As one would expect, the influencers who make influencer marketing possible had a very good year too. The best example of that: mega-influencer Kylie Jenner sold a 51% stake in her cosmetics company, Kylie Cosmetics, to beauty giant Coty for a whopping $600m.
While other influencers have launched brands of their own, the fact that Jenner was able to build hers into a real business that a major company was willing to pay more than half a billion dollars for a stake in is a watershed moment as it proves that the value in influencer-created brands doesn’t just exist on paper.
At the same time, there is also the possibility that such a major deal could signal “peak influencer brand.” Obviously, there is only so much room for deals of this size, and as influencers, enticed by the success of Kylie Jenner, Huda Kattan and other high-profile influencer entrepreneurs, have flocked to launch their own brands, competition is fierce and the potential for oversaturation very real.
With this in mind, there are a number of things influencer-created brands will increasingly need if they are to be successful going forward.
Consumers are more sophisticated than ever and their expectations reflect that, especially in industries such as beauty and fashion. As a result, influencers cannot assume that if they slap their name on a set of products, it will pass muster with customers simply because of their name.
Instead, just like any other brand, influencer-created brands must deliver products of commercially acceptable quality. This can be challenging for influencers who have little to no experience with product development and have to place their faith in third party manufacturing partners. For example, while Kylie Jenner’s relationship with Seed Beauty is a case study in what can happen when everything goes right, the experience of beauty influencer Jaclyn Hill shows what happens when it doesn’t.
As more and more influencers launch their own brands, standing out is getting more and more difficult. This means that realistically it will be less and less viable for influencers to private-label vanilla products and succeed. Instead, they will need to differentiate themselves through product innovation and customer segmentation.
In the beauty industry, for instance, beauty influencer Deepica Mutyala created a brand, Live Tinted, offering products that appeal to consumers historically underserved by major beauty brands. “If you’ve ever felt left out of the beauty narrative, Live Tinted is for you” the brand’s website proclaims.
Paid ad spend and campaign optimization
Even with substantial followings on popular social platforms like Instagram, influencers should realize that their organic reach is controlled and limited by algorithms. If they want to maximize reach and sell more effectively to their fans, they will increasingly need to put paid ad spend behind their efforts and retain staff or vendors with the expertise to optimize their campaigns.
Influencers and the opportunities they have wouldn’t exist without the internet but to take their brands to the next level, offline distribution can be very helpful.
From Kylie Cosmetics, which had a partnership with Ulta to distribute its products in more than 1,000 stores in the US, to Something Navy, a fashion brand created by style and lifestyle influencer Arielle Charnas which has distribution in Nordstrom, numerous influencer entrepreneurs have found that partnerships with offline distributors can be a significant driver of sales growth.
Healthy relationships with followers
Consumers are a fickle bunch and their relationships with influencers are somewhat tenuous. According to a new study by Influence.co, consumers can sour on influencers and even unfollow them for a fairly large number of reasons. These include scandal, overposting, promoting values that consumers don’t agree with, using tragedy for self-promotion and even “discovering [that an] influencer is a horrible person.”
Clearly, influencers who want to sell products to their fans have little room for error and the margin for error is likely to get smaller and smaller as influencer fatigue grows.
Influencer-created brands are heavily dependent on the continued involvement and promotion of the influencers behind them. But being a public figure 24 hours a day, seven days a week isn’t easy.
Case in point: Felix Kjellberg, who goes by the online name PewDiePie and has had the mostsubscribed YouTube channel for years, recently announced that he plans to take a small break at the beginning of 2020.
In a video announcement, he stated, “I don’t know what it feels like to not worry about uploading a video. Even when I am away, I’m still uploading during that time. I’m still monitoring the video, I’m still making sure everything is good at that time. I’ve never had a full stop, so I just want to know what that feels like.”
While this seems entirely reasonable, the challenge for influencers wanting to step back is that their followers could very well move on during a break. And for influencers with their own brands, that could potentially cause sales to dry up.
Renewed opportunity for traditional brands?
The rise of influencer entrepreneurs has created challenges for established brands as some of the influencers they would want to work with have chosen to focus on launching their own brands instead.
But now that launching a brand is no longer guaranteed easy money for influencers, established brands may find that they have a renewed opportunity to approach influencers about collaborations. Indeed, that Kyle Jenner decided to sell a majority stake in her company to an established firm is a strong indicator that even the biggest influencers are aware of the fact that the environment is changing.