- Brands are canceling campaigns and delaying payments to creators as they brace for a downturn.
- Some creators said they have struggled to land new deals and that affiliate commissions are down.
- Insider spoke to dozens of creators and managers about how they’re adjusting to a shaky economy.
Personal-finance influencer Seth Godwin quit his job in April of last year to become a full-time content creator. Business was booming for the TikToker, and he was earning enough to take a risk.
What he didn’t count on was a global economic slowdown.
“There are fewer brands reaching out to do partnerships now,” said Godwin, who makes money from TikTok’s creator fund, brand sponsorships, and affiliate marketing commissions. “Whenever brands do reach out, the rates that they are able to offer have been cut decently. Overall, they have dropped from between 15% to 20%.”
Godwin said he’s relying on the long-term partnerships he agreed to at the start of 2022 to keep his business afloat.
“I still have that income coming in, but adding new sources has been the main struggle,” Godwin said, adding that he’s considering lowering his rates to bring on more deals.
Godwin isn’t alone.
“On YouTube: We’ve had six figures worth of brand deals canceled in the past 30 days,” personal-finance creator Nate O’Brien posted on Twitter this week. “Either companies are panicking or running out of money. Probably a bit of both.”
Out of 40 industry insiders – 26 creators and 14 talent managers – that Insider spoke with, 21 people provided examples of recent cutbacks from brands. Even more expressed some sort of uncertainty about the state of the industry.
Several spoke on the condition of anonymity to avoid damaging relationships with brands and marketers.
In a wobbly economy, sources of income can dry up at a moment’s notice. That’s what some creators are learning this month as brands have begun offering lower ad rates and canceling or delaying payments for influencer campaigns as they try to survive a broader financial downturn.
The cutbacks certainly aren’t unique to the creator economy. The US recently entered a bear market, and some analysts and investors fear a
recession
is coming. May was the worst month for startup layoffs since the start of the pandemic coronavirus, according to employment data tracked by the website Layoffs.FYI, and advertising budgets are often among the first to go as brands look to cut spending.
Influencer-marketing spend is no exception, particularly among startups and VC-backed companies looking to extend their runway over the next few years.
Since 2020, many creators have been riding a wave of opportunity and growth as the creator economy boomed.
Leo Patrizi / Getty Images
Overdue payments, changing deliverables, and supply chain issues
While some brands are canceling influencer campaigns before they begin, others are overdue on payments to creators for work that’s already been delivered this year.
Beauty brand Vanity Planet told one influencer in recent weeks that it would not be able to pay them for a brand campaign on time, according to the creator’s manager. The manager, who spoke on the condition of anonymity to avoid damaging the relationship with the brand, said they were considering requiring companies to pay a portion of their clients’ fees upfront in future campaigns.
“Our
marketing influencer
strategy was crushed this year, “Vanity Planet CEO Alex Dastmalchi told Insider in an emailed statement, pointing to a variety of obstacles the company has faced in 2022, including Apple’s iOS privacy changes that made targeted advertising harder, hyperinflation, rising costs,” unprecedented logistics “challenges, and a general slowdown across the economy.
“Unfortunately, the many challenges mentioned above have resulted in delayed payments to some of our vendors and partners,” Dastmalchi said. “We’re not giving up on influencers but are recalibrating our influencer strategy to adjust to these changes.”
Another talent manager, who spoke on the condition of anonymity but whose identity is known to Insider, said some brands have recently scaled back on deliverables, or how many sponsored posts the deal requires, as a way to lower rates.
Issues go beyond just fear of a market in crisis. Some companies literally don’t have enough product to send influencers for campaigns due to supply chain issues – from lack of inventory, to lack of packaging, to shipping delays.
Dorian Holguin, an esthetician and nano influencer, said he recently had a brand deal with a makeup brush company canceled because the company didn’t have enough inventory to give him to use for promotional purposes.
“We were in the process of negotiations when I received the word that the campaign had to be shelved,” Holguin wrote to Insider. “The company was running low on inventory and didn’t have enough for sales, much less marketing.”
Recent company layoffs have also impacted some creators. One TikTok creator said that an upcoming deal she had scheduled with a recruiting app was canceled after the person she was in contact with at the company was laid off.
Creators who post about personal finance, NFTs, and cryptocurrencies have been particularly affected by the downturn. Recently, the crypto exchange Coinbase drastically lowered how much it pays some social-media influencers who drive sign ups to the platform, for example.
For creators, longer-term deals and TikTok are critical in a choppy economy
Paid deals has not dried up for all creators. About half of the creator and manager sources told Insider that for them or their clients, these last few weeks have largely been business as usual.
“We’ve actually booked quite a few high-dollar deals last week and this week, and had some contract extensions into December,” Christie Childers told Insider via email. Childers owns talent management firm Best Day Ever and has a roster of 10 creators.
Lissette Calveiro, a content creator with 80,000 followers and a manager who works with a handful of influencers, said she has been leaning into long-term deals to combat the volatile economy.
“I will say, on the downside – or upside depending on how you see it – I do notice most brands prefer sticking to long-term partnerships and working with a smaller group of creators,” Calveiro told Insider.
One area of stability for influencer-marketing spend appears to be TikTok, which has experienced rapid growth and continues to draw in advertising budgets for creator content. The company’s head of global business solutions, Blake Chandlee, told CNBC last week that the platform had not seen an ad market slowdown nor the headwinds that some others are seeing.
Catarina Mello makes content about travel, lifestyle, and the business of being a creator.
Courtesy Catarina Mello
And as with other parts of the ad industry, certain content verticals has not been affected as much as others. Travel brands, for example, are continuing to invest in marketing as spend on flights and hotels continues to rebound.
Catarina Mello, a travel influencer with 440,000 Instagram followers, said the business has been better than ever for her. After two years of canceled trips, travel-focused brands are looking to reach travel-starved consumers, Mello told Insider.
“If we made it through Covid, we’ll make it through this as well,” said Becca Bahrke, CEO of influencer management firm Illuminate Social. “Brands will need to still advertise – it might just be different brands spending more money, while others aren’t.”