In the Internet age, “influence” is an increasingly desirable trait for brands looking to sell their products.
And influencers, those with significant followings on such social media platforms as YouTube, Twitter, Instagram, Vine and even Snapchat, are increasingly using their base to command thousands in endorsement dollars.
While some in the business community have expressed doubts about whether Internet stars and social media personalities are worth the investment, a cottage industry of firms in Los Angeles has sprung up to connect these increasingly business-savvy individuals with digital-friendly brands.
“We definitely have more of those influencer firms because we have more influencers, YouTubers, celebrities, Viners, etc., living in L.A. than other cities,” said Kevin Winston, founder and chief executive of tech networking group Digital LA.
And some of the companies using these services are deciding to come back and spend more the second and third time around.
“Over 70 percent of our customers recur on their campaigns,” said David Kierzkowski, co-founder and chief executive of Santa Monica’s FameBit Inc., a YouTube marketing platform where brands can solicit popular YouTube creators to make videos promoting their products.
Many of those customers start out with moderate campaign budgets in the $1,000 to $2,000 range. But, said Kierzkowski, “most brands at least double their spending while others increase it into the six-figure range once they measure the performance.”
More than 500 brands have already used FameBit’s service, which launched just 11 months ago. FameBit takes a 20 percent cut of each deal and projects its annual revenue will reach $10 million, said co-founder and Chief Operating Officer Agnes Kozera, twice what it was projecting in September.
“We have a lot of momentum” Kozera said. “We’re growing.”
Its service is designed to expand the pool of influencers making money based on the size and characteristics of their audience. The company targets YouTubers who might not match the huge subscriber numbers of A-list talent but maintain loyal followers in niche markets.
FameBit participated in the eighth class of Mountain View accelerator 500 Startups earlier this year and raised a $1.4 million seed round in June. Investors included 500 Startups as well as Science Inc.; DeNA; and Allen DeBevoise, founder of Machinima Inc. The company operates out of Science’s Santa Monica headquarters.
Culver City’s theAmplify, also less than a year old, helps brands connect with Instagram influencers with at least 50,000 followers and assists them in creating photo-based campaigns.