Influencers tap reach on social media to launch own labels
7 min read 18 Dec 2021, 12:03 AM ISTContent creators are moving up the value chain. Besides promoting brands for money and making angel investments in promising startups, influencers are now launching their own products
PremiumMUMBAI : Content creators are moving up the value chain. Besides promoting brands for money and making angel investments in promising startups, influencers are now launching their own products. They aren’t limiting themselves to merchandise, podcasts or cohort-based courses. Instead, creators are launching consumer goods, the kinds that compete with the brands they may have promoted in the past. And some of their products have made the difficult jump from online stores to physical retail shelves.
In October, Aanam C., a beauty influencer with a decade’s worth of domain expertise, launched her own cosmetics label, Wearified. She claims to have surpassed her projected sales from pre-orders for a collection of lipsticks by 150%.
Popular food vlogger Madhura Bachal launched her brand of spices for Marathi cuisine, Madhura’s Recipe, on e-commerce sites in August 2018. Since last year, these masalas—which contribute more to her annual income than revenue from branded content—have been sold at select retail stores in Maharashtra.
Fashion influencer Suman Khera Sethi, who has a little over 33,000 followers on Instagram, makes more money off her clothing line, Label S, than she does from brand collaborations right now. Launched a few months before the first nationwide lockdown in 2020, she says her venture has picked up recently, after taking a hit twice during the pandemic.
Top entertainment creator Faisal Shaikh’s line of deodorants, 2407, launched in October 2019, is set to hit annual sales in double-digit crores, according to his agency.
A combination of low marketing costs and high engagement with customers makes these brands click. Their customers are the readymade cohort of followers and subscribers that the creators courted and won over the years. This community is highly engaged and trusts the creator, making it easier to sell. While some creators have launched products to strengthen their brands, others used the influencer route to gain a following and eventually enter the market.
‘Creator brands’, as Qyuki Digital Media managing director Abhimanyu Radhakrishnan describes these lines launched by influencers, “have little customer acquisition costs compared to regular e-commerce products. It’s easier to convert a fan into a customer than a customer into a fan," says Radhakrishnan of Qyuki, the agency representing Bachal and Shaikh (popularly known as Faisu) and running their product businesses.
Aanam calls this phenomenon of creators launching brands a “natural next step". From Kylie Jenner and Tati Westbrook in the US to Diipa Khosla in the Netherlands and Huda Kattan in the United Arab Emirates, several prominent international influencers run their beauty and skincare brands now worth millions.
“With diminishing attention spans, audience loyalties are dwindling, and the content game has become too number-driven for my liking," says Aanam. Through Wearified, she is looking to build a more sustainable parallel career free of the vagaries of algorithms. She hopes her new brand and career will rest on the connections established over the last decade with her follower community that provided her with the insights she needed for product development.
A former marketing professional, Sethi says she “took the path of influencing to get into the fashion designing business", which had been her dream all along.
A representative for Faisu says the creator decided to launch a line of deodorants based on his own experience selling clothes to passersby on Mumbai’s busy Linking Road before becoming famous for his entertaining TikTok videos. He wanted to create a product for people like himself who needed to look and smell good for consumer-facing jobs even if they did not have access to uninterrupted water or commute in public transport.
While their lives as creators have given them unique insights into the minds and needs of consumers, launching and managing a product is an entirely different affair. Running a products business requires skills that creators, by and large, don’t have. And most of them are aware of this. Very often, the agency hired to represent them manages the business’s day-to-day operations, from customer care to ensuring manufacturing guidelines are followed, while they continue to focus on content creation.
“We take a minority share in the venture to provide the necessary manpower, technical, legal, and operational support. Our aim is to take the entity from zero to one," says Radhakrishnan.
Agencies also see a larger business opportunity in scaling their creators’ brands, especially since Thrasio-style companies, which aggregate and build up brands across sectors, are looking to invest in or acquire D2C startups.
Unsurprisingly, advertisers, especially D2C brands that rely on influencer marketing for sales growth, aren’t thrilled. “It is confusing for the audience," says Shivani Chakravarty, founder of Exalté, an artisanal wellness tea brand. Chakravarty had been considering an influencer for collaboration when she discovered the creator had launched her tea range. “How does one justify and convey another brand’s offering convincingly to the community then?" she asks.
In most traditional industries, this would be considered a conflict of interest. However, creators do collaborate with multiple competing brands at once, but on a project basis and for a fixed fee or commission. When they launch a brand, they automatically become its brand ambassador, so the stakes are much higher. “In my opinion, both brands and content creators would avoid collaborating on product categories where they see a major conflict of interest," says Shivani Behl, chief marketing officer of Plum, a beauty and personal care brand.
Creators like Faisu and Bachal do not endorse brands that compete with their products. Aanam and Sethi, on the other hand, say they haven’t faced any conflict of interest issues. “The advantage of being a beauty creator is that you’re wearing 20 brands at once," Aanam explains. “Brands don’t have an issue collaborating because I’m not promoting my label in their time," adds Sethi of Label S.
Of course, beauty and fashion are categories where consumers often buy products from multiple brands, which perhaps works favourably for both the creator IP owner and the advertisers. Fashion consultant Shruti Jaipuria believes the absence of conflict is also because most D2C fashion brands are “young and inexperienced". “Their goal, primarily, is to be mentioned and improve sales. If an influencer offers that, it’s usually a win for them," she says.
Globally, fashion influencers like Chiara Ferragni have capitalized on their global following to launch brands, says Diksha Sachdev, founder of Fashion Solutions, a fashion and lifestyle marketing agency for young brands. “In no way has this diminished their authenticity or caused a conflict with other brands," says Sachdev, who works extensively with foreign and local fashion brands.
However, the “this has worked in the US and China" thesis falls flat in the face of the reality that people in those countries have a larger propensity to spend on hobbies and leisure, besides a far more evolved e-commerce scene.
At an estimated ₹900 crore at present, India’s influencer economy figures are not comparable to the $3 billion industry in the US, much less to China’s $210 billion influencer economy powered by a vibrant live-commerce ecosystem. Recently, China’s top live-streamer, Austin Li Jiaqi (also called The Lipstick King), sold $1.7 billion worth of products of different brands on Alibaba’s Taobao app during a 12-hour live-stream session. A Business Insider report said another top live-streamer, Viya, enabled sales of $1.25 billion worth of goods in her 14-hour marathon.
At least four influencer marketing executives Mint spoke to said brand collaborations still bring in the lion’s share of income for most creators while sales from their products remain low. “The model works better when a celebrity launches their own brand," says Lakshmi Balasubramanian, co-founder of Greenroom, an influencer marketing firm. “They don’t do much; usually, an established player in the sector ties up with them and runs the business side of things while the celeb gets a portion of the profit." Balasubramanian cites the example of actor Katrina Kaif who entered a joint venture with Nykaa to launch its line of products, Kay Beauty, in 2018. When the beauty marketplace went public earlier this year, the value of Kaif’s investment in the venture grew 10X to ₹22 crore, according to market analysts.
A similar co-creation model with relevant influencers is an option many brands are exploring. Plum is one of those brands. StyleNook, a clothing recommendation service, is another. “The trend (of creator brands) is inevitable," says Kuntal Malia, co-founder of StyleNook. She would rather be a part of it than oppose it.
It is a necessary trend, says Lavin Mirchandani, founder of GetEvangelized, the agency that represents Sethi of Label S. “If content creators don’t find ways to own their distribution and develop services or products to add value to their community, they are likely to become less relevant in the long run."
It's similar to production houses that create content commissioned for TV networks as a service versus studios that build IPs that can be distributed across networks and extended into experiences, merchandise, books. Mirchandani argues creators have to eventually be like the studios.
Radhakrishnan of Qyuki reckons the niche influencers will see their IPs grow faster than lifestyle influencers. Even for them, though, he predicts it will be at least two years before the earnings from product sales equal those from brand collaborations.
But the creator brands model isn’t for everyone. As Mirchandani says, “Those who haven't figured out the difference between an audience and a community should be wary of monetising too early."
