGNA and Twitter’s new study, “The Impact of Culture,” was just how much consumers—particularly younger people on Twitter—expect and even want brands to be culturally relevant: aligning well with cultural events, promoting trends that define today’s culture and supporting social issues that benefit everyone.

Insight-rich results

Brand involvement in culture is especially important among consumers between the ages of 18 and 35, and those on Twitter versus the general population are more passionate, informed and feel more strongly about brands aligning with culture.

The study found that brands can become more relevant by embracing culture by staying current, demonstrating knowledge of consumers and giving back. When people are deciding which products and services to buy, they’re not only thinking of basics like price and quality—or even more amorphous concepts like reputation. They are also assessing just how much a brand reflects their interests and supports the issues they hold close to their hearts.

Incredibly, a brand’s cultural involvement makes up a full 25 percent of a consumer’s purchase decision. That means being involved in culture is a significant consideration when people are weighing whether or not to buy something, alongside other factors like positive brand perception, price and quality. It’s a finding that should make marketers rethink their focus and strategies, since cultural relevance can be established with one campaign, whereas other factors are relatively more intractable.

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While jumping on trends and cultural happenings in realms like sports and music are table stakes for brands, the study reveals that people want to go even deeper: Americans might love their reality TV, but survey respondents say they are more informed on issues like gender equality and fair trade than pop culture events.

What does this mean for marketers?

Go where the most leaned-in and influential people are already gathered: A key revelation of the study is that while culturally passionate consumers tend to be younger, what really sets them apart are their media habits. Social media usage is a 25 percent stronger indicator of cultural passion than age. According to our study, culture-focused ads work harder on Twitter than on other premium sites, where audiences of true tastemakers are most engaged and most receptive.

Live out the values of your customers: While there are many ways for a brand to be involved in culture, according to survey respondents, the top ways include giving back to the community, putting customers first, being inclusive of a wide audience and supporting social issues that benefit everyone.

Have a strong POV in your ads: Culture-focused ads succeed in positioning brands as relevant. They also position them as socially responsible and innovative. And they create a more memorable experience for consumers.

This new research makes a strong case for brands to acknowledge, and even actively improve, the culture that permeates all of our lives so fully. And expressing their engagement with culture on platforms like Twitter is the best way for brands to join the liveliest conversations of the day.

By E.J. Samson.

E.J. Samson is the lead content strategy manager for Twitter’s Global Business Marketing team. Follow him on Twitter @ejsamson.

Sourced from AdAge

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Food Leads The Way As Private Label Flourishes

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From Amazon to Target and beyond, there seems no end to the proliferation of private-label brands competing for consumer dollars. Throw in services like the online startup Brandless, and it’s virtually a free-for-all for both established and emerging CPG brands.

The most-purchased private label category is food, with 58% of adult shoppers saying they purchased such items in the last 30 days, according to consumer research provider MRI-Simmons.

From a retailer perspective, this is very appealing given the economics of the grocery business. According to CB Insights, while the average profit margin on grocery store goods is about 1.3%, retailers earn 25% to 30% higher gross margins on private labels compared to manufacturer brands.

Citing one example, CB Insights notes how Kroger has long used shopper analytics to guide investments in its own manufacturing facilities and now has a portfolio of over 40 plants processing everything from Big K Cola to spaghetti sauce. Kroger’s Our Brands line comprised nearly 30% of the company’s unit sales as of March 2018, the research firm says.

In the food and beverage space, purchasing private-label products is the No. 1 money-saving tactic among adult shoppers across all income segments, according to a report from IRI for the first quarter of 2019. That tops trying new, lower-priced brands; visiting multiple retailers; downloading coupons from a retailer/manufacturer website and comparing prices on area retailers’ websites. Those money-saving tactics appear in the exact same order when it comes to the purchase of private-label non-food items, IRI says in a separate report.

These insights have not been lost on Target, which generated headlines this month when it announced a major expansion of its private-label offerings. In addition to the youth-oriented, non-edibles branded More Than Magic line (everything from sportswear to electronics and stationery), Target unveiled plans for its own food and beverages under the Good and Gather tag.

“We know that food and beverage is a big reason our guests like shopping at Target, since nearly three quarters of our baskets have at least one food item in them,” Executive Vice President and Chief Merchandising Officer Mark Tritton said while explaining the company’s second-quarter 2019 earnings. “And driven by the improvements we have implemented over the last two years, we have been seeing consistent growth and market share gains in food and beverage for well over a year.”

While Target is aiming to stock some 2,000 private-label items within a year, Amazon Basics is already there and then some, with more than three times as many items, according to data company ScrapeHero. Even though Amazon’s aggressive embrace of its own products — particularly as regards to which brands show up in on-site search results — has angered many of its longtime brand partners, the digital behemoth continues to plunge full-speed ahead.

Then there is Brandless, the online startup that sells food and personal care products, (many priced at $3), which clearly has Amazon in its sights. Launched in July of 2017, Brandless this month landed $240 million in a funding round led by SoftBank Vision Fund. It represents SoftBank’s second large ecommerce investment in the U.S. (sports-apparel company Fanatics was the first).

Still, according to MRI-Simmons, younger shoppers are the most skeptical of private-label offerings. Those in the 18-34 cohort are more likely than all adult shoppers to agree that private label products are less trustworthy than name brands and that they feel “cheap” when they buy them.

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How New Disruptive Consumers Are Buying Brands

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Nearly half of consumers today (48 percent of all U.S consumers ages 13 and up) are disrupting the traditional purchase path, from discovery through purchase, the new study reports. These consumers are younger, have higher incomes and choose brands that aid their self-expression.

The new IAB Study confirms that word-of-mouth (WOM) recommendations are the highest-valued prompt for direct-to-consumer buyers before trying a new product.

Greater than reviews or social media Influencers.

But the concept of “brand value” is also transforming. It’s no longer about usage or “better, faster, stronger” efficacies. Rather, brand value for nearly half of today’s consumers comes from their ability to contribute opinions, suggestions and sharing the cool things they buy, wear or use on social media.

The fact that they also like to be the first of their friends to post about a purchase experience — means they’re also your first adopters.

If you’re not opening social portals for your consumers, you’re not just losing business. You’re losing the game.

These disruptor brands cater to the new cohort by building consumer loyalty and lifetime value (LTV) through cross-channel interaction.

Brands like to think of themselves as “personalities”—as a wallboard exercise. But today it’s the new rulebook. Imagine, for example, that your product is a YouTube or Instagram star: it pays to spread content across channels. Internet star Zach King, for example, is huge on Vine and YouTube, but also has a major Instagram following. Beauty blogger Huda Kattan writes blogs, but also has a presence on Instagram. Fitness model Michelle Lewin spreads her messages across a swath of social media channels, increasing her audience count each day.

Omnichannel adjacency pays off back inside the funnel: Search, shopping, plus social media sites bundled together equal traditional TV for brand discovery today. Great ads spark trial, but so do great product plus great social content.

This Is A Tipping Point Moment

How do we define brand loyalty for this new cohort? Key drivers include — following the brand on social media, telling others about the brand (WOM), and having a subscription from the brand.

But if you think Influencers are on their way out, you’re way off track. Today there are at least four types of Influencers:

Celebrity/Professional Influencers, 2) experts, 3) ‘Real’ people, and 4) Super Influencers.

According to the IAB study, Influencers are the “advertising” of the modern consumer economy. They not only wield power during initial purchase consideration — via posts, word of mouth and other methods, but also exercise their power further down the purchase funnel.

Disruptor consumers are over 2X more likely to say they only listen to Expert Influencers and 150% more likely to value online mentions by ‘Real’ people.

Roughly 1 in 3 disruptor consumers qualify as Super Influencers — a newly identified cohort who are strategic, deliberate, and prolific in their postings. They take the time and effort necessary to create brand-centric content to publicly build their personal brand. Some of their verbatims read like, “I like to share cool things I buy, wear or use on social media.” “Content I share online is an important part of who I am.” “Content I share online is an important part of how I want people to think of me.”

Not surprisingly, nearly half of these super consumers want samples and free shipping. But only one in five cares about loyalty programs.

Attention Is The Prize

The industry of attention is the largest, fastest-growing segment of the global economy. There are massive inefficiencies in how people’s attention is being extracted and traded and, for 80% of consumers, simply purchasing a brand is not enough to define loyalty: brand engagement and interaction are required.

As DōTerra CIO Todd Thompson, stated last week in Glossy, “The user experience becomes a strategic driver of revenue. Engagement with the customer sets us apart from other companies.”

Seizing people’s attention and holding onto it, represents the largest investment opportunity for companies in the next decade. It used to be that simply putting a product or service on the shelf (or on your site) put you in the game. Today, brands are not becoming thinner, they’re spreading their brandwidth at scale to become more relevant, meaningful and vital. A statement from the IAB study, “When I purchase a new direct to consumer (DTC) brand, I am expressing who I am,” is not a loose declaration. It is conflating human identity and product.

Brands are people, too.

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Author of Primal Branding

Sourced from Branding Strategy Insider

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