Harnessing the Power of the Loyalty Economy

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By Matt Silverman

Over the past decade, the internet’s creative content has evolved to be so much more than shouting for viral attention in news feeds.

Content creators, some of whom have built massive followings from scratch, enjoy the deepest audience relationships in the history of media. And they have done so in a climate where other online media outlets — ones that rely on scale, algorithmic distribution (e.g., Facebook), or SEO — have faltered.

In an age of algorithms, “essential content” — media so important to an audience that they would be upset if it disappeared — is arguably the most durable online content model that exists.

This transition, from an economy based on novelty to one based on loyalty, can sometimes be hard for brands, media, and even mainstream audiences to parse. But it’s out there, and it’s huge.

Understanding Essential Content

Essential content is easily recognizable in traditional media: It’s a favorite TV sitcom, a trusted radio sports commentator, or the morning newspaper. Online, essential content has taken dynamic new forms. It’s a global video game speed-running community, a YouTube makeup tutorial channel, even a group of virtual fashion models.

To some, this content may seem trivial, but to the audiences obsessed with it (and who oftentimes play a part in its creation), it’s essential to their lives and they are extremely loyal to its creators.

In 2014 when Grace Helbig started a new YouTube channel after management conflicts forced her to abandon the channel on which she’d gained millions of subscribers, her audience followed her immediately. That level of loyalty has not gone unnoticed, and more recent examples illustrate how far some streaming platforms are willing to go to leverage that proved creator power:

In 2019 Richard “Ninja” Blevins, the popular video game streamer who built a following of 14 million viewers on Amazon’s livestreaming service Twitch while playing Fortnite, was lured away by a multiyear contract with streaming competitor Mixer, owned by Microsoft. According to CNN Business, the deal was worth between $20 million and $30 million. (In this instance, the content creator did very well for himself financially, though the platform was unable to reap the benefit and closed during the writing of this piece.)

Similarly, Spotify recently secured exclusivity rights to comedian and podcast phenom Joe Rogan’s entire catalog of podcast content in a deal The Wall Street Journal reports is worth more than $100 million. The deal will single-handedly push one of the largest podcast audiences in the world into Spotify’s walled garden.

These deals (and others like them) show that tech companies will spend obscene cash to own the audiences that power their platforms. And the race is underway to gobble up the biggest and the best.
 
The Marketing Shortcut

Marketers have two paths toward cultivating essential content and the brand loyalty that goes along with it: The long way of making the content themselves or the shortcut of partnering with a successful creator.

Which path is the right one depends on the brand’s product, budget, and in-house appetite for creative risk.

Podcasts are so beloved that when listeners become leads for Policygenius, they go out of their way to credit their favorite show in end-of-funnel surveys.

Reaching smart consumers where they live online is a no-brainer for business tech products, says Lauren Drell, a journalist-turned-brand-marketer based in Brooklyn, N.Y. She works with companies to create content and messaging throughout the customer journey. She has developed content with brands ranging from American Express and Samsung to Sweetgreen and The Farmer’s Dog.

“Slack has produced two podcasts of their own — Variety Pack and Work in Progress. And Basecamp launched The Distance, which interviews founders of businesses that are 25-plus years old,” Drell says. While she notes that these shows have ended production or follow a “seasonal” model, their quality speaks to brand goals far beyond traditional advertising.

Hiring platform ZipRecruiter has taken a hybrid approach, Drell says. It is not only a big advertiser across numerous podcasts, but in 2018 it also launched its own 11-episode podcast called Rise and Grind, which, as Drell points out, partnered with Shark Tank host and FUBU founder and CEO Daymond John. “A compelling, media-trained, recognizable name never hurts,” Drell says.

Drell notes similar examples where brands are either developing their own content or partnering at the ground level with established shops or public figures. One, consumer financial services company Synchrony, partnered in 2018 with Reddit co-founder Alexis Ohanian to host the first season of its podcast Business Schooled, in which Ohanian interviews the entrepreneurs behind companies like P. C. Richard & Son, Jerome’s Furniture, and Nightlight Pediatrics.

The financial services app Robinhood produces Snacks, a short, high-energy podcast that contextualizes the day’s top business news — an essential media service for would-be investors. “It outlines three stories, dives into each, and then wraps up with the key takeaways and a fun fact, making sure you learn something even if you get distracted — clearly, they know their audience,” Drell says.

On the other side of the content coin are pure influencer integrations. Drell points to adidas’s work to promote its adidas Women brand.

adidas has partnered with a mix of influencers and athletes to promote its line of women’s athletic gear. It’s an example of a brand integration that builds on influencers’ connections to their followers.

“adidas has done a great job partnering with influencers who are fitness-minded and yet diverse, alongside your typical athletes,” Drell says, citing influencers Chinae Alexander, Karlie Kloss, Jada Sezer, Ally Love, and Mae Yoshikawa, all of whom are part of adidas’s campaign. “It all feels organic because [these] women would be documenting their workouts anyway, and you can tell that adidas and the women actually share the same values.”

When Buying Influence, Bigger Isn’t Always Better

Not all brands need an adidas-sized budget to get a big return on working with essential content creators.

Buying ads with influencers may feel like a mushy, qualitative prospect — especially compared to the cold efficiency of targeted search and social. However, with research and close monitoring of performance, this route is an excellent option, says Blayne Smith, associate director of acquisition at Policygenius. The New York-based company, which helps consumers compare and shop for insurance coverage, advertises heavily across many audio verticals.

Smith, who also markets across search and social platforms, says that audio influencers out-perform those outlets regularly.

“Influencer is better than other digital ads because the ads can be truly native,” Smith explains. “Done right, the audience either doesn’t know it’s an ad right away, or they just don’t care because the ad itself is content. This makes response rates so much higher.”

In fact, podcasts are so beloved that when listeners become leads for Policygenius, Smith says they go out of their way to credit their favorite show in end-of-funnel surveys — an extraordinary signal of loyalty to a program that simply doesn’t exist for search or social feeds.

Smith also says that because the audio ad space is newer, there are more bargains to be had, at least for now.

So, how does one find the right influencer? Marketers should start by aligning price and category. “We’re typically aiming for a target CPM of around $25,” Smith says. “But there can be some flexibility.”

Smith explains that while he’s had success in politics and comedy verticals, the category actually matters far less than the way in which hosts deliver the ad.

“The slightly less tangible thing that makes a podcast ad good is the host’s connection with the audience,” he says. “If the ads are entertaining or informative, and resonate with the audience — and the host knows best here — then people aren’t as likely to skip them, which leads to a much lower ‘real’ CPM.”

Dollar-for-dollar, Smith says scale also matters far less than one might expect — another important differentiator from traditional ads.

“Total audience size is not really a concern for me,” Smith explains. “While obviously larger shows are going to drive more total customer engagement, we have been very pleased with the performance of smaller shows that have really good category fit — often family shows or small personal finance programs. They can be very efficient in CPAs [costs per action] for us, and in aggregate add up to a substantial part of our strategy.”

He adds: “As in many things, a diverse strategy is more stable long term.”

A big win for Policygenius was investing in a then-small hunting and fishing podcast called Meateater, which Smith began sponsoring a few years ago.

“It crushed it,” he says. “It quickly became one of our top-five shows.” For Policygenius, the smaller spend with a perfectly aligned influencer yielded a better return than a large spend with a household name.

“It’s really reinforced my strategy that we need to have lines in the water with shows that aren’t in the top 100 podcasts because the audiences are still growing and shifting rapidly,” Smith says. “That’s where you’ll find the big wins.”

The Future of Essential Content and Online Media

Audiences will always seek out new content to care deeply about. But the form of that content continues to evolve rapidly — often too rapidly for most brands to keep up. The massive popularity of Fortnite, for example, is as much about a fun video game as it is about attending virtual events with thousands of other players, like the concert rapper Travis Scott put on within the game in late April.

Instead of trying to stay apace, marketers should keep their focus on mature or maturing content ecosystems. Is TikTok the best platform to court influencers right now? Maybe. But its explosive popularity can just as quickly implode. (See: Vine and Yik Yak.) If a company has a lower risk tolerance, it may be wise to let others test those waters first.

After all, there are plenty of proven winners in established content spaces, such as YouTube, podcasting, Instagram, and email newsletters, to name a few.

The “killer apps” for augmented reality and virtual reality — where, for example, strangers from around the world pose as virtual mushrooms and cute birds and discuss their lives — are right around the corner. When they go mainstream, audiences will be spending exorbitant amounts of time in three-dimensional social spaces, just as they do in two-dimensional news feed environments today. And, like today, they will expect from the creators outstanding content that speaks to them and support the brands that make it possible.