In the Creator Economy There is Money to Be Made

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

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

“In 24 hours, we had 100,000 followers from changing that one diaper and five million-plus 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 on the scene at different times. I hit the parenting and content creator spike.”

Today, a little more than a year and a half after that post, Mr. Banks has 1.7 million followers under the TikTok handle @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 to negotiate all of it for him.

This is the randomness and power of the creator economy, a loosely defined amalgam of people who post content, amass followers and likes, and get paid for their reach. What’s not random is the size of the creator economy. It is projected to be valued around $480 billion by 2027, according to Goldman Sachs Research.

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

“The creator economy is anyone making content and making money off of it,” Mr. Goode said. “It could be someone at home doing Spanish lessons on a subscription platform. It could be doctors selling advice. You see a ton of this in the fitness space. It’s much larger than influencers on Instagram.”

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

That process of brands and creators linking up is not loose and free. “We’ve just gotten so smart about how we vet creators,” said Myisha Moore, vice president of influencer marketing at Edelman, a public relations and marketing firm. “We make sure the person and the brand align.”

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

But sometimes niches are what a brand wants more than a massive number of followers. “What we tend to see is the bigger the following the less the connection they have with their followers,” Mr. Goode said. “When you have a smaller following, you’re building it yourself. It’s manageable. Micro creators with 25,000 to 125,000 followers are more impactful to some companies.”

Hailey Hunter, a rink-side broadcaster for the N.H.L.’s Pittsburgh Penguins with 66,000 followers on 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 line of clothing — meaning it is a mix of different brands that she promotes, as opposed to clothing she creates on her own.

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

On its end, the golf retailing chain is looking to reach people who like golf but aren’t watching the network broadcasts to get their information about the sport.

“There are so many fans of golf who are not the traditional audience,” said Jill Thomas, chief marketing officer at PGA Tour Superstores. “You have to reach emerging golfers or nontraditional golfers in a different way.”

But that’s not to say influencers can post whatever they want when they want. The contracts for content have provisions and requirements in them like any other sponsorship deal.

“There isn’t anything we’ve posted on our social channels that didn’t hit the mark we wanted,” Ms. Thomas said. “There’s lots of stuff on the cutting room floor.”

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

“We’re working with humans,” Ms. Moore said. “I’ve had to pull someone from a campaign because they got caught in something criminal. We always make sure our brands are covered.”

The vetting process is the core 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 past. The exception is a new area within college sports where student-athletes are paid for the use of their name, image and likeness, or N.I.L.

Such deals aren’t just going to the best football or basketball players. One of the top N.I.L. earners is Olivia Dunne, a gymnast at Louisiana State University whose annual deals are valued at around $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 heavy.”

Lingering around all of 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 in service of brands. Pretending something isn’t a paid post is legally dicey.

“For me, the most important thing is that ‘ad’ is the first word in the caption,” Mr. Banks said. “You don’t want to make a piece of content look like an ad. I want it to look like an organic video, but I need to tell people it’s an advertisement. That’s why the nappy [diaper] videos were such a good fit, and then I drop in that this is a great product as I’m doing it.”

Influencer marketing in the future is likely to look highly professionalized, with a distinct bifurcation between influencers who are brands onto themselves and leading the conversations, and creators who are more mom-and-pop in their feel.

“It’s going to start to split off,” said Ms. Moore. “The creators who really want to stay in the game are going to learn how to work with A.I. They’re going to amplify their creativity to a new level. They’re going to come back with insights into the audience and say, ‘I’m going to set you apart.’ The ones who are having fun, making a little passive income — they’re going to find it harder to create.”

It’s also going to be something seen as a profession like any other. “It’s moving from an alternative pathway to a primary career to the new generation,” said Mark Zablow, chief executive of Cogent World, an influencer marketing firm. “It’s built on key pillars — community, authenticity and digital artisanship, which is the ability to create digitally.”

Yet none of this works if the audience doesn’t believe that the creators — who formed a bond with their followers before there were advertising dollars behind them — are authentic in what they are saying.

“The limitations really only come when you don’t find the authentic relationship between the brand and the creator,” Mr. Goode said. “If the beauty creator is trying to sell beer to their audience and they’ve never done it before, then it won’t work.”

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