I love this recent video from the Youtube channel How Money Works:
Maybe I like it because it appeals to my pre-existing sensibilities. Basically, if a product is aligned with someone famous, I’m usually less likely to use that product.
There are exceptions to this. For instance, if a movie is directed by Christopher Nolan or David Fincher, I’m likely to watch it. If David Mitchell (author of The Bone Clocks) writes a novel, I’m likely to read it. But this is because they are intimately related to the product, and they’ve earned my trust in this narrow domain. Without any further information, I wouldn’t be interested in a novel written by Nolan or Fincher, and I wouldn’t be interested in a movie directed by Mitchell (especially since he was one of the writers credited to Matrix Revolutions).
If an actor or model sportsperson and/or influencer is promoting a product, I’m less_likely to buy it. And I’m likely to think less of _them, too.
There’s a reason I never even thought of buying Beats headphones (as much as I like Dre’s 2001), and have never owned a pair of Air Jordans. I didn’t even think of buying a pair of Yeezy’s, even when I thought My Beautiful Dark Twisted Fantasy was a masterpiece (and before listening to anything by Kanye West gave me bad vibes). I refuse to buy cologne or perfume associated with a celebrity: if you see me doing that, ring 111 because I probably plan on drinking it.
(To be clear: I’m not saying this is always the case. Just that it’s a general tendency, and there can be exceptions. Consider it a presumption, or prior when I don’t have any additional information.)
The video above relates mainly to businesses where the influencer in question has an ownership stake in the business. It starts off with talking about Ryan Reynold and the two businesses that made him a lot of money as a minority owner: Aviation Gin and Mint Mobile. Another example are the Prime “sports” drinks affiliated with Youtubers Logan Paul and KSI.
They’re good examples. Look, I like Ryan Reynolds and have enjoyed quite a few of his ads for Aviation and Mint. But apart from making me more aware of these products, it wouldn’t be the deciding factor for buying one of these products or services.
I know very little about KSI, but I despise Logan Paul, and don’t trust anything that comes out of his mouth. I’m more likely to drink poison than Prime.
Anyways. The video gives a few reasons why influencer businesses don’t tend to create good products, and end up being bad investments for most people involved – including the influencers themselves.
- These businesses often trade on the reputation of influencer in question, and this strategy is only as sound as the influencer’s reputation.
Products built around an individual have a single mode of failure.
Think: Kanye West.
Or: half of the influencers that were hot five years ago.
Most influencers have a shelf life. The appearance of selling out of not acting in the best interests of their fans can turn sentiment against them. Ryan Reynolds is probably going to find it hard to market his next business(es) after selling Mint Mobile to T-Mobile.
- The influencers often don’t have that much control over their businesses.
Logan Paul and KSI are entwined with the Prime brand, but they only own 20% each of the business. The majority stake is owned by a distribution company called Congo Brands.
Even founders and significant shareholders can lose control of a company’s direction – to the extent they had any control in the first place. They can be blamed for decisions they don’t have control over or support. In some cases, these influencers can end up contractually bound to a product they don’t support any longer, and even being forced to provide a positive spin for decisions and products they don’t support (“eating s#!t”).
Heck, Ryan Reynolds might not have wanted to sell Mint Mobile to T-Mobile. But he had a minority stake, and if the other owners wanted it to happen, he probably had little control in the matter.
- Influencer products tend to be worse than more boring, proven products.
In all seriousness, what do most of these influencers know about the production, quality assurance, and product distribution associated with the products their businesses operate?
Sure, Mr Beast might enjoy hamburgers. Logan Paul might have been an avid consumer of sports and energy drinks. Ryan Reynolds might enjoy drinking gin, and use a phone that requires a mobile service provider. But that’s the same as you or me! They don’t have any special knowledge or ability to discern all of the other things necessary to make the actual product.
You could argue that they have the resources and ability to pick good people to do these things, but would you really bet on these individuals or their teams being able to create better products than a company populated with professionals that have successfully been in the business of doing this for many years? My bet is that Mr Beast will keep focusing on making Youtube videos, Ryan Reynold will continue to spend most of his time and energy on showbusiness-related matters, and Logan Paul will just keeping doing whatever Logan Paul does.
Where does this leave us?
To be alert when people are promoting a product or company when they have no business in doing so. Which, in my view, is basic media or cultural literacy.
The video I shared, and most of this article relate mainly to big name influencers and large companies. But the general ideas hold when the scope is narrower.
Also, I know that people and businesses need to make a living, but be sceptical when people advertise products and services. This is especially the case where they hold themselves out as being impartial, which is common in the financial services domain.
One of the best metaphors I can think of relates to a film or book critic. I love reading, listening, and watching some critics (this is even when I often disagree with their views, in both superficial and fundamental ways – for example, The Critical Drinker).
But when they start to blur the line between whether they are critiquing a movie or book, or promoting it?
🤮