Brands cancel deals, delay payments

  • Brands are canceling campaigns and delaying payments to creators as they brace for a recession.
  • Some creators said they’ve had trouble getting new deals and affiliate commissions have dropped.
  • Insider spoke with dozens of creators and managers about how they’re adjusting to an unstable 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 TikToker and he was earning enough to take a chance.

What he didn’t count on was a global economic slowdown.

“There are fewer brands looking for partnerships now,” said Godwin, who makes money from TikTok’s creator fund, brand sponsorships and affiliate marketing commissions. “Every time the brands get closer, the rates they can offer have been reduced decently. In general, they have been reduced by 15% to 20%.”

Godwin said he is relying on the long-term partnerships he agreed to in early 2022 to keep his business afloat.

“I still get that revenue, but adding new sources has been the main struggle,” Godwin said, adding that he is considering lowering his rates to get more deals.

Godwin is not alone.

“On YouTube: We’ve canceled six-figure-worth of brand deals in the last 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.”

Of the 40 industry experts (26 creators and 14 talent managers) Insider spoke with, 21 people provided examples of recent cuts by brands. Still more expressed some sort of uncertainty about the state of the industry.

Several spoke on condition of anonymity to avoid damaging relationships with brands and sellers.

In a faltering economy, sources of income can dry up at any time. 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 are certainly not unique to the creator economy. The United States 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 coronavirus pandemic, according to employment data tracked by website Layoffs.FYI, and ad budgets are often among the first to go as brands are looking to cut costs.

Influencer marketing spending is no exception, particularly among startups and VC-backed companies looking to extend their runway for years to come.

influencer pay gap

Since 2020, many creators have taken advantage of a wave of opportunity and growth as the creator economy boomed.

Leo Patrizi/Getty Images



Late Payments, Shifting Deliveries, and Supply Chain Issues

While some brands are canceling influencer campaigns before they start, others are behind on payments to creators for work already delivered this year.

Beauty brand Vanity Planet told an influencer in recent weeks that it wouldn’t be able to pay them for a branding campaign on time, according to the creator’s manager. The manager, who spoke on 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 up front in future campaigns.

“Our


influencer marketing

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 hampered targeted advertising, hyperinflation, rising costs, “unprecedented “logistical challenges” and a general slowdown in the economy.

“Unfortunately, the many challenges mentioned above have resulted in payment delays to some of our suppliers and partners,” Dastmalchi said. “We are not giving up on influencers, but we are recalibrating our influencer strategy to adjust to these changes.”

Another talent manager, who spoke on condition of anonymity but whose identity is known to Insider, said some brands have recently reduced deliverables, or the number of sponsored posts required by the deal, as a way to cut fees.

The problems go beyond the fear of a market in crisis. Some companies literally don’t have enough product to send influencers to campaigns due to supply chain issues, from lack of inventory to missing packaging to shipping delays.

Dorian Holguin, a beautician and nano-influencer, said he recently canceled a brand deal with a makeup brush company because the company didn’t have enough inventory to use for promotional purposes.

“We were in the process of negotiations when I received the news that the campaign had to be shelved,” Holguín wrote to Insider. “The company was running out of inventory and didn’t have enough for sales, let alone marketing.”

Recent company layoffs have also affected some creators. A TikTok creator said an upcoming deal she had scheduled with a recruiting app was canceled after the person she was in contact with at the company was fired.

Creators who post about personal finance, NFTs, and cryptocurrencies have been hit particularly hard by the recession. Cryptocurrency exchange Coinbase recently slashed how much it pays some social media influencers who drive subscriptions to the platform, for example.

For creators, long-term deals and TikTok are critical in a tumultuous economy

The paid offers have not been exhausted for all creators. About half of creator and manager sources told Insider that for them or their clients, these last few weeks have largely been business as usual.

“We actually booked quite a few high-value deals last week and this week, and we had some contract extensions through December,” Christie Childers told Insider via email. Childers owns the talent management firm Best Day Ever and has a 10-creator roster.

Lissette Calveiro, a content creator with 80,000 followers and a manager who works with a handful of influencers, said she has leaned toward long-term deals to combat the volatile economy.

“I will say that on the downside, or on the upside, depending on how you look at it, I notice that most brands prefer to stick to long-term partnerships and work with a smaller group of creators,” Calveiro told Insider.

One area of ​​stability for influencer marketing spending appears to be TikTok, which has seen rapid growth and continues to attract ad budgets for creator content. The company’s head of global business solutions, Blake Chandlee, told CNBC last week that the platform hadn’t seen an ad market slowdown or the headwinds that others are seeing.

Catarina Mello teaches a course on being a full-time influencer.

Catarina Mello creates 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 haven’t been as affected as others. Travel brands, for example, continue to invest in marketing as spending on flights and hotels continues to rebound.

Catarina Mello, a travel influencer with 440,000 followers on Instagram, said business has been better than ever for her. After two years of canceled trips, travel-focused brands are looking to reach travel-hungry consumers, Mello told Insider.

“If we get through Covid, we’ll get through this, too,” said Becca Bahrke, CEO of influencer management firm Illuminate Social. “Brands will still have to advertise; different brands may spend more money while others don’t.”

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