What's next for the big business of influencer-founded brands?
With ready-made audiences in place, more and more influencers are cutting out the middleman to launch brands all their own. And now they have more help to get started.
While influencers have long dabbled with brand collaborations, the current career move du jour is to cut out the middleman and launch a brand all their own.
It’s estimated that brands spent $9.7 billion on influencer marketing in 2020, and while much of this capital goes into the influencer’s pocket, there is also an army of management firms and influencer marketing agencies and platforms (of which 380 launched in 2019, according to Influencer Marketing Hub) taking their cut along the way. There is also the anxiety that, eventually, these lucrative sponsorship deals may stop coming in.
Launching a brand, on the other hand, is seen as a way of not only taking back a bit more creative and personal control over the products the influencers are promoting, but also future-proofing their income.
“Social media’s been around for over 10 years now in some form or another, and so we are naturally seeing people who have aged out of their original demographic, or how they became well-known creators,” says Ronak Trivedi, the founder of Pietra, a platform that connects influencers with manufacturers and helps them set up their e-commerce operations. “Just taking pictures on the beach – you can’t do that forever.”
The influencer-to-brand-owner career trajectory is already in full swing. In 2019, then 18-year-old YouTube star Emma Chamberlain launched her own coffee brand called Chamberlain Coffee, while a year later TikTok star Addison Rae launched her own skin and makeup line, Item Beauty, in partnership with brand incubator Madeby Collective. Some have even been able to leverage their fame to strike retail deals. Since its July 2020 launch, Sephora has stocked body positive makeup brand One/Size, founded by mega-influencer Patrick Starr.
Several influencers have even gone as far as to step aside as the obvious face of their brands, perhaps hoping to shed the negative connotations that come with the “influencer” or “content creator” labels, positioning themselves instead as serious creative directors and CEOs. At first glance, it may not be clear that the likes of makeup brand Vieve (founded by Scottish makeup artist and YouTuber Jamie Genevieve), wig brand Radswan (launched by Freddie Harrel, a former blogger) and hair care company Ceremonia (whose founder, Babba Rivera, an influencer and accomplished marketer) have emerged from this world.
“My personal brand helped to get it started,” says Radswan’s Harrel. “But I don’t think that’s what’s going to keep on leading it further down the line.”
The perception that influencing is easy still exists, despite the importance brands large and small place on this workforce to promote their products for them.
For many content creators, “influencing” is a stepping stone to bigger things. For Harrel, for example, influencing has been a relatively small part of her overall career. In 2010, she completed an MBA, and her resume includes marketing stints at Vestiaire Collective, Topshop and ASOS. She began blogging in 2013, but she says it wasn’t until 2017 that she was making good money from her personal brand.
“When I started the blog, it was really not to make something of it, it just happened,” she says, adding that she only spent one year as a “full-time” influencer. “I don’t think I would have lasted long with the influencer thing. I had my fun, and in 2017 I started making a lot of money from blogging. [But] I remember when Snapchat came out, and I was like ‘oh my god, do I need to be on Snapchat too?’ You feel like you have to stay relevant, and for me it’s not mentally healthy.”
Running a business, on the other hand, allows influencers to put the skills they have developed (or already have) in marketing, self-promotion, and content curation to greater use. In turn, this allows them to save money where venture capital-backed direct-to-consumer brands may feel pressured to pour heaps of cash into Instagram and Facebook ads to gain visibility.
Their ready-made audiences will not only purchase products from them, but can also provide feedback on products or even inspire the overall direction a brand should go in. Harrel says Radswan has been “co-created” with her audience, adding that the brand’s first collection of wigs was confirmed by asking her followers to vote on which styles they liked. “I really used [the audience] as a lab, and it’s how I get customer insights,” she says. “We really intend to keep this at the core of our strategy.”
“[Influencers] have all these things that these existing DTC brands really want, except for access to suppliers and commerce infrastructure,” says Trivedi.
There are two big challenges for influencer-founded brands. First, they need to figure out how to actually go about creating their own supply chains and making connections with manufacturers. Second, they have to make sure they are bringing differentiated products to the market, to avoid the risk of their new venture being perceived as a glorified merch line.
Influencer product flops are not unheard of: when YouTuber Jaclyn Hill launched a line of lipsticks under her own brand in 2019, customers immediately began complaining about the quality of the products. The lipsticks were eventually pulled from sale, although Hill has plans to relaunch her brand this year.
Platforms and agencies exist to hook influencers up with the contacts and business know-how they might be lacking, and the fees for these types of services can vary. Pietra, which sees itself as a Shopify-style platform for influencers who want to create their own brands, charges flat fees based on the services provided and the volume of product sold. Pietra takes a 5% + $1 fee for products sold on its marketplace, for example, and charges a $99 fee to assemble, quality check and warehouse up to 500 units of product.
At the more expensive end, incubators like Luxury Brand Partners or Magic Dusk (who helped launch Patrick Starr’s One/Size and YouTuber Samantha Ravndahl’s makeup brand, Auric, respectively) can provide more tailored, hands-on services. Trivedi says he has heard of these services costing up to 60% of an influencer’s profits.
The influencer economy is not going away anytime soon. According to eMarketer, spending on influencer marketing in the U.S. is expected to exceed $4 billion next year. As content creators continue to wise up to the power of being able to directly monetize their audiences, it is likely that more influencer-founded brands will follow.
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