Personal finance influencer Seth Godwin quit his job in April last year to become a full-time content creator. Business was booming for the TikToker, and he was earning enough to take a risk.
What he didn’t count on was a global economic downturn.
“There are fewer brands looking to partner now,” said Godwin, who makes money from TikTok’s creator fund, brand sponsorships and affiliate marketing commissions. “Every time brands reach out, the rates they’re able to offer have been cut decently. Overall, they’ve gone down 15% to 20%.”
Godwin said he is counting on the long-term partnerships he agreed to in early 2022 to keep his business afloat.
“I still have that income, but adding new sources has been the main struggle,” Godwin said, adding that he was considering lowering his rates to close more deals.
Godwin is not alone.
“On YouTube: Six figures of brand deals canceled in the last 30 days,” said personal finance creator Nate O’Brien. posted on Twitter this week. “Companies are either panicking or they’re running out of money. Probably a bit of both.”
Of 40 industry insiders — 26 creators and 14 talent managers — Insider spoke with, 21 provided examples of recent brand cuts. Even more expressed some sort of uncertainty about the state of the industry.
Several spoke on condition of anonymity to avoid damaging relationships with brands and marketers.
In a faltering economy, sources of income can dry up in the blink of an eye. That’s what some creators are learning this month as brands have begun offering lower ad rates and waiving or delaying payments for influencer campaigns as they try to survive a financial downturn. wider.
Cuts are certainly not unique to the creator economy. The United States recently entered a bear market, and some analysts and investors fear a
arrived. May was the worst month for startup layoffs since the start of the coronavirus pandemic, according to employment data tracked by the Layoffs.FYI website, and advertising budgets are often among the first to disappear as brands look to cut spending.
Influencer marketing spend is no exception, especially among startups and VC-backed companies looking to expand their reach over the next few years.
Late payments, changes to deliverables and supply chain issues
While some brands are canceling influencer campaigns before they start, others are falling behind on payments to creators for work that has already been delivered this year.
Beauty brand Vanity Planet told an influencer in recent weeks that it wouldn’t be able to pay them for a brand campaign on time, according to the creator’s manager. The manager, who spoke on condition of anonymity to avoid damaging the relationship with the brand, said he was considering requiring businesses to prepay some of their customers’ fees in future campaigns.
“Unfortunately, the many challenges mentioned above have resulted in delayed payments to some of our suppliers and partners,” Dastmalchi said. “We are not abandoning influencers but recalibrating our influencer strategy to adapt to these changes.”
Another talent manager, who spoke on condition of anonymity but whose identity is known to Insider, said some brands have recently reduced deliverables, or the number of sponsored posts required by the deal, to reduce prices.
The stakes go beyond the simple fear of a market in crisis. Some companies literally don’t have enough product to send influencers for campaigns due to supply chain issues – from lack of inventory to lack of packaging to shipping delays.
Dorian Holguin, esthetician and nano-influencer, said he recently canceled a branding contract with a makeup brush company because the company did not have enough inventory to allow him to use it at certain times. promotional purposes.
“We were negotiating when I learned the campaign was to be put on hold,” Holguin wrote to Insider. “The company was running out of inventory and didn’t have enough for sales, let alone for marketing.”
Recent corporate layoffs have also impacted some creators. A TikTok creator says an upcoming deal she had planned with a recruiting app was canceled after the person she was in contact with at the company was fired.
Creators posting about personal finance, NFTs, and cryptocurrencies have been particularly hard hit by the downturn. Recently, crypto exchange Coinbase drastically reduced the amount it pays certain social media influencers that drive sign-ups on the platform, for example.
For creators, longer-term deals and TikTok are essential in a choppy economy
Paid offers have not dried up for all creators. About half of creator and manager sources told Insider that for them or their clients, the past few weeks have been largely business as usual.
“We actually booked quite a few high-priced contracts last week and this week, and had a few contract extensions through December,” Christie Childers told Insider via email. Childers owns talent management company Best Day Ever and has a roster of 10 creators.
Lissette Calveiro, a content creator with 80,000 followers and a manager who works with a handful of influencers, said she’s been looking into long-term deals to combat volatility in the economy.
“I will say, on the downside – or up depending on how you look at it – I notice that most brands prefer to stick to long-term partnerships and work with a smaller group of creators,” said Calveiro told Insider.
One area of stability for influencer marketing spending appears to be TikTok, which has seen rapid growth and continues to pull ad budgets for content from creators. The company’s Head of Global Business Solutions, Blake Chandlee, told CNBC last week that the platform hadn’t experienced a downturn in the ad market or the headwinds that some others are seeing.
And as with other parts of the ad industry, some content verticals haven’t been impacted as much as others. Travel brands, for example, continue to invest in marketing as spending on flights and hotels continues to rebound.
Catarina Mello, a travel influencer with 440,000 Instagram followers, said business was better than ever for her. After two years of canceled trips, travel-focused brands are looking to reach travel-hungry consumers, Mello told Insider.
“If we made it through Covid, we will get through it too,” said Becca Bahrke, CEO of influencer management firm Illuminate Social. “Brands will need to continue to advertise – different brands may spend more money, while others may not.”