May 5, 2022 - Technology

Tech firms sell creators as the future of ads

Annual advertising revenues for select U.S. tech companies in 2021
Data: Company reports, analyst reports; Note: Microsoft reported a revenue of more than $10 billion but did not disclose an exact figure; Chart: Thomas Oide/Axios

After years of touting their scale and efficiency, Big Tech companies have a new pitch for Madison Avenue: Social media creators are good for brands.

Why it matters: The user-generated content that tech giants rely on to fuel engagement has long been considered a brand-safety risk for marketers. But professional creators or influencers offer more polished content that poses less brand risk.

Driving the news: Speaking to hundreds of ad agency and marketing executives in New York this past week at the Interactive Advertising Bureau’s (IAB) annual NewFronts ad presentations, tech companies promoted their ability to connect brands to mobile creators and influencers.

  • Snap touted investments in programming, including shows based on creators such as a second season of "Charli vs Dixie" featuring TikTok stars Charli and Dixie D'Amelio. Snap announced a partnership with Cameo where advertisers can work with Cameo talent to make ads for Snapchat. It also showcased opportunities for brands to experiment with augmented reality, and creators spoke onstage of their love for the format.
  • "Meta is where stories are told, where creators thrive and where brands are built," Meta's VP of Americas Nada Stirratt said at the company's first in-person NewFronts. Its presentation featured three creators — a trumpet player, a cookbook author and a standup comedian — who use many of Meta’s apps and partner with brands.
  • TikTok introduced a new program called "TikTok Pulse" that allows creators to share a cut of the ad revenue TikTok makes off of their content, a move that closely mimics YouTube's creator monetization strategy. Its event was staffed by creators with the music and the coffee provided by TikTok stars.
  • Amazon executives touted new efforts to more closely align brands with creators on Twitch.

Yes, but: Twitter's NewFronts presentation was not creator-focused, but rather emphasized "premium content" with partners like Condé Nast, Essence, E! News and Fox Sports.

Be smart: Creators give advertisers an opportunity to get closer to a highly-engaged community, as opposed to messaging to a group of people based on their demographics.

  • As internet natives, creators have been able to cultivate closer relationships to consumers, particularly in the 18-34 year-old demographic prized by advertisers.

Between the lines: YouTube has long pioneered the value of creators and brands working directly with them.

  • The tech giant, which was the lead sponsor of this year’s NewFronts, will showcase its advertising innovations to marketers in two weeks, during the same time period that TV networks will present to marketing executives.

The big picture: Social media giants see traditional brands as a key to providing legitimacy to their ad experiences, despite the fact that they make most of their money from small and medium-sized business.

  • In the past, tech giants relied mostly on premium content from publishing partners to fuel high-end ad opportunities for blue chip brands. Today, creators offer a new way for brands to spend money with Big Tech.

The bottom line: "The kind of untold story there that I think is also going to be playing out in the NewFronts is the role of creators," Eric John, vice president at IAB's Media Center, told Axios ahead of the event.

  • He noted that publishers "are increasingly leaning into the community of creators" to help engage their audiences, in addition to premium content.
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