Unlocking the potential of the creator economy
In the social commerce world, literally anyone can become a creator. It’s a radical shift in the balance of market power as more people realize the opportunities of monetizing their creativity, influence and networks.
For platforms and brands, this people-powered commerce represents an extraordinary growth opportunity. But, and it’s a big but, to take advantage they have to recognize just how different the new dynamics are – and, crucially, that their success will hinge on empowering and supporting this new breed of creators.
Bottom line? If these creators succeed, so will both platforms and brands. To make this happen, they will have to adapt their strategies and business models for the social commerce ecosystem.
From a beauty influencer in China making $20 million a month from livestreaming to his nearly 63 million followers to the leader of a group-buying network coordinating orders from network members and placing them with a reseller, creators are nothing if not diverse. But they share one vital characteristic – the authenticity that creates trust. For enterprises, this is what makes creators so valuable.
To bridge this gap and optimize the social commerce opportunity, enterprises need to understand the three main types of players—influencers, creators and resellers—and recognize that they’ll need to develop different strategies to engage with each of them:
These three types of creators also vary in relative maturity. The larger the follower base, the more sophisticated their business and potential earnings. But there’s also a trade-off. The more followers they have, the more difficult it becomes to engage personally and authentically with their networks.
Along with these creators, there is another market segment that, given its size, has the potential to be the most valuable of all: ordinary users – sometimes called “inadvertent creators” – on social media. They have small, focused networks and know many of their connections personally. Authentic sellers in these networks provide enterprises with an opportunity to get “in the know” by joining their groups on channels like WeChat, Weibo and Little Red Book.
Given that our research shows personal recommendations from friends and family hold more weight with shoppers than recommendations from people they don’t know personally, there’s significant value in getting ordinary users involved in social commerce, and onto the “entrepreneurial” ladder.
All of this underlines that the social commerce ecosystem is extraordinarily diverse. As well as understanding who the key types of players are, brands and platforms need to work out how to support each of them – and, in doing so, build mutually beneficial relationships.
So how should they go about it? The short answer is by championing and empowering the individuals at the heart of these vibrant new marketplaces. Let’s take a closer look at how enterprises can engage with and activate the key players.
Individually they may have the smallest number of followers, but collectively ordinary users are the largest group in the social commerce ecosystem. Activating these users as creators could further turbocharge the social commerce phenomenon.
of all social media users are already making some sort of income through social commerce.
If you think about it, that’s 1.4 billion people worldwide. While most of these are in China or India today, others look set to follow. For example, American teens identify "professional streamer" as their dream job. So we can expect the number of creators to grow dramatically from here.
What can enterprises do to get things moving:
When creators, influencers and sellers succeed, so do the enterprises they work with. It’s a virtuous circle that brands and platforms can keep spinning by targeting the type of support creators require – depending on how advanced they are on their journey and what their ambitions are for their business.
There are three main segments to address:
There’s currently a "match problem" in the micro segment. That’s to say, it’s hard for creators to find the right brands. And it’s hard for brands to find the right creators. For the mid-tier and, of course, the mega-creators, advertising agencies can play matchmaker for large brands. However, a gap still exists in the micro-segment, which presents an opportunity for platforms to develop matching tools leveraging data and AI from users who have designated themselves as creators.
One example? Amazon launched an influencer platform allowing creators of all sizes to curate goods from Amazon Marketplace sellers and earn a commission, similar to the old affiliate marketing model. This type of platform allows creators of all sizes to work with businesses, no matter how large or small. However, there’s still a long way to go to optimize the matching experience between social media platforms and brands to fully unlock the potential of social commerce.
In addition to matching, we see four main areas where enterprises can deliver the targeted support that creators need to achieve their goals: upskilling; increasing influence & relevance; commercialization and holistic services that provide additional business and personal back-up. It’s important to note that the support creators need to become more successful will evolve as they grow in sophistication and scale.
Enterprises also need to rethink business models to directly address the unique contribution of creators. With the right approach, these can not only reward creators, but also serve as a source of inspiration for brands and platforms as they develop new products and services.
By enabling brands to place their ads against the most popular 4% of content, TikTok Pulse creates benefits for brands, creators and the platform. Brands get the exposure of culturally relevant content and the creators are paid a share of advertising revenue. The platform itself benefits from attracting brands and improving the content that, in turn, draws in more users. Or take Volition Beauty. It’s harnessing the power of the micro-creators to innovate and inspire new products that meet needs often overlooked by bigger companies, with over 4,000 new ideas coming from its social program in just a few years. Users vote for their favourite products to go into production, and those who submit successful ideas are rewarded with commission.
Newer business models will also start to emerge as the web changes. Social Finance (or SocialFi) is arriving at the same time as Web3, marking a decisive shift in data ownership from platforms to individuals. Creators will be able to receive direct monetary benefits by earning tokens from creating or engaging with content, for example on a service like Influencio, which is the first dedicated blockchain influencer marketing platform.
Or creators can mint non-fungible tokens (NFTs) that make it possible to precisely track the impact of their brand-related communication and the value it delivers, which will lead to greater transparency in how they charge for their influence and creativity. Brands will need to include the resulting insights in their negotiations with creators going forward, for enhanced visibility on engagement KPIs and ROI.
For enterprises, getting to know and understand all the key players in the social commerce ecosystem is an essential move. Social commerce’s growth trajectory makes this a market that no-one can afford to miss out on. However, to reap the benefits, they have to be ready and willing to play by new rules. The rise of creators is changing the balance of power. But it’s nothing to fear. Approached in the right way, everyone stands to win.