Turning Trash into Cash—The New Generation of Instagram Brand Makers
Brand building with the Kardashians
Teas that help you detox and trim down, creams that plump up your rump and gummi bears that promise to boost hair growth. That’s just a small sample of products that several wily young entrepreneurs turned into strong brands within just two years—and solely on the strength of celebs posts on Instagram. Online Marketing Rockstars took a deep dive and caught up with some of the players behind the scenes to explain what makes the sector go round.
“Look at how long my natural hair is getting. Thanks to my SugarBearHair vitamins. They taste delicious and have become a daily part of my hair care routine! I love these little blue bears!” That quote is from Kylie Jenner on one of her Instagram video posts this past July, where Jenner can be seen popping a blue gummi bear into her mouth.
But these are no ordinary gummi bears. No, these little blue wonders claim to boost hair growth. You’d think that a normal, reasonable individual would have a healthy skepticism of the legitimacy of such a glowing product description. But if the stats the mini film has racked up are any indication—11 million views and 1.5 million likes—you would be wrong.
SugarBearHair, however, is not the only product making the rounds on Instagram that should get the spidey sense tingling. If you follow celebs on Instagram, there is a pretty good chance you think “detox teas” and “natural teeth whiteners” are all the rage.
Celeb profiles filled with junk
In the past year or two, Instagram has been inundated with an array of questionable products and product categories. Last year, US blog Jezebel compiled an exhaustive list of such products in its article entitled “The Big Bad World of Products Celebrities Promote on Instagram.” The list includes tea brands MateTea, Fittea, Slendertox Tea, Tea Mi, Bootea and Lyfe Tea, as well as teeth whiteners Coco White, Bright White Smile, Express Smile Atlanta and Mr. Blanc. The article is filled with pics of celebs posing with the products for the camera in testimonials. Most of the celebs are members of the Kardashian and Jenner clan, but there is also a handful of actors and musicians plugging similar products as well, including Vanessa Hudgens, Lindsay Lohan, Britney Spears, Lil Kim and Nicki Minaj.
The sheer size of the list is impressive and worth a look to understand just how widespread the phenomenon actually is. Since the Jezebel article first appeared, new products and product categories have joined the fray. There are waist trainers, for example, which are corsets that trim your waist just by wearing them. Or how about wonder cream Pureleef, which delivers a more voluptuous and aesthetically pleasing posterior when used regularly. And then, there are the aforementioned gummi bears.
Expensive, ineffective and possibly harmful
Unsurprisingly, there are serious doubts as to whether the products deliver on the grand promises their manufacturers make. Within minutes of looking into the product claims, we found numerous reports quoting doctors and other experts that the claims are not only false, but that the products can actually damage your health. According to one British doctor, senna, a laxative contained in many of the detox teas, is harmful when taken for periods exceeding two weeks. And these products are by no means cheap. A two-week supply of Lyfe Tea (which contains senna) costs 35 bucks, a month’s worth of SugarBearHair, containing 60 mostly sugar-containing gummi bears, will run you 30, while a 14-day supply of Cocowhite’s coconut-oil based teeth whitener costs 20.
From a marketing perspective, however, the rise of these products is astounding. Most of the brands were by and large unknown until celebs started plugging them on Instagram. That indicates that they do not have corporate backing, nor did they gain traction via standard marketing channels or in retail outlets. The lion’s share of their brand building seems to have occurred on Instagram.
That is remarkable because performance marketing (i.e. ads targeting turnover) is said to work fine online, but that there is no substitute for standard media channels when it comes to brand building. For example, Zalando, an eCommerce platform in Europe, was initially successful after its clever online marketing campaigns, but its real breakthrough occurred thanks to a TV ad campaign and its catchy German slogan “Schrei vor Glück” (Scream for Joy).
Laziness to attractiveness
Apparently, the landscape is changing due to, among other things, new visual platforms like Instagram. And for the newest generation of young consumers, such platforms have replaced the traditional function of fashion and lifestyle magazines: to inspire and inform consumers about the latest trends in fashion and elsewhere. While there are legitimate companies with legitimate products that have engaged in brand building on Instagram (Filip Tysander, e.g., built the Daniel Wellington watch brand via Instagram for a lower price segment that generated revenue of $220 million in 2015), subjective perception leads you to the conclusion that most products found on Instagram are of questionable value and use. They promise consumers that their products will make you more attractive and popular without lifting a finger. It’s a type of value proposition that continues to work on platforms focusing on the superficial, like Instagram.
Behind these new brands are savvy entrepreneurs unknown to the majority of the public. This new generation of marketers tends to be very young, which has not stopped them from amassing considerable experience in building reach online and to completely rethink brand building in the process. Their names are rarely listed on the websites of their products—but finding out who these people are is just a matter of doing your homework.
Brand building á la beauty bloggers and viral publishers
The people behind SugarBearHair, for example, are Nicole Christine Nightly (nee Nicole Johnson), who also had a brief career as a beauty blogger and YouTube star, and Dan Morris, who had a hand in launching viralcrunch.com. Florida-based Besweet Creations LLC owns the SugarBearHair brand, whose managers are are Nicole Johnson and Dan Morris. Johnson is also the founder of detox tea company Skinny Fox
Bootea and Cocowhite are run by young British entrepreneurs Jonny Teeling and Will Peirce, who founded snog.com, a dating network for students, while they were still enrolled in college. With snog.com, they were able to secure a six-figure investment from Canadian Internet entrepreneur Kevin Ham.
If the brand building ain’t broke, don’t fix it
The methods used by these new brand builders to increase awareness of their products follows a similar modus operandi, invariably centering on paid celebrity posts on Instagram. And these posts cost a pretty penny. In an article published in the New York Times, a staff member at an agency called Captiv8 is quoting as saying that Instagram influencers with three to seven million followers typically demand $75K for a paid post. The cost for a post by a Kardashian or Jenner, who have followers numbering in the upper eight figures, will run you somewhere in the mid-six figures, according to several sources in the US. Clients may be able to bundle the posts to reduce their costs, and the investment appears to be worth it for advertising clients.
Let’s take Kylie Jenner, for example. Any paid post by Jenner would ideally be seen by 10 million of her approx. 74 million followers. If the advertising client paid $400,000 for it, then the CPM would amount to $40—which is a pretty standard figure for brand advertising. But then you have to factor in that any pic by the Kardashians or Jenners is usually reposted by a slew of other accounts, which, in turn, further boosts the post’s reach. Furthermore, brands are not limited to posting the images on their own brand channels, as they can repost them on other profiles with wide reach, which just happen to be much cheaper. The Instagram account NailsArttVidss, for example, regularly posts images of celebs with FitTea packages to its 8.8 million followers before deleting them a couple of hours later.
Get others to build your brand
Ideally, this creates a positive trickle-down effect for the brands. The products seen held up in front of the camera by high-profile celebs like the Kardashians and Jenners begin popping up in highly frequented fashion channels and other outlets (Marie Claire, Yahoo), and their mentions increase in blogs, as well. Just think of the people that have blogged about trying out all the “Kardashian” products. And it keeps snowballing from there, so that brands not only get additional reach completely gratis, but also it also generates a positive SEO effect. You need not look further than SugarBearHair for proof, as it is the first result listed when googling “hair vitamins.” Taken as a whole, the initial cost of the paid post is mitigated by all the subsequent pub.
Many of these new brand builders conduct sales through their own web shops, typical basic, no-frills sites that are inexpensive to set up like those offered by Canadian shop provider Shopify. Some implement additional distribution channels: Bootea, for example, is available for purchase in England at Boots drug store, SugarBearHair sells their product on Amazon Marketplace, where they are the current best-seller in their category.
The majority of the raw materials used by the products are relatively inexpensive: tea for the detox teas, coconut oil for whiteners or sugar for the gummi bears. If you buy tea in bulk and sell it off in small portions, you can greatly maximize your profit margins.
22 million pounds of profit in a year
Johnny Teeling, founder of Bootea and Cocowhite confirmed as much in a blog post from February 2015, where he says that “the tea company was when we finally hit a home run and we have made a lot of money. Over these two years we have also set up two more companies each turning over in excess of £6M a year meaning our portfolio currently brings in roughly £22M a year.” At the time the entry was posted he said that he and his partner were in discussions to sell the tea company for “somewhere in the region of £40-£50M.” As yet, however, there does not appear to have been a change of ownership.
Selling the company now would surely be wise as the detox tea segment is showing just how fast copycats can pop up and increase competition. A product that is not interchangeable or mistakable promises to have more success in the long run.
Over the course of the past few months, regulatory authorities have taken note of celebs conducting hidden advertising on social networks, as well as some of the products they are plugging. The UK’s “Advertising Standards Authority” issued a warning to Bootea in September 2014, to cease promoting that consuming their product burned calories. In the USA, consumer watchdog group “Truth in Advertising” sent an open letter to the FTC, accusing the Kardashian/Jenner family of not sufficiently marking their posts as paid ads. The family responded by correcting some of the posts with the addition of #ad at the beginning. It is hard to say for certain if that will dampen the efficacy of celeb ad posts, but it is at the very least unlikely.