HEADQUARTERS: Los Angeles, CA
YEAR FOUNDED: 2013
2015 REVENUE: $7 M
Big names like Leonardo DiCaprio and Stephen Curry might come to mind when you hear the words "celebrity spokesperson." Getting a Hollywood actor or this season's reigning NBA MVP to endorse your brand, however, is going to cost a lot of money.
So how can you tap into that word-of-mouth power without shelling out tens of millions of dollars? Look no further than YouTube, Instagram, Pinterest, or Snapchat. That's according to the founders of InstaBrand, an influencer marketing company.
Founded by brothers Eric and Alex Dahan, and their friends Joey Chawaiki and Felix LaHaye, InstaBrand aims to help companies tap into the power of "social media celebrities" to spread the word about their brand in a more organic way. To qualify as one of these "celebrities," the marketing startup says you must have at least 10,000 followers per platform, and draw at least 1,500 likes and comments per post.
InstaBrand works as the middleman that connects brands with social media influencers to promote their products. A company looking to promote its line of accessories, for instance, may have an Instagram influencer post a picture of themselves wearing one of the brand's necklaces onto their account.
Keep in mind that while these social media campaigns might be more cost-effective than other advertising campaigns, they aren't at all cheap. InstaBrand's clients may pay as much as up to seven figures for one campaign work. The company has roughly 800 clients--in verticals ranging from fashion (Fossil, American Apparel) to tech (Airbnb, Spotify). It currently works with about 25,0000 "web celebs."
Alex Dahan came up with the idea for InstaBrand in 2011, as he was looking for a cheap way to advertise his new line of jeans. One night at a club, he ran into two young men whom Alex recognized from Instagram. At that moment, something clicked: Each of the two had at least 40,000 followers on his accounts. Alex thought, if both of them posted a picture of the jeans on Instagram, they could reach 80,000 people.
Finally, he walked up to the guys and simply offered them a free pair of jeans if they agreed to post a picture of the jeans on their Instagram account. "They were like, 'Hell yeah, that sounds like the best thing ever!'" Chowaiki, who was with him at the time, recalls. "They had zero cash flow at the time."
In just two weeks, Alex sold 2,000 pairs of jeans. He realized that instead of selling jeans, he could make money connecting the people who sold jeans with these social media influencers.
Yoram Wurmser, a retail analyst with digital research firm eMarketer, says that influencer marketing can be more successful for some companies than other types of marketing because social media users associate influencers with something they aspire to obtain.
"It's really good for brand development, and it associates your brand to a lifestyle or an idea," says Wurmser.
It wasn't much later when the four co-founders starting building the website for InstaBrand out of their living room, with "eight computer monitors--and probably 100 cans of Coke Zero," according to Eric.
Eric, a self-proclaimed "get-stuff-done kind of guy," took on the role of CEO. Alex became the creative director, while Joey, the salesman of the group, got to work recruiting influencers. LaHaye, who was born in Montreal and lived in London for several years, helped open the company's international offices.
When the four started InstaBrand, the influencer market was just emerging--they were excited to simply land a $4,000 campaign with American Apparel, one of their first clients. Now, launching a campaign with a company and an influencer is a lot more complex than handing over a pair of jeans. Alex says that InstaBrand's influencers get paid anywhere from $500 or $50,000 per campaign.
Any indication that influencers are trying to game the system--such as creating fake followers to make themselves seem more popular--will disqualify them. The company says that it wants to give its clients the most "organic" way to reach as many consumers as possible.
But just how authentic can anyone be when they are promoting something because they were paid to do so? "You're following this influencer because you like that individual. From time to time, if they integrate product and brand messaging into their content, it doesn't really disrupt the user's activity," Alex insists.
As a way to maintain authenticity, Wurmser says that influencers must be careful to disclose when any posts have been paid for by a company, so as not to lose the trust of their followers.
To differentiate itself in the increasingly crowded influencer market, InstaBrand released a "social influencer search engine," which companies can purchase to find influencers to work with among a network of 100,000 social media celebrities. The way the InstaBrand co-founders see it, it's a way to secure a better position for themselves in the influencer food chain.
"We want to be a force that powers the influencer market over the next few years," Eric says.
Correction: An earlier version of this article incorrectly stated that Joey Chowaiki had been involved in a jeans business with Alex Dahan prior to starting InstaBrand. He was not involved in the jeans business.