Social Media Influencers: Are They Legitimate Merchants?

Instagram models, TikTok stars, and other internet favorites are making money. A lot of money. Many think that the amount of attention social media influencers receive is excessive and further disregards the industry.

Influencers use popular social media platforms such as Youtube, TikTok, and Instagram to create a brand presence for themselves – something that corporations spend millions for. These online icons attract large audiences quicker than most traditional companies do. This has created a new wave of marketing tactics and birthed a new type of merchant.

Social media influencers are genuine business owners who partner with companies and get paid for sponsoring products. Some even start their own line of products to sell, which naturally falls into place for those with thousands and millions of followers.

The Rise of the Influencer

The fluctuating history of popular media formats extends as far back as the reign of the newspaper. Radio and television had their prime moments, and now social media platforms race against each other to see who can procure the most engagement. Whichever media outlet dominates at a given time is where the influencers start popping up.

Celebrity Endorsements

Initially, influencers were celebrities who were already household names through the music and entertainment industries. They are sponsored by companies and paid to advertise their products, which usually came in television commercials or magazine ads.

Taylor Swift has quite a portfolio of sponsorships. She has starred in commercials for Target, Keds, Diet Coke, and most recently for Capital One.

Robert Pattinson landed on the Forbes Celebrity 100 Power List after Twilight. Dior promoted their Homme Eau for Men through Robert Pattinson’s stardom. His featured commercial may have sold a lot of fragrance but probably attracted more attention from teenage girls than consumers.

Star Athletes

Although we most likely won’t see Taylor Swift at Target or catch a whiff of Robert Pattinson to see if he’s wearing Dior, esteemed athletes earn lifelong endorsements of products that they can show off on the playing field.

Cristiano Ronaldo has been arm in arm with Nike for the last few years. He exclusively dons Nike pairs when he plays futbol. The renowned player even wears a Nike shirt as he advertises a haircare brand. Cristiano uses Instagram to endorse his partnerships as his account has the most followers on the platform.
Simone Biles has countless endorsements, but one of her largest ones is Athleta. The superstar gymnast praises the brand for its unconditional support of her health and career. She leads Athleta’s “Power of She” campaign.
Naomi Osaka holds 20 endorsement deals and is the highest-paid female athlete in the world. She makes most of her income from her affiliations, which include Nike. The sports brand mogul bid against Adidas for her association, showing how valuable sponsorships are to corporations.

The ‘Kylie Jenner Business Model’

Kylie Jenner is constantly hit with criticism, but it’s undeniable that she is one of the most successful influencers to date. Made famous by her family, Kylie went on from a young age to start a cosmetics line in her name. In 2021, Kylie Cosmetics is worth $1 billion.

How did she do it? Her celebrity status is a significant contributor to her accomplishments. However, the way she developed her business is now a duplicatable model that even those without fame can use to become online business owners.

Step One: Get Followers; The more followers, the more endorsements. Kylie had no problem gathering 200 million Instagram followers. Others capitalize on any viral status they’ve reached, and most are bloggers or vloggers who create high-quality content that attracts followings.
Step Two: Get Sponsored; Big brands or small companies reach out to or accept applications from influencers with an above-average number of followers and offer sponsorship.
Step Three: Creating a Brand; If they hadn’t already, influencers partake in Ecommerce and sell their own products. They market through their own social media channels.
Step Four: Get Paid; Influencers create income through endorsements, referral links, and selling their products.

Leveraging Clout as an Average Person

The incredible ability to build an audience online extends to any person who can create content that people want to see. They then use their influence to market other companies or their products.

Mommy-Bloggers

The FTC got involved with the influencer world when “Mommy-Blogs” started taking over.

This blogging genre consists of women, usually mothers, who write about recipes, parenting, and literally anything that can be thought of. These blogs curated a massive audience, and businesses started collaborating with bloggers to promote their brands. The FTC had to customize advertising regulations that would keep up with this new wave of marketing.

From Youtube to Affluent Thrifter

Ashley “best dressed” is an example of an ordinary teenage girl who steadily gained a large fanbase for her videos. She posts fashion and vintage thrifting content, which caters to a young audience that spends most of their time online.

Now a young adult, she continues to create content and earns most of her income from Youtube. Additionally, she promotes brands from time to time on Instagram and showcases a gallery of products with affiliate links that will pay her a percentage of sales.

Although she is now making half a million dollars annually as a 22-year-old, it allegedly took her two and a half years of curating content to start earning income from her online activity.

Ecommerce Looks Effortless on these Models

Yet bustling influencers now that attracting an audience and consistently creating is anything but smooth. However, starting a business is easier than it has ever been before, which is why many young people are delegating their time to create a brand in lieu of working a traditional job.

Allie Schweizer is an Instagram influencer who started out modeling brands on the platform. She since then took up her own LLC and started selling clothing online under Allison Pearl. Allie is one of many influencers with an average-sized (10-40k followers) audience that works hard to popularize her products online.

How Influencers Should Protect Their Business and Finances

Most social media influencers whose careers are tied to their online leverages are operating a business for the first time. Navigating regulations and protecting their corporation and assets can be a murky ordeal.

If You’re an Influencer, You are a High Risk Merchant

High risk merchants have a more difficult time partnering with banks because of the uncertainty of their business operations. There are a handful of reasons why you won’t be treated like a traditional corporation.

You’re in an Unpredictable Market; Influencers depend on followers and sponsors for their profit and are at the mercy of the media platforms they utilize. These social media companies can change their regulations anytime regarding how much influencers can get paid and how they advertise. Additionally, some outlets fall out of favor and are no longer used by the majority of internet users. An example is Vine, which had its moment, but then gave way to Instagram and was eventually replaced by TikTok.

It’s Still Uncharted Territory; The FTC is still figuring out how to enforce advertising regulations to protect consumers when it comes to social media marketing. The influencer world never ceases to evolve, and its expansion can change an influencer’s business trajectory at any moment.

Here are some quick tips for operating your social media influencer business with confidence.

Register your business to safeguard your company and assets.

When your income grows, reevaluate your payment processing; Paypal and Venmo are uncomplicated solutions for payments when influencers are just starting off. When your monthly income reaches at least $10,000, you may want to reconsider your methods. These processors are not made to support larger businesses and may bring you under scrutiny or shut down your account, resulting in income loss.

Get help on compliance; All Ecommerce merchants have regulations to follow, but it may be easy to pass over them. Having an experienced person consult you and ensuring your selling platforms follow compliance will save you headaches. These consultations sometimes come from the bank or payment processor you work with.

Need a hand with establishing your social media influencer finances? RevitPay guides high risk merchants through safe Ecommerce practices and connects businesses with merchant accounts and supportive payment processing.