Ryan Stern was having a cocktail at a dive bar in San Francisco when she came up with the idea for her business. She is the co-founder and CEO of Collectively, a startup that counts over 50 brand clients, and connects them to a network of more than 5,000 social media influencers (sometimes referred to as 'web celebrities') across such platforms as Instagram, Vine, Pinterest, Snapchat and YouTube.
A food blogger by background, Stern had recently inked a deal with Picwick and Weller -- a now-defunct shirt retailer that once counted Ashton Kutcher as an investor -- to manage their social media marketing. "People will pay us to do this," she recalls thinking. "Why not go see if a lot of people will pay us to do this?"
Collectively pays influencers on a per-project basis to promote the brands on their web channels. In return, it charges brands anywhere between $2,500 and $2.5 million for facilitating the campaign. About 75 percent of Collectively's business comes from repeat customers, says Stern. The remaining 25 percent represent one-off projects. Though she wouldn't disclose revenues, Stern says the company is profitable, and that sales grew 600 percent in 2015.
Earlier last week week, Collectively announced a new partnership with HP to promote its latest laptop. The 13.3 inch Spectre 13--which launched Tuesday, and is billed as the "world's thinnest laptop"--comes amid rumors that Apple is planning to push out a line of ultra-thin MacBooks. HP teamed up with Jess Hannah, an L.A.-based jewelry designer, to produce one limited-edition version of the Spectre, which is coated in 18 karat gold, has a diamond-encrusted logo, and is set to be auctioned off to support the Nelson Mandela Foundation.
In addition to tapping its influencer network for the campaign, Collectively produced a short social documentary for the computer giant's YouTube channel, set to be released on April 22.
Why Silicon Valley cares about influencer marketing
Gone are the days when companies turned a blind eye to social media influencers. Web celebrities offer brands the opportunity to turn a profit with minimal effort and spend.
Michelle Phan, the famed YouTube vlogger and co-founder of makeup subscription service Ipsy, claims to have paid nothing on customer acquisition in the early days.
"We didn't need marketing money," recalls Phan. She was confident that she could continue to post content to her millions of followers on YouTube, and then find "the right creators" to generate even more views for the brand over time. Today, her company sees revenues of more than $150 million, and has raised more than $100 million in funding.
A recent Salesforce study found that 70 percent of brands planned to increase their budgets for social media, as customers grow wary of banner ads; 70 percent of internet users would prefer to learn about a product through content rather than through traditional means, according to data from MDG Advertising. In addition to HP, Collectively's clients have included Pandora, Old Navy, bareMinerals, Jawbone, and General Motors.
Some hesitation in the new marketing strategy
Of course, by working with Collectively, a company is forced to hand over more creative control than it might be used to. "It scares some brands," Stern admits. "We put some guardrails up, but ultimately it's more of a creative brief."
Influencers can generally decide how they want to incorporate a product in a post, though they are required to include a tracking link, so Collectively can gauge how much traffic (thus, potential business) is coming through the platform.
In particular, Stern says she enjoys working with companies that are shifting direction, and are therefore more open to new strategies on social media. "If a brand is looking to re-brand or reposition, that's an area where we can test and play with something that might be farther from the core customer base," she says.
Oftentimes, Collectively steers brands in a different direction than what they originally envisioned. For certain launches, tapping into the influencer reach on a platform like Snapchat might be more effective than using Facebook or Instagram, for example. She also flags that having tons of followers is not the most important factor in choosing a social media partner.
"Every single program we do continues to support the story that a smaller community--say, an influencer with 10,000 followers [in a niche area]--is still always greater than a conversation with someone who has 5 million followers," says Stern, referring to the "engagement" and "conversation richness" you're more likely to foster.
Keeping it real
Because the company's aim is to promote select brands through more authentic web content, be that a Vine, an Instagram post, or a Snapchat still, it vets the network of influencers by looking beyond how many followers they have. It assesses their engagement rate per post, as well as the influencer's longevity on social media.
Once accepted onto the Collectively team, influencers are gifted with an incredible amount of trust: Sponsored content is never evaluated before it gets published, and the influencers can often command thousands of dollars in compensation. Though Stern says an on-going project with a client can be worth millions of dollars in revenue, a good chunk of that often goes directly back to the creators.
Still, she says, large projects are worth the associated costs, because influencers have the power to captivate their audience with an "emotional connection" that brands simply can't foster. (Many of those influencers are also bringing in ad revenues through the social media accounts themselves, and so don't rely only on Collectively.) Of note, influencers choose to work on particular brand projects--not vice versa.
"We don't sell talent lists to our clients," Stern explains of the programs. "We talk about archetypes and we talk about people in our community and what their behaviors are, who they're following, and then we map that back onto a larger group of talent or collaborators that we think could best authentically tell this story."
In one instance, Stern recalls that a pet food company solicited Collectively to target fashion-minded women in New York City with cats. Collectively was able to browse its database to find the right influencer matches for the client.
Collectively's steep competition
Collectively sees itself as more of a creative agency than a tech company, and is up against steep competition.
Just this week, Experticity partnered with ReadyPulse to create a single influencer marketing company under the Experticity umbrella. The new venture has a combined client list of more than 750 consumer brands, compared to Collectively's more than 50. Experticity, which is based in Salt Lake City, Utah, has raised $18.7 million in venture capital funding. InstaBrand, another influencer marketing startup based in Los Angeles, Calif., has raised $2.5 million in venture capital funding, and claims to have served more than 600 brands, including Unilever, Disney, and Amazon, since launching in 2011.
Still, Stern contends that it's her "creative community" that sets the company apart.
"We are facilitating a true revenue model for these creative partners," she says. "We're a business of small businesses."
It also helps that Collectively does not build its own technology platform, but rather relies on a (highly-customized) version of Salesforce. That, says Stern, actually saves it more money.
"The social media landscape is changing so rapidly that it [technology] is a really pour investment," she explains. "You'd have to invest in an engineering team and a tech platform that will be outdated before you can even get it to market."