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Software and Platforms

Unlocking the potential of the creator economy

August 4, 2022

New game, new rules…

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.

Who are the creators?

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:

Influencers, who harness their status as opinion leaders to motivate their followers to take action, including making a purchase. Their power? Developing a network of followers and creating a personal brand that attracts and engages an audience. For example, many Peloton instructors have attracted fans to their social media sites and are partnering with relevant health and fitness brands and earning commissions in the process.

The golden rule for influencers is 60/30/10. That means 60% of posts should simply be informative, engaging, or fun for the target audience. 30% of posts should be about sharing content from followers or other influencers, and 10% should actually include a call to action or make a sale. This formula is a tried and tested way for influencers (and by extension, brands) to engage, build, and monetize their networks, without overwhelming them with advertisements.

Creators, who produce content, such as how-to’s, sketches, songs, dances and art. Their USP? Original ideas that can entertain, influence and educate. And they’re increasingly looking to monetize their talents, including selling-on products. One example? Jenne Vermes, who teaches tap-dancing lessons on YouTube. YouTube provides creators, like Jenne, with access to Creator Support Teams, the Copywright Match Tool, and monetization features, including a majority share of advertising revenues. Additionally, loyal fans can opt to become benefactors. While Jenn wants to keep her tap-dance instruction free for all of her followers, she rewards her benefactors by allowing them to select songs and “co-create” routines.

Resellers are individual entrepreneurs who curate goods and services to sell on to their networks. They know what their followers like and they use those insights to curate items accordingly. They use their personal relationships to share listings and generate sales. Resellers can take many shapes as well. Some curate goods from brands they believe will resonate with their audiences. Some find and sell used goods to promote sustainability. Some organize group-buying to achieve discounts for their networks. And some re-package or bundle products to enhance value.

Influencers, who harness their status as opinion leaders to motivate their followers to take action, including making a purchase. Their power? Developing a network of followers and creating a personal brand that attracts and engages an audience. For example, many Peloton instructors have attracted fans to their social media sites and are partnering with relevant health and fitness brands and earning commissions in the process.

The golden rule for influencers is 60/30/10. That means 60% of posts should simply be informative, engaging, or fun for the target audience. 30% of posts should be about sharing content from followers or other influencers, and 10% should actually include a call to action or make a sale. This formula is a tried and tested way for influencers (and by extension, brands) to engage, build, and monetize their networks, without overwhelming them with advertisements.

Creators, who produce content, such as how-to’s, sketches, songs, dances and art. Their USP? Original ideas that can entertain, influence and educate. And they’re increasingly looking to monetize their talents, including selling-on products. One example? Jenne Vermes, who teaches tap-dancing lessons on YouTube. YouTube provides creators, like Jenne, with access to Creator Support Teams, the Copywright Match Tool, and monetization features, including a majority share of advertising revenues. Additionally, loyal fans can opt to become benefactors. While Jenn wants to keep her tap-dance instruction free for all of her followers, she rewards her benefactors by allowing them to select songs and “co-create” routines.

Resellers are individual entrepreneurs who curate goods and services to sell on to their networks. They know what their followers like and they use those insights to curate items accordingly. They use their personal relationships to share listings and generate sales. Resellers can take many shapes as well. Some curate goods from brands they believe will resonate with their audiences. Some find and sell used goods to promote sustainability. Some organize group-buying to achieve discounts for their networks. And some re-package or bundle products to enhance value.

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.

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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.

1 | Activate ordinary users

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.

46%

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:

  • Make it easy for an ordinary user to get started as a creator: Platforms, such as LinkedIn, prompt ordinary users to enable “creator mode” to get discovered, showcase content, and gain access to creator tools. Instagram uses algorithms to identify users with high levels of influence (not necessarily those with the largest networks) and proactively encourages them to make the leap. And Meesho, in India, is making it possible for anyone with a smartphone to start an online business with zero capital. Local creators get support from the company with everything they need to sell to their local and digital communities.
  • Convert ordinary users into advocates with the right approach: Brands can also make it easy for users to become creators, influencers and resellers. To enable easy reselling, Danish fashion brand, Samsøe Samsøe, sews QR codes into items. Scanning the code creates a hyper-local, prepaid Facebook ad that can be used to find the item’s next owner. Also, some brands are proactively working directly with platforms, using AI to identify “power users” with strong relevant micro-niches to serve as brand advocates.
  • Make scale irrelevant: Remove any minimum volume requirements and fees to unlock creator tools for users. After all, enabling users to create content or engage other users is the best way for platforms to enhance engagement and drive user-generated content. Some commission-based referral models, like Meiyuan and DealShare, allow ordinary users to tap into social commerce profitably at any scale.

2 | Build symbiotic relationships

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:

Mega creators

will often work with professional teams and may be using social commerce as a primary source of income, with a focus on optimizing revenue generation.

Mid-tier creators

are looking to make more of their influence and diversify their revenue streams.

Micro creators

need help finding their feet and establishing their business.

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.

VIEW THE INFOGRAPHIC

  1. Upskilling: We found that 44% of sellers would benefit from training to boost their marketing/sales skills. Snapchat is a platform that does this, teaching sellers how to make the most of the tools it provides. Brands also have a key role to play. The No7 Beauty Company Creator Collective is an invitation-only course, endorsed by dermatologists and beauty journalists, aimed at up-and-coming influencers. Another great example? Anchor Start Up, teaching bakers in Malaysia how to build and grow their baking business.
  2. Increase Influence & Relevance: This is a top priority for every creator. There are a number of ways enterprises can help, depending on the maturity of each creator. 43% of creators rank the ability to reach people more easily among the top three types of support they want. TikTok’s algorithm surfaces content from high-profile and unknown creators alike for each user’s "For You" page, helping to boost follower numbers for budding creators. And it’s not just scale they’re after. Targeting and engagement with followers are just as important. Influencer Danielle Bernstein (behind the WeWoreWhat fashion line) partnered with fintech Imprint to launch a co-branded Visa card that rewards her followers for their loyalty.
  3. Commercialization: Enterprises can get creative to help creators monetize their networks and tap into new sources of revenue. Examples include platforms like Facebook, which enable users to reward creators with tips and gifts. Platforms can also help brands and creators get together. The Snap x Cameo Advertiser Program matches brands with talent on Cameo to create ads that dramatically increase awareness and views. Or there’s US-based Pietra, a marketplace that enables influencers to create their own product lines and sell them directly to consumers. To date, more than 20,000 influencers have taken advantage.
  4. Other Services: Creators may need services beyond sales and marketing. Their inherently public profile could, for instance, mean they need mental health support. Streamloots Strong, for example, has launched a “Well-Being Resource Center” in partnership with mental health advocate Mxiety to provide creators with materials they can use to manage their mental wellbeing. Financial services, specifically designed for the creator economy, are another area of assistance. Karat Financial has developed new products specifically for creators. Its credit card, for example, offers higher credit limits according to follower numbers.

3 | Create new business models

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.

Get it right….and everyone’s a winner

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.

About the Authors

Robin Murdoch

Managing Director – Corporate Strategy, Global

Oliver Wright

Senior Managing Director – Consumer Goods & Services, Global Lead

Karen Fang Grant

Global Research Lead – Industry Networks & Programs

Laura McCracken

Managing Director – eCommerce & Payments, Global

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