2014-03-26

Co.Labs

The Fast-Growing, Profitable Market For Kid "Influencer" Endorsements On Twitter, Instagram, Vine, YouTube, And Pinterest

Teenagers with big social followings are making thousands of dollars pushing brands. Here's how it works.



Who’s getting the better deal here, the new age social media barons, or the brands paying them? And when a trusted viral voice is now in the pocket of a big company, what’s in it for the audience?

Going Viral In Your Underwear

Twenty-year-old Carmel, Calif. native Cameron Asa runs arguably one of the most powerful parody accounts on Twitter: TweetLikeAGirI. In a phone conversation he told me so, proudly. And unlike some of his peers he even advertises his rates online. For an account with over a million followers, and talk of huge fees paid out to influencers, getting Asa’s accounts to interact with you online won’t break the bank. So, is this a business or just about bragging rights?

“Some people are content to make $200 to $400 on their accounts [per post],” explains David Orr. Orr claims to run a dozen major parody accounts, including YaBoyBillNye. He says Asa is part of a group not maximizing their potential. “He could hire a COO and turn his account into a business.”

Orr won’t reveal just how much he makes, but says “making a thousand dollars a day is by no means unrealistic” for influencers. He says the top 1% on Twitter can command daily rates of several thousand dollars--most of the people behind major accounts are inexperienced teens missing that opportunity.

“It’s great that 16- and 17 year-olds are making $500 a day in revenue, working from 6 p.m. to 9 p.m., after school,” he says. “People like myself work from 7 a.m. to 2 a.m. They’re not looking at this from a business aspect. I’m an entrepreneur. I’m looking to maximize my revenue.”

To do that the 22-year-old Illinois native and University of Arizona graduate spends an average of 14 hours a day online, seven days a week. He’s so dedicated that he cut his Spring break trip short to get back to his work. Next week Orr is planning to launch his own engagement platform and management company, helping other influencers work with brands. Social Holdings Incorporated will pay tweeps based on click rates.

“Anyone with 250,000 to 300,000 followers is influential enough to work with,” he notes.

Orr is cagey when it comes to specifics, but he’s very successful. He recently bought a house. But he’s somewhat of an outlier, learning about business as a teen after founding and running a consumer electronics company and an iPhone app. He started using Twitter around 2009. Most of the money he used to purchase his new lakefront home was gained in his previous ventures, not just from his work as an influencer. Orr says marketing is a long-term play, not an overnight hit. His advice for less savvy operators: Start saving.

“A lot of people haven’t grasped that this money isn’t forever,” he says. “They’re spending like there’s going to be a paycheck every day for the rest of their life. Just because you’re making great money now doesn’t mean you should drop out of college or move out of your parents’ house.”

Another big personality on Twitter is Taylor Nikolai, who claims to have 4 million followers on a slew of accounts, including FacesPics. The 25-year-old says there’s about 30 major account owners on Twitter, and “literally infinite possibilities on branding.”

Read about social media marketing on campus: These Campus Celebs Are Huge On Vine and Instagram

Like Orr, he spends his days tweeting from his home, in suburban Minnesota. After graduating in 2010 with dual degrees in business and journalism, he couldn’t find a job. So he spent a lot of time online, where he realized if he was willing to commit all his waking time to the web, he could have success on Twitter.

“The way that I started was creating a parody account of a fictional character, which is probably more common than you think.” Nikolai won’t say which character exactly. And he’s hesitant when pushed to talk about his annual income, which he says has never reached over $100,000.

“I’m not making a lot of money right now like all my competitors are because I’m trying really hard to brand long term,” he says. “I think that letting people know that I’m this parody account ruins the joke.”

Nikolai is in favor of working directly with companies to build awareness instead of driving traffic to websites and getting paid off AdSense, which he calls unsustainable. And he’s not into scheduling tweets, which forces him to be up and online all day, every day, tweeting on roughly 20 accounts. He thinks this engagement tactic is less alienating to followers, and keeps eyeballs on Twitter. Fans respond to originality, live-tweeting events, and piggybacking on trending topics. Starting out, knowing the players and getting them to cross-promote posts helps fledgling accounts build.

“On a good day 1,000 retweets and 1,000 favorites means the tweet was great, on any account,” Nikolai says.

The Landscape And The Players

YouTube, Twitter, Vine, Instagram, Pinterest--these are the platforms where you find young buyers waiting to be influenced. Since Facebook makes users pay to reach target audiences, it’s the only major social network not in the mix. Google+ is reportedly at work on AdHeat, a patented system connecting brands with influencers.

The kind of posts fans respond to may differ from network to network, but what many top influencers have in common is a major presence on most, if not all sites. Trendsetters are capable of migrating followers, which makes them attractive to brands looking to wrap their products around their content. The more of a reach, the more money involved.

These kids drive huge sales--as many as 60% of marketers are investing, according to data collected from the cloud communication company Augure. Judicious estimates could make this a billion-dollar segment of a half-a-trillion industry.

"Influencers" get paid per tweet or post, or work under contract on campaigns. Some get connected with companies covering multiple platforms, like theAudience, or specialty spots like Big Frame, CollectiveDigital, or Jukin Media, which focus on video creators. Then there’s twtMob for Twitter, theAmplify for Instagram, or HelloSociety for Pinterest. A startup called Niche gives you a customized group of social media "celebrities" who will organically tweet, post, and talk about your products. This isn't canned material made by some agency coming out these kids' mouths. It's them.

In a nod to the growing market, Twitter has started to quietly reveal engagement numbers for major users, a real metric influencers can use to prove ROI.

Top influencers can make thousands of dollars a day in endorsements and merchandise. Big money is changing hands, much of it to teenagers, which has made this a topic the media has loved to cover.

But while the 16-year-old stars making big bucks are being celebrated, what’s not as well known is that some of this activity is not legal. That’s because in the U.S. the Federal Trade Commission mandates the disclosure of paid or sponsored content. Penalties are in the six figures, but many in the space say there’s still a Wild West mentality at work.

If you’ve ever visited a web page and weren't sure if the material you were reading was editorial or promotional, this goes out to you. And if your favorite Vine, YouTube, Instagram, or Twitter star is posting on behalf of a company for money, and not telling you, they’re breaking the law.

In 2009 the FTC released guidelines concerning online endorsements. Last year those rules were updated. Before that, the code hadn’t changed since 1980. There are more than 50 pages of regulations, but the main takeaway is this: If you’re paid to post online, you have to make it known, and when it comes to social that means including an “s/p” designation (sponsored post), or tags that say #sponsor or #ad.

Who Are These Web-Savvy Pied Pipers?

Typically millennials in their teens and 20s, influencers drive engagement--creating tweets, videos, photos, memes that people respond to, share, comment on, or even steal. Originality, wit, and volume posting is key--and so is pulling at heart strings or tickling funny bones.

Forget your Klout score, followers and reach are key, but the main criteria hinges on “capturing an emotion or quality in a platform that is meaningful,” explains Oliver Luckett, the founder and CEO of the social media publisher theAudience. Luckett’s company works with hundreds of influencers, driving billions of impressions for household name brands who want to work with these kids. “It really boils down to how much engagement, both visible and invisible. That’s the connective tissue.”

Likes and retweets are visible. The magic metric marketers have long coveted, word-of-mouth and the positive mental association consumers make with a product, is invisible. When you say soft drink, having Coke instantly come to mind is equally, if not more valuable to a company, than celeb endorsements. Years of good marketing literally brand a company’s product into the consumer’s mind's eye. That’s the mission and goal. And for influencers, selling out has become cool.

“It’s a lot more acceptable now,” says Jonathan Skogmo, who heads Jukin Media. Marketing directly to fans is more engaging and “easier than putting a billboard up. You don’t know how many drivers act on them. On the digital level, it’s easy to track.”

Influencers are male and female, black and white, and everything in between. And they don’t have to be traditional stars. The fact that they’re relatable, and look and live like their peers actually make them more convincing than Hollywood. With mainstream magazines like Seventeen putting Instagram stars on their covers, commercials using user-generated videos, and brands like American Eagle turning Viners into models, are these the new secret celebs?

“People feel closer to them because they show up in their feed--they hang on every word and thing they’re wearing,” explains Lindsay Fultz, a Los Angeles engagement specialist at theAmplify, which brings together influencers and brands in 16 algorithm-based affinities like entertainment, music, and dining. Fultz says it’s a win for teens to work with big companies that line up with their personality, and a win for brands to reach new audiences. “This is the way it’s going.”

The Origin Of Influencer Marketing

In 2008 a L.A. company called DigiSynd was acquired by Disney. The DigiSynd team included Oliver Luckett, who would go on to found and run theAudience, and his partner Rami Perlman, who is now the vice president of talent and influencers at theAudience. That duo was part of the group that started managing Disney’s social media--and changed web history.

Perlman says back then Disney laughed when they proposed using an online heavyweight as a marketing tool. But in 2010 they convinced Disney to use the electronic musician Pogo to create an official remix for Toy Story 3. They also managed to twist Disney’s arm and sell tickets for the film on Facebook. The video got almost 4 million views and the gambit was a huge success.

“First they laughed at us, then they wanted to destroy us, then they wanted to work with us,” laughed Perlman. “So funny because I’ve been preaching this forever.”

Now Perlman works with a growing stable of homegrown web personalities, bringing heavyweights together for live events like the #whatever series, where about 150 influencers reached 6 million impressions and 1 million engagements on Twitter and Instagram off only 228 posts. The onetime punk rock musician, and son of famed Israeli violinist Itzhak Perlman, also recently helped guide the Chainsmokers’ viral sensation “#Selfie,” stacking their music video with multiple influencers. The video has over 30 million views on YouTube--without a traditional record label or celebrity backing.

What’s Next?

The stage influencers play on can lead to more than just endorsements. Taryn Southern has built a following of almost 350,000 subscribers on YouTube, parlaying that success into television appearances, a web series sponsored by Glamour magazine, and a deal with Hot Pockets. Southern, who appeared on American Idol when she was only 18, says she won’t work with brands she doesn’t actually have an affinity for.

“Your audience knows--it never works with a brand you’re not passionate about,” she told me. “Where I’ve made mistakes is trying to be clear of an integration that doesn’t work for YouTube personalities. If people are being paid on social they have to be honest.”

On YouTube, Vine, and Instagram, creators are the stars, but on Twitter, the trendsetters are largely parody accounts, which can leave the people running them feeling like the Cinderella of the ball. Do the people pulling the strings feel overshadowed by their made-up characters?

“How could I not,” Nikolai admits, laughing. “If I have a really funny joke, I won’t post it on my personal, I’ll post it on my famous parody account.”

Those growing pains, and deciding which brands to work with, will be the continuing narrative in this story. Content thievery remains rampant, as are selling accounts, and failing to disclose brand partnerships. Eventually the FTC will start cracking down. And what happens when influencers grow up? What will their role be then--will they lose their brand appeal or morph into a new commodity?

“I think we’re in the beginning stages of social media,” muses Nikolai. “I have nearly 4 million followers on Twitter but I think that could expand. Who knows where it could go? Who knows what other formats of social media I can drive that traffic to?”

[Image: Flickr user Al Ibrahim]




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