There is something alluring about authenticity. Authenticity disarms you. When authenticity meets commerce, it does what advertising cannot do. Authenticity lowers your guard It circumvents ad fatigue and instead makes you experience the warm embrace of the feeling of 'belongingness'. That feeling sells over $10B worth of products a year in China.
Unilever is smitten. It has a stated mission to make its entire line of products purpose-driven. In markets like Latin America, brands like Sunsilk have launched special product lines for curly hair, in partnership with influencers identified and curated by sifting through massive troves of unstructured data.
But there is a backlash too. Influencers skip and do new brand partnerships as they try to make hay while the sun shines on them. The promiscuity does no good for the brands. They realize that they don't own the audience. Then there is the issue of fraud. How do you trust that an influencer's audience isn't bought out or a bot army? Companies with the scale and reach of Unilever can make strategic investments to combat structural issues from fraud to measurement.
What about D2C brands that don't have the stature of Unilever but access to the same influencer pool? What about the influencers who are now big enough to launch their own brands. More tellingly, what about the micro-influencers who are now lured by "Everything-as-a-service" platforms that help these influencers launch brands without going through the operational pain?
Authenticity is being mass-commercialized now!
So far, there has been a separation between the creator and the brand. Creators knew their craft, built an audience for themselves and brands bought that audience. Now, creators are launching brands themselves. Their size and reach do not matter, because from product design to distribution, there are platforms that do everything for the creator. They just need to show up. In other words, plug your authenticity and reach and the platform will spit out brands with your face on the label. The ingredients will be paraben-free, cruelty-free, all-natural and non-GMO!
This is not new. In one of my many visits to Salt Lake City, my Lyft driver gave me five samples of his brand of "medicinal" coffee that he promotes to his Instagram followers. In a rare flash of wisdom (infused right in time through a call to my wife), I dropped it in the dumpster before heading to the TSA queue. It had no labels or ingredients list. I remember him telling about some mushrooms though.
In the world of nutraceuticals where nothing is a surprise, body-builders are known to launch brands by tweaking formulations slightly. They lend their names and everything else is done by an agent. Add AI, ML curated and vetted manufacturing mumbo-jumbo to the mix, you get a VC-fundable business that will mass-produce brands for thousands of influencers with factory-level efficiency. Usually, the brands launched by these body-builders shut shop in a year. Usually, it is after a consumer dies of a heart attack. And usually, the legal fees are baked into the business plan. Unreal, right?
No, it's the same everywhere. Uber told you that they screen every driver until you realize that they didn't. Banks didn't disclose a breach until someone else did. Airbnb did not talk about scam listings until it blew up. Building trust mechanisms at scale is often a reaction to being spotted as that emperor who had no clothes. It is hard to focus on anything that impedes growth, especially when there is money owed or to be made.
Ruhnn, a Chinese eCommerce company turned influencer-led brand factory, IPOed in the US for $125M. Guess what, they have quarterly growth to report. There are more such VC-backed startups that offer 'everything-as-a-service' for the providers of 'authenticity as a service'. The former is measured on how soon they can hit scale. They essentially own the brands. The latter often don't have the sophistication and often, the inclination to verify that the brands that carry their names do what they are supposed to do.
In an ideal world, the platforms would care. Influencers would care. The products will be good. Everyone's going to be happy.
It's ironic that the wave of independent brands came into being because big CPG is inauthentic. But it is the big CPG that has the wherewithal to play the long game to commercialize 'authenticity' the right way. IMO, the era of 'influencer created brands' is an era that never was.
- Ashwin Ramasamy & Sujay Seetharaman
PipeCandy is a market intelligence platform that tracks the global eCommerce & 'direct to consumer' landscape.
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