In the Creator Economy there is money to be made

This article is part of our special section on the DealBook Summit that brought together business and policy leaders from around the world.

Barney Banks shot a cute video of himself while changing his son’s diaper. His mother-in-law suggested posting it on TikTok. His partner agreed. So he did.

“Within 24 hours we had 100,000 followers from changing that one diaper and over five million views,” said Mr. Banks, a former professional dancer who is now an e-sports host. “Why? It seems like certain areas of content creation explode onto the scene at different times. I’ve reached peak parenting and content creators.”

Today, just over a year and a half after that message, Mr. Banks has 1.7 million followers under the TikTok name @iammrbanks and has amassed 48.6 million likes on his posts. He now has sponsorship deals with Pampers, baby food companies and clothing brands, as well as an agent who can negotiate anything for him.

This is the arbitrariness and power of the creator economy, a loosely defined amalgam of people who post content, collect followers and likes, and get paid for their reach. What is not arbitrary is the size of the creative economy. Its value is expected to be around $480 billion by 2027 Goldman Sachs Research.

“A lot of people think the creator economy is just people posting about beauty products on Instagram and making money from it,” says Derek Goode, senior vice president of creator marketing at 160over90, a branding agency owned by the entertainment company Endeavor. “That’s part of it.”

“The creator economy is anyone who creates content and makes money from it,” Mr Goode said. “It could be someone at home who teaches Spanish on a subscription platform. They could be doctors selling advice. You see this a lot in the fitness room. It’s much bigger than influencers on Instagram.”

Mr Banks said in October 2022, six months after that post, he had 1.2 million followers and received a message from an agent asking him to represent him. “When the agency asked me who I wanted to work with, realistically I said, who would want to work with me and who should build a long-term relationship with?”

That process of connecting brands and makers is not separate and free. “We’ve gotten so smart about the way we research creators,” says Myisha Moore, vice president of influencer marketing at Edelman, a PR and marketing agency. “We ensure that the person and the brand are aligned.”

Want to target people who love beer and wellness in New Orleans? Big agencies can collect data and find that person for you.

But sometimes niches are what a brand wants more than a huge following. “What we often see is that the bigger the following, the less connected they are to their followers,” Mr Goode said. “If you have a smaller following, you build it yourself. It’s manageable. Micro-creators with 25,000 to 125,000 followers have more impact for some companies.”

Hailey Hunter, an on-ice broadcaster for the NHL’s Pittsburgh Penguins with 66,000 followers Instagram, fits into this category. She was a golfer at Ohio University who hoped to play professionally. But then she went into sports broadcasting.

She has a deal with PGA Tour Superstores to curate her own clothing line – meaning it’s a mix of different brands that she promotes, as opposed to clothing she makes herself.

“I’ll be sharing all my looks on my Instagram page, talking to the camera and explaining why they can be worn to work or to the course,” Ms Hunter said. “My followers know that I am very authentic to myself and they trust me and what the PGA Tour Superstore stands for.”

Ultimately, the golf store chain is trying to reach people who love golf but don’t watch network broadcasts to get information about the sport.

“There are so many golf fans who are not part of the traditional audience,” said Jill Thomas, Chief Marketing Officer at PGA Tour Superstores. “You have to reach emerging golfers or non-traditional golfers in a different way.”

But that doesn’t mean influencers can post whatever they want, whenever they want. Content contracts contain terms and requirements, just like any other sponsorship agreement.

“There’s nothing we’ve posted on our social channels that hasn’t achieved the goal we wanted,” Ms Thomas said. “There’s a lot of stuff on the cutting room floor.”

In most cases, these campaigns are planned months in advance, which gives time to pivot if the creator does something that doesn’t fit the brand.

“We work with people,” Ms. Moore said. ‘I had to remove someone from a campaign because he was caught doing something criminal. We always make sure that our brands get attention.”

The vetting process is at the heart of what every agency does. And given the digital footprint of almost all creators, it should be easy to dive deep into people’s online pasts. The exception is a new area in college sports, where student-athletes are paid for their use name, image and likeness, or NIL.

Such deals don’t just go to the best football or basketball players. One of the top NIL earners is Olivia Dunne, a gymnast at Louisiana State University, whose annual deals are valued at about $3.5 million. “When we tell a company to work with a college athlete, their eyes bug out,” Ms. Moore said. “The vetting is very difficult.”

Hanging out at all this is how the Federal Trade Commission regulates the alliance between brands and influencers, namely what influencers can say and how they can say it to benefit brands. Pretending that something is not a paid item is legally risky.

“For me, the most important thing is that ‘advertisement’ is the first word in the caption,” Mr Banks said. “You don’t want to make a piece of content look like an advertisement. I want it to look like an organic video, but I have to tell people it’s an ad. Hence the diaper [diaper] videos went together so well, and then I say this is a great product the way I do it.

Influencer marketing in the future will likely look very professional, with a clear division between influencers who are brands in their own right and lead the conversations, and creators who feel more mom-and-pop.

“It’s starting to split off,” Ms. Moore said. “The makers who really want to stay in the game will learn to work with AI. They will take their creativity to a new level. They come back with audience insights and say, “I’m going to set you apart.” Those who are having fun and making some passive income will find it harder to create.”

It will also become something that is seen as a profession like any other. “It’s going from an alternative path to a primary career for the new generation,” says Mark Zablow, CEO of Cogent World, an influencer marketing company. “It is built on important pillars: community, authenticity and digital craftsmanship, or the ability to create digitally.”

Yet none of this works if the audience doesn’t believe that the creators – who formed bonds with their followers before advertising dollars were behind them – are authentic in what they say.

“The limitations really only come when you can’t find the authentic relationship between the brand and the creator,” Mr. Goode said. “If the beauty maker tries to sell beer to its audience and it has never done that before, it won’t work.”