Happy Sunday!
If you’re a mom, happy Mother’s Day to you! You have the hardest job and most of the tough times are never have attributable appreciation (is there Northbeam for appreciation?)! Well, I want you to know you’re very appreciated. And to the moms who travel in airports and manage little kids… you are amazing too. I don’t know how you do it!
If you’re reading this, I hope you’re sitting comfortably on a couch, feet up, slightly reclined, beverage in your hand, fuzzy socks on, and you’re ready for today’s blog. Today’s blog dives deep into the intersection, and really a 101, of celebrity brands and celebrity partnerships.
Creators as The Most Effective Modern Marketing Channel
The reality is having a creator or influencer partnership has been one of the most powerful and effective marketing strategies available to DTC/CPG brands over the last decade.
From celebrity-founded brands like Fenty, Skims, Casamigos, Kylie Cosmetics, Teremana, Rare Beauty, Goop, Win Beauty, and others to more digitally-native influencer-founded brands like Chamberlain Coffee, Feastibles, Prime, The D'Amelio Brands, Juvee, Summer Fridays, Item Beauty, and others, almost everyone I speak to is looking for a creator/influencer partnership to supercharge their company.
Why do they want this?
A few reasons:
People like people a lot more than they like brands. Humans want to learn from, follow, and buy from other humans, not your corporate social media “brand” account.
Massive “free” top of funnel distribution. Many of these celebrities/creators have owned audiences generating hundreds of millions of organic content impressions per year. Some of these creators/celebrities have owned audiences generating hundreds of millions of organic content impressions per month. This becomes an unbeatable “free” distribution channel with the right product/audience fit that can yield 10X higher ROI than any other channel I’ve seen including paid ads. I say “free” here because you still have to pay the creator/influencer and you might have to give them a significant revenue share or equity stake to be involved.
Brand lift and trust. Attaching the right celebrity or influencer to your product creates an instant brand lift that dramatically improves your company’s brand perception overnight. The reason why is credibility and trust. If your brand was able to attract a known celebrity or influencer as a partner, then the product must be legit. (At least that’s how many consumers think) But in general, getting a major celeb or influencer on board is one of the fastest ways to build credibility and trust with a new product or service today.
Earned media, retail access, better partnerships, and more PR. Additionally, having a celebrity or major influencer involved is a great way to generate more press and earned media as well get access to more and better partnerships and collabs + retail doors. Big box stores like Target love working with influencer backed brands because they know these people can drive traffic to the store. I think this is pretty obvious but you will also get much more organic press and PR if you have a known creator/celeb involved.
World class content. Lastly, these celebrities/influencers are famous for a reason. They are either world class at storytelling and content creation on digital and social or they have done something incredible offline as an athlete, artist, entrepreneur, etc that has brought them this fame. Either way, they are no stranger to making great content and they understand how to build a brand through media that sells.
I think the reasons to partner with a creator/celebrity are obvious, but how does this all work from a brand’s point of view?
When Should A Brand Think About A Creator Partnership?
I wanted to ask Daniella about her perspective on when a brand should consider partnering with a creator and obviously her answer is, “It depends.” When it comes to creator/celebrity partnerships, there are multiple tiers of creators and multiple ways that you could approach or structure a potential deal. It could be a one off campaign, a limited edition collection or collaboration or you could be looking to bring on a full fledged co-founder/key brand ambassador for the business with a significant equity stake.
Regardless of what kind of partnership you are going after, Daniella reminds us that it’s important to have the necessary infrastructure and resources to support a strategic investment in making this work.
Just like choosing to run paid ads or TV commercials, working with top-tier creators is not cheap. Established creators or celebs also don’t want to dilute their brand by partnering with a product that’s too early stage.
Daniella recommends getting to some level of product/market fit and approaching creators once you have more resources, infrastructure, and leverage to strike a deal. This means that you should already have a team, a product in market that’s profitable, and a vision for where you’re headed next. Even if you plan to offer equity, most creator deals will have cash or royalties involved as well.
Just like producing and running a great TV commercial for 6 months in a major market, you are looking at low to mid 6 figures of investment to get the conversation started with big creators here.
How Should a Brand Go About Finding a Creator/Celebrity Partner?
If you’re a brand that does have the cash flow and resources to invest in a creator partnership, the next step is to conduct a search to find the right fit. This is where The Preppy Family comes in. They operate on a monthly retainer model + they take a percentage of the final deal you make with the creator/celebrity to partner with your brand.
In general, The Preppy Family recommends figuring out your budget, creating a list of 10-20 creators/celebrities that you think might be a good fit, and then working with an executive search firm like ours who has the industry connections to open these doors and help you navigate, structure, and sign deals.
Remember: This is a process. Just because you want to work with a certain creator or celeb, doesn’t mean they want to partner or work with you. You still have to sell them on your vision and joining your team as well as using their hard earned audience to promote your brand. Just like fundraising, you should expect to get a lot of “no’s” along the way. If you reach out to 20 creators, you might only find one that meets your criteria when it comes to budget, product/audience fit, their availability, and willingness to sign on.
How Can Deals Be Structured & What Do They Cost?
When it comes to deals with creators/celebrities, there are a few common ways that you could structure them.
For a one off campaign, it’s likely a cash-only deal.
For a limited edition collection or more significant partnership, it will typically be cash + a royalty or cash + equity or all 3. This means that you will pay them an upfront fee to collaborate plus give them a royalty on every sale. The royalties range from 0.25-5% of contribution margin depending on what you are selling and how involved the creator is.
When it comes to budget, The Preppy Family mentions that you have to consider the level of creator you are going after. As she talked about above, there are clearly different tiers.
Want to partner with Kim K or Ryan Reynolds? That will be a multi 7 or 8 figure cash deal + equity + royalties.
Looking to partner with a native social media influencer who has 500K-1M followers across channels? You will obviously pay less. Start thinking in the $50-150K range for cash payment and potentially a small percent of net profit like 0.25 to 2% depending on how much they sell.
As you would imagine, Tier 1 influencers with millions of followers can charge brands millions of dollars. They know their name and likeness + audience is valuable and if they can actually move units, it can be totally worth it for your brand.
What Are The Deliverables & What Can I Expect?
Again, it really depends on the deal that you do but there are always going to be contractually obligated deliverables involved.
When you pay a creator or celebrity to do marketing for you or when you bring them on as a co-founder/key brand ambassador there are typically a handful of things that you could require from a contractual standpoint.
It starts with a minimum number of posts but depending on the significance of the campaign, partnership or collaboration, you could also have them obligated to be part of key strategy or product meetings, participating in X number of content shoot days, a certain amount of product placements in their videos, a certain amount of in-person events that they have to attend, etc.
You should also work to negotiate licensing deals to use their name and likeness in ads, on packaging, in your copy and emails, on the website, on social, etc.
The general rule of thumb is that all of these terms are negotiable and you can require basically anything you want as long as the other party agrees.
You could also tie the creator/celebrity's compensation to achieving a set number of sales. For example, they would get a base of cash and a bonus if they hit certain sales metrics or other milestones over a given period of time.
How Should Brands Evaluate Potential Creators/Partners? What Are The Green/Red Flags?
When it comes to how brands should evaluate creators/celebrity partnerships, The Preppy Family had a few great anecdotes here as well.
If they are already an established creator/celeb, ask their team for case studies about other products they’ve promoted in the past. If they are big enough, they should have several examples. Get their team to tell you about their past experiences and the key results (i.e sales, impressions, followers, emails subs etc) that they achieved through their partnership or campaigns.
Do your due diligence. Make sure to do research on the creator/celeb and review their catalog of content before signing a major partnership. Make sure that it aligns with your core values and the messaging that you want to convey as a brand.
Ask about and review how many past or active partnerships this creator/celeb has had. If they are actively partnered with 15 brands, it might not be a good fit. If they have already done 25 brand deals in the past 3 years, their audience might be tired of getting sold to. If they promoted your competitor 18 months ago, that’s also a red flag. Make sure to review all of this.
Next, review engagement rates, not just follower counts. Follower counts and email list sizes are generally vanity metrics. What you really want to see is engagement, click through rates, and sales. The main question you are asking is: Can these people get others to take an action? Can they get people to swipe up, visit the site, enter their email, and most importantly, buy? This is the most critical thing.
Once you have looked at the 4 items above, you should feel much better about whether or not this creator/celeb is the right fit for your brand or not.
How Should Brands Measure Performance and ROI?
When it comes to measuring ROI, you have to compare the work you do with creators and celebrities to any other marketing channel that you are running.
At the end of the day, all of the business is a capital allocation problem. You have $X resources that you need to spend on Y activities to generate Z outcome. You could spend your money on more ads, more organic content, more team members, a fancy retreat in Hawaii, etc. whatever you think will have the highest ROI.
You have to think about working with influencers and creators as just another marketing channel that can be measured just like anything else.
The top metric to measure is obviously sales. You can do this through custom links and landing pages that you use to exclusively drive traffic to from the influencer’s/creators content and ads.
Beyond sales, there are a few other ways to measure ROI that aren’t as black and white.
Is it easier to fundraise now that you have this creator on board?
Is it easier to recruit top talent now that you have this influencer as an ambassador?
Is it easier to enter other partnerships and collabs with this creator as a successful case study?
Does working with this creator/celeb help you get into retail?
Does it provide a halo to your other channels?
There are certainly a lot of other metrics that you can measure that aren’t strictly tied to net sales. You just have to be mindful of these as well when measuring ROI.
Should You Do a Test Project Before Partnering Full Time?
Another thing that The Preppy Family said that I totally agree with is before you bring on a creator as a significant shareholder or with a big equity or revenue share deal, you should consider doing a test project with them first.
Perhaps you launch a limited edition collection or hire them as a brand ambassador for 6 months in a cash only deal to see how they perform.
Not only can you measure direct sales via a limited edition collab or campaign, you will also get a better sense of what it’s like to work with them and their team.
Are they easy to work with? Is their team responsive? Are they competent and engaged? This will tell you whether or not they would be a good partner long term.
In general, I think this is a very smart strategy for anyone thinking about having a creator/co-founder and giving away a lot of equity at an early stage. When possible, do a test run first to see if it’s a good fit! This will save you and the creator/celeb a lot of time and headache if the campaigns and test projects don’t go as planned.
Wrapping Up
At the end of the day, creator/celebrity brand partnerships are not going away. In fact, I think they will only continue to accelerate from here on out. There are tons of obvious advantages for brands and there’s also plenty of unique ways to structure these partnerships overall. If you are thinking about involving a creator/celeb, feel free to reach out to The Preppy Family in our chat and we'd love to chat with you.
My 0.02 on everything above…
Go into the meeting with leverage. Have the profit and resources to support a meaningful investment here. Standing up a real creator partnership is no different than standing up a great TV campaign or OOH campaign. It’s not cheap and likely will require 6-12 months of hard work to start generating really meaningful results.
Do a test project first!. When possible, find a way to collaborate on a campaign or a limited edition collection before giving your equity away. This is super important and I’d recommend it to anyone.
Look for someone who really wants to be involved. The difference between the creator partnerships that I have seen that have really worked out well and the ones that haven’t is the creator actually wanted to be involved and they natively and organically enjoyed making content about the product/brand. If the creator/celeb just wants to make a few posts or put their face on the packaging and let their team do the rest, it’s not going to work. You need someone who is bought in and excited and is willing to do meaningful work to make the partnership successful for you both over time.
View it as just another marketing channel. Instead of allocating everything to Meta, Google, and TikTok, why don’t you take 15% of your ads budget and allocate it to creators/influencer partnerships? It might just be the unlock that you are looking for.
Okay, that’s all for this week, now onto some fun stuff…
That's all for this week
I hope today’s newsletter was fun to read and didn’t take too much time away from enjoying Mother’s Day. I’m currently watching the Knicks vs. Pacers game and sweating through the second quarter.
Now that Mother’s Day is coming to an end, the busy season is about to pick up for us eCommerce and marketing nerds… it’s time for sales baby!
I hope you plan to get 9 hours of sleep tonight and have an amazing upcoming week. I’ll be back next week with a more tactical deep dive… one where you can print it out, highlight it, and then take action on Monday to make more money.
Until then… have an awesome week and I’ll see you next Sunday!
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