Good Morning. If you've learned anything from Crashing Up this year I’d love it if you shared this with your smartest, most ambitious family and friends.
💄The Rise and (Likely) Fall of Influencer CPG Brands
Let’s play a game. What do all of these brands have in common?
Chamberlain Coffee
Ani Energy
David’s Perfume
Kramoda Coffee
Item Beauty
Morphe 2
Yes, they are all CPG products. But there’s something else here. All of these companies were founded by influencers. (Emma Chamberlain, Bryce Hall & Josh Richards, David Dobrik, Zane Hijazi & Heath Hussar, Addison Re, Charli & Dixie D’amelio, respectively)
In a seismic shift of the CPG industry, influencers are now launching their own products in an effort to steal market share from the leading brands they once used to promote.
In June, Facebook teamed up with Kantar to publish a report on the benefits of influencer marketing. Here are some key takeaways:
Among US makeup shoppers, 44% indicated that creators affect their purchase decisions, with 55% saying that they are more likely to buy a product based on a social media post
60% of global consumers say that they’d follow a brand on Instagram after seeing it promoted by a creator who shares their values and interests
Given the information above, it’s a no-brainer for influencers to leverage their audiences to promote their own products instead of somebody else’s. Not only does this maximize their earning potential, but it also creates optionality.
Many of the savvier influencers recognize that they won’t be this popular forever. Although hard to imagine, platforms like TikTok and Instagram will grow obsolete. Teen heartthrobs will inevitably age and lose a bit of their appeal. The endless firehose of brands looking to throw money at them will eventually run dry.
“You must own equity to gain financial freedom” - Naval Ravikant
Influencers are finally now recognizing the benefit of owning equity over quick money-grabs. Some are asking for equity in place of cash in brand deals, while others are investing in startups directly, bringing their wealth of marketing expertise to cap tables across the country. The most entrepreneurial of the bunch are building a portfolio of investments, while also creating products of their own. Regardless of the approach, the younger generation is buying into the long game.
But there’s one big question that remains… Will these brands stand the test of time?
Yes, right now while the stocks of the personalities behind the brands are high, it’s a smart, easy move. Every teenage girl in America wants to look like the D’amelio’s and Addison Re. They’d probably buy a bag of horse manure if it had Charli’s name on it. But what happens when the dust settles?
The beauty, food, and drink industries are grueling to break into, even with a head start. Without a great product and well-oiled operating team, these brands won’t survive. While low hanging fruit in the short term, building a long term, household name CPG brand is an entirely different story.
I have a feeling that very few of these influencer led ventures will turn into sustainable businesses. The truly entrepreneurial and creative influencers will continue to crank out innovative products to their audiences, while those solely relying on their name as a value add will quickly fizzle out.
My prediction for the winners? David Dobrik and Emma Chamberlain.
🎙️Crashing Up Podcast
Hunter Pomerantz is the former student manager of the Syracuse University basketball team and co-founder of The Players Trunk, a platform that allows former college and professional athletes to sell their team exclusive gear.
🎧 To learn more about the inspiration behind the idea, the implications of sweeping NCAA NIL (name, image, likeness) policy changes, and how The Players Trunk is turning into a one-stop shop for unforgettable fan experiences, click the play button on the audio player at the top of this email.
🧰 Tool of the Week
The audio space is buzzing (no pun intended). Smart devices like Siri and Alexa have become honorary family members and social audio apps like Clubhouse (I have an invite for whoever shares this newsletter with the most people) and Discord are reinventing the way we connect with others over the internet. Now, audio can also help you get in touch with your self.
Wellnest is a journaling app that helps you track your thoughts and moods through voice notes. It provides journal prompts and guided content on a variety of topics to help you when you get stuck.
I’ve only been using it for a few days, but I’m already loving it. It’s easy, fun, and therapeutic.
Want to get started? You can download the app here.
Enjoyed this week’s newsletter? Click one of the links below to tell me how you feel.
That’s it for this week. If you’re new here and want to catch up on some old editions, here are a couple of my favorites: Alone Together and The Owls and the Larks You can also follow me on Twitter or check out randymginsburg.com for more writing.
Thanks,
Randy
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