Economics of influence

Laurie Shannon had no experience with filming, social media, or cake decorating when she started making YouTube videos from her parents’ basement.

She taped parchment paper over a lamp and used a camera she already owned to make her first videos, which she uploaded to her channel, The Icing Artist. “It was really hard because the quality of the content wasn’t good,” says Laurie. “We uploaded every week, but didn’t get any momentum.”

For the first two years, The Icing Artist earned about $5,000 per year. She kept her costs low by using gear she already owned, but she made a big investment in time. She worked at a bakery to pay the bills and spent every evening and weekend baking, filming and editing. “I thought if I keep pushing and pushing then maybe I can get there.”

Over time, the Icing Artist attracted 1 million subscribers, giving Laurie the opportunity to work from her home near Toronto alongside her fiance who also quit his job to work on the channel full time. Together, they earn between $10,000 and $40,000 per month.

Making cake videos from your home might sound like a dream job, but it’s no get-rich-quick scheme. “It was two and a half years of hard work before I could do this full time, and it’s still hard work,” says Laurie. “We work seven days a week and long hours every day.”

As more people try to become influencers, they are coming face-to-face with this harsh reality, says Robert Kyncl, Chief Business Officer at YouTube, in his new book.

YouTube alone saw 1,000 accounts “cross the 1,000-subscriber threshold every day in 2016,” says Kyncl’s book. “Breaking through the noise to capture a viewer’s precious attention has never been harder, even if the opportunity exists for nearly anyone to do so.”

Successful influencers like Laurie have built their careers on real relationships with their fans and developing quality content that speaks global audiences—showing that influence can’t be manufactured, it has to be earned.

Influence is money

Paying social media stars to promote products is becoming a popular way for brands to advertise online.

A decade ago, print advertising accounted for 53 percent of Google searches worldwide, according to Google Trends, which shows how often search terms are entered. Today, influencer marketing accounts for 51 percent of Google searches, while video advertising accounts for 32 percent and print advertising makes up the remaining 21 percent.

The millions of people who follow fitness, fashion, and pet accounts fit specific demographics. And their attention is worth a lot of money. This year, companies were expected to spend $50,000-$100,000 per influencer marketing program according to a survey by marketing agency Linqia.

Fitness influencer Lyzabeth Lopez, the creator of the Hourglass Workout, told Forbes she charges up to $5,000 per post and $100,000 per campaign. Famous yogi Rachel Brathen, who has more Instagram followers than the populations of most Canadian cities, charges a minimum of $25,000 per social media post, according to Forbes.

Even so-called “micro-influencers” can earn money from social media, says a recent blog post by the Influence Agency, a company that matches influencers with brands. Instagram accounts under 50,000 followers can earn between $250-$2,000 per post, while accounts with up to 100,000 followers can earn $1,000-$4,000 per post.

Max Chafkin, a writer at Bloomberg Businessweek, wanted to see just how hard it was to become an influencer, so he set out to turn his “schlubby” Instagram feed with 212 followers into a sleek men’s fashion account. His goal was “to persuade someone, somewhere, to pay me cash money for my influence.”

Chafkin dished out about $2,000 over six weeks on professional photography. He got a haircut, borrowed clothes from Lord Taylor and enlisted the help of an agency pro bono. He also paid $10 per month for bots that left thousands of comments and likes around Instagram, and eventually resorted to buying 500 fake followers for $15.

Chafkin ultimately completed his goal, but he doesn’t have an optimistic outlook on the industry. “I spent a couple thousand dollars and got one free t-shirt,” Chafkin told VICE Money. “I was so far away from breaking even it’s almost not even worth talking about.”

The experiment shows that it is possible to use tricks to jumpstart an influencer career, says Chafkin. “But in the end you’re going to need some sort of talent.”

The size of a creator’s audience is the basis for how much they get paid, but brands consider lots of other factors when they decide whether to work with an influencer, according to Parker.

Having high-quality content that looks authentic and fits a creative niche can get the attention of a brand. It’s also important that your followers are real people who engage genuinely with your content, he explained.

Being reliable and responsive is another big part of working with brands because they have strict deadlines, according to Parker. The creators who turn their brands into businesses are ultimately the ones that will thrive in the industry, he explained.

Jahtna Hernandez did all of the above last year when she switched up her approach to YouTube and turned it into a source of full-time income.

Last year, she was unemployed, in debt, fresh out of a relationship, and living with her parents. She decided to focus on her YouTube channel, xoJahtna, and spent the next three months immersed in creating videos. “I would go days without sleeping…my mom was very concerned,” says Hernandez.

She had failed at YouTube two years before — she was creating nail art videos and had built up a following of 70,000 subscribers. But she didn’t enjoy filming it and eventually quit.  

Hernandez decided to change the topic of her channel and make videos about do-it-yourself life hacks. Her first video demonstrated different ways to style your hair using household items like a fork. Something about the video resonated with her online audience. It went viral and her subscriptions started to snowball, giving her 77,000 followers and 2 million views in a single month. Her first cheque from YouTube paid off her entire debt, which had climbed to $8,000.

Hernandez was seeing success on YouTube, but it didn’t make her an influencer overnight. Her income was coming directly from YouTube ads, which is based on the number of views her videos had, rather than from brand deals.

It took another seven months and 320,000 subscribers for a brand to contact her about sponsorship.  “You have to have a good amount of traction to actually live off of [YouTube],” she says.

Hernandez is learning how to negotiate with brands to increase her revenue and create a more sustainable career. The added pressure of delivering branded content has increased the intensity of her work, sometimes creating multiple videos at the same time to meet her deadlines.

To be successful at YouTube, “you have to go all the way in,” says Hernandez. “The harder you go, the more results you’ll get.”

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