Influencers with millions of followers will increasingly be replaced by a decentralized army of everyday nano-influencers, says Andrew Yang, CEO of Cultos.
Think back to the early days of social media influencers, before the accusations of a lack of authenticity or fake followers – now commonplace. The early influencer “pioneers” were a group of young people who grabbed the opportunity that the evolving, social internet provided and became incredibly successful.
Early influencers – such as the “mommy bloggers” often credited with starting the trend – quickly became some of the most prominent communicators on the internet, with some earning as much $40,000 per month in revenue.
The later addition of commerce features and in-app shopping on social media platforms made it possible for influencers to sell everything from skin creams to exercise equipment and clothes. Millions of dollars were made virtually overnight on these sorts of referral link programs and the media swooned.
“Instagram influencers are far more important than celebrities,” proclaimed the New York Times in 2014. “[It’s a] good thing social media did not exist during the era of ‘Mad Men.’ It might have put Don and Peggy out of business,” said another story.
Influencers and change
The excitement of the influencer age might sound like a familiar refrain to the crypto community. At a time when billionaires routinely buy million-dollar NFTs, there is a new set of young people who are again inverting power structures through new technologies and becoming incredibly successful in the process. But crypto and blockchain hold a bigger promise than this.
Web3, often described as the short and buzzy catch-all term for a future defined by decentralized ownership structures, is the next generation of the internet. By simplifying the way anyone can be rewarded for their actions and attention through digital assets such as cryptocurrency and NFTs this new internet will eliminate the long-standing barriers between brands, creators and fans.
This premise is the source of contentious debate in tech and media circles. We saw this play out when Twitter founder Jack Dorsey recently tweeted “You don’t own ‘web3.’ The VCs and their LPs do,” setting off a days-long argument and leading renowned venture capitalist Marc Andreesen to block @Jack.
Ownership
The issue with Dorsey’s tweet, and other similar statements, is that it suggests only ownership matters in Web3. That’s far from the case. In fact, these ownership principles much more closely apply to Web2, which has been driven by venture capital-backed social networking sites. Conversely, Web3 is about aligning incentives between platforms and users so that both platform owners and users benefit.
What made Dorsey’s tweet so ironic is that influencers on social media platforms – including the one he founded – were actually a very good early model of how the benefits of even centralized media platforms could become decentralized by users. Influencers leveraged these platforms to build large audiences that enabled them to sign big deals that became staple programs for marketers and brands. This is a big business. Estimates suggest U.S. influencer marketing will approach $5 billion in 2023.
Influencers and the dirty secret
There’s a dirty secret with social media influencer marketing: it doesn’t work. Users no longer look to influencers for guidance on their buying decisions. Consumers are starting to realize that influencers aren’t necessarily authentic product users; they are spokespeople who are paid to pitch products. As a result, people are less inclined to buy the products or use the services they are hawking. One recent survey found that nearly 60% of social media users never intend to buy a product promoted by influencers.
There is hope, though, for the brand and product marketers wondering how to better use their influencer budgets. As forward-looking brands begin deemphasizing the traditional influencer programs that have failed to deliver, the next generation of influencer marketing is taking shape.
In the Web3 future, the handful of influencers with millions of followers will increasingly be replaced by a decentralized army of everyday nano-influencers. This new model has shown to be extremely effective, suggesting that large groups of people with small followings can collectively have a bigger impact than smaller groups with large followings.
Influencers and Engagement
In addition to strength in numbers, individual engagement among nano-influencers is stronger as well. An influencer marketing report actually found that users with smaller follower counts actually receive the highest engagement rates, compared to users with much higher followings. In fact, social media posts about brands or products by everyday users get five times the engagement than those of paid influencers and 92% of consumers say that they trust recommendations from friends over all other sources.
But how do brands activate this army of nano influencers? Just as “Web2” gave rise to social media, Web3 is providing new technology, including NFTs and cryptocurrency, to reward these potential brand ambassadors. Initially, the Web3 influencer revolution will happen slowly, with brands rewarding users for posting on existing social media platforms. But the sea change will truly come with the launch of the first Web3-native platform that has reward programs built in to pay everyday users for their posts and attention.
The rising tide of Web3 stands to metaphorically lift all boats. Consumers will increasingly be compensated for their valuable support and attention. Innovative brands will leverage new mechanisms to build engaged audiences of authentic nano-influencers. Existing social media platforms that choose to embrace the new model of social interaction even stand to benefit.
Web3 is here to redefine influencer marketing from a model that benefits a select few to one that benefits all.
About the author
Andrew Yang is the founder of Cultos, a Web3 platform that rewards users for promoting their favorite brands on social media. By liking, following, posting about and otherwise engaging with companies on social channels, consumers can earn branded tokens and NFTs from their favorite companies.
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