By Andy Karuza, the marketing Lead at NachoNacho and founder of multiple technology startups.
The rise of the content creator has been well documented over the past 15 years, but the economy that has come with it is reaching levels never seen before and growing exponentially. The creator economy is estimated to be worth more than $100 billion, and more than 50 million people worldwide consider themselves creators, but the vast majority are amateurs.
There are about 2 million professional content creators, and nearly half of them earn their money on YouTube. Instagram places second with about 500,000 pro-creators, and Twitch’s live streaming service has about 300,000. For the 48 million amateur creators, Instagram is the number one option.
One of the most well-known ways to earn a living is by creating video content people want to watch, and YouTube’s Partner Program was one of the pioneers in this space. It was built in 2007, and if a creator meets the criteria to join, they can put ads on their videos. YouTube takes 55% of the advertising revenue, and creators keep the remaining 45%.
Meta, the Facebook and Instagram parent company, is playing catch up in this space. It just recently announced a similar deal for creators. It will also allow creators to keep 55% of advertising revenues while the company takes 45%. It focuses on the Instagram Reels feature, which can also be shared on Facebook.
TikTok is rolling out a new way for creators to earn money on its platform. TikTok Pulse allows advertisers to insert brands into the platform’s top 4% of videos. But creators must have at least 100,000 followers to participate in the program’s first phase. Until now, the only way brands could advertise with TikTok creators was through affiliate marketing.
Affiliate marketing is one of brands’ most frequently used strategies to leverage influencers on social media. It’s also one of the most commonly encountered forms of advertising consumers see while using social media. The relationship exists directly between the brand and the creator outside the social media platforms. Creators must disclose their relationship with the seller, and the brand is leveraging the inherent trust established between the affiliate and their followers. In 2022, affiliate market spending in the United States is predicted to reach $8.2 billion and is expected to grow throughout this decade.
Popular content creators can also engage with fans to solicit sales and donations through e-commerce platforms, selling fan engagement or social commerce, merchandise, personal videos like “ask me anything,” or hosting watch parties for big events. One company operating in this social e-commerce space is MILLIONS.co. It connects the sports world through technology while empowering athletes to become their “creators.” They can use the platform to build their brands, connect with fans and grow their social followings. Athletes sell merchandise and personal videos and host watch parties for big and small sports events. Brands can leverage these athletes and advertise on the platform by sponsoring these watch parties, live streams and personal videos. It also allows boxing and mixed-martial arts gyms to host pay-per-view events and is expanding this offering to college-level team sports. There’s also a strong case that athletes are the original influencers.
Content creators can also go down the paid-subscription route. Twitch is one of the more popular platforms in esports that allows users to make money from paid subscriptions. Viewers can subscribe to their favorite channels at different prices typically paid monthly. Patreon is another paid-subscription platform connecting creators with their fans, paying monthly to enjoy the content. For those looking to educate themselves in a particular field, Masterclass allows users to access tutorials and lectures pre-recorded by experts in various fields.
Business leaders and marketing professionals have a few key options to leverage creators and these platforms. First, make sure you explore the platforms in a meaningful way and don’t simply scroll through some funny videos before moving on to more important business. Learn what’s trending, and why, while fundamentally understanding the platform’s algorithms as well as the strategies and tactics behind the content.
Once that is nailed down, finding and identifying creators who best align with your brand and messaging becomes easier. Pay those creators fair rates for the audiences they currently have while helping them grow their following. Before long, you’ll be working with a top 4% creator at a significant discount because you built a genuine relationship and invested in that creator’s success.
Finally, be ready for the next big thing, and don’t be afraid to be an early adopter. TikTok is having a moment, and if you invested time and energy into learning about it two years ago while it was still new, you would be leveraging it to its full potential while the competition is playing catch up. While the tech industry (and many others) are experiencing difficult financial times, there will likely be a resurgence of investment and no shortage of new companies, platforms, apps and ideas in the years to come. Keep your ears to the ground and get in early; even if it turns out to be nothing, you’ll develop a sense of how to spot the winners, both platforms and creators.
One of the big takeaways for creators and their platforms is that one doesn’t exist without the other. With a pool of 50 million creators worldwide, only 4% consider themselves professionals and report making a decent living off their content. The additional 96% might be putting full-time hours into their creations but aren’t making enough money to meet the U.S. poverty line. Meanwhile, Meta, YouTube, TikTok and others are raking in billions of dollars in profits that wouldn’t exist without constant content streams. The vast majority of creators only see a small portion of the pie. As creators realize how much value their content is giving to these platforms, they will (and should) start to demand much more significant portion sizes.