Who will influence us next?

Since inception, we’ve used our resources and capital to drive epic outcomes for our portfolio companies and have sharpened our understanding of consumer behavior over the last 12 years.

When it comes to consumer behavior, there’s one term we can’t ignore: social influence.

In his role as the CEO of Myspace, Managing Director Michael Jones foresaw the impact of social influence over software, a predictive strategy he also saw as the CEO of Userplane (acquired by AOL) and investment in HouseParty (acquired by Epic).

Since our investments in FameBit (now YouTube BrandConnect), the largest influencer network on YouTube at the time, which was acquired by Google and HelloSociety, the largest influencer platform on Pinterest, sold to the New York Times in 2016, we’ve been dialed in with trends and the heartbeat of the zeitgeist. And we’ve been bullish about it ever since.

Influencer marketing is buzzworthy, but it’s also rapidly changing from the Instagram influencer and content creators of yesteryear.

They have significantly transformed the way we market products to consumers; they build authenticity and trust, maintain target audiences, are skilled content creators, provide social proof, increase engagement — the list goes on. According to the IZEA Insights Trust in Influencer Marketing report, 62% of consumers trust influencers over A-list celebrities.

Influencers as media

The heyday of Myspace — the most popular social network from 2005 to 2008 — was really the beginning of influencers. Makeup artists like Jeffree Star and even everyone’s first friend Tom were well known for their photos and follower counts.

In 2009, the race between actor Ashton Kutcher and CNN to reach 1M followers on Twitter was a turning point for celebrities to usher in direct communication with fans. It was the first time a celebrity competed directly with the media — and won.

Since then, articles published in the Hearsts or Newscorps of the world would be drowned by a single tweet from Kutcher. Thus, was the beginning of the end of news influence; influencers now have the same reach as media behemoths, and their gaining traction and audience size.

These influencers can stand for everything under the sun — politics, beauty, sports and fitness, weight loss — the list goes on. This massive power by way of a massive audience is now the first line of news distribution — and consumers are likely getting it faster than publications.

This evolution will continue and we’re keen to watch it.

A well-planned and executed influencer campaign is a powerful marketing tool; McKinsey has reported that this year, the influencer marketing economy is valued at $16.4 billion. And this isn’t just for beauty products, fashion, or wellness — influencer marketing is moving into industries from tax prep to moving companies.

Here’s what’s happening from our perspective.

An AI Field Day: The Pope Drip

We all saw the viral image of the Pope wearing a hype beast ankle-length white coat and silver cross. The image — a byproduct of AI generation — is a mile marker that we are stepping into a time where we are going to be influenced by humans along with human-generated AI images.

And we have to accept that duality.

The Pope Drip image circulated across the globe within a matter of days, with news coverage in GQ, CNN, and Bloomberg, and once it was revealed to be AI-generated, it was clear that this was a reckoning for influencers and how we’re influenced in the future, including how brands market their products.

AI influencers analyze data faster, can create content 24/7, identify the needs of followers, as well as deploy highly stylized visuals to draw an audience’s attention and build followers quickly.

We’ve seen campaigns with Lil Miquela — a human-like generated image — working with Bella Hadid and Noonouri endorsing Kim Kardashian’s Skkn skincare line.

AI has also been used behind the scenes by helping brands find the ideal influencer and deciphering how well they align with a company’s values and mission, enabling marketers to be more efficient, effective, and customer-focused.

With enhanced personalization, better marketing analytics, increased efficiency, and improved content creation — AI is, at least partially, the future of marketing.

So much so that we recently partnered with Nasdaq for LA Tech Week to host a panel on late-stage companies utilizing AI for all things marketing in Los Angeles.

Science’s Managing Director Peter Pham hosted a fireside chat with Mammoth Media CEO, Benoit Vatere, and Liquid Death’s SVP of Marketing, Daniel Murphy discussing the importance of integrating AI that is here now, keeping your eye on emerging tools, and how to use AI to build a sales pipeline.

In addition, Science portfolio investment Open3’s founder, Matty Mo, an LA-based contemporary artist and marketing entrepreneur, has been using AI to build his new online brand and their growing social footprint.

Short-form video continues exploding

At Science, we use tools to monitor trends and identify individuals, categories, consumption habits, and consumer behavior to drive both our portfolio construction, as well as identify how to best align our companies with tides moving in that direction.

Whether it’s on TikTok, YouTube shorts, Instagram Reels, or Facebook Stories, video content is not going anywhere: 66% of consumers report short-form video to be the most engaging type of social media content in 2022, up from 50% in 2020.

The algorithmic preference for video content makes it crucial for brands to have a strong, smart, and consistent video marketing strategy.

Science portfolio company Liquid Death — which was not founded by an influencer with an existing fanbase — has utilized short-form on TikTok and Instagram to become the No 3 most followed brand of all beverages, both alcoholic and nonalcoholic.

Brands that can personalize their marketing efforts, create engaging video content, and partner with social media influencers will find themselves better positioned to gain market share and adapt to changing market conditions in the coming year. Science portfolio Mammoth Media’s service Creatorly is the premier influencer network for social media creators and the largest platform on TikTok, which allows Mammoth to help over 200+ brands turn views into retail transactions.

Increase in Nano and Micro-influencers

Influencers come in all different sizes, and we have seen repeatedly that small, niche, micro-influencers can outperform bigger, mass-brand influencers.

Those unfamiliar with marketing tactics might think a larger influencer with millions of followers is the ultimate goal for brand recognition, but there are so many factors to consider in addition to cost (macro influencers can cost upward of $5000 to $10,000 per post).

Settling in the 10,000–50,000 follower range, micro, and nano-influencers have a smaller but highly engaged and dedicated following that audiences deem more authentic and accessible. Because their content is hyper-curated, they’re likely to create and distribute more relatable content free of filters, stylized production, and stylists.

From a business perspective, micro-influencers are generally open to longer-term partnerships over a one-time brand shoutout on social platforms, increasing a company’s ability to secure staying power with stronger content targeted correctly versus what a bigger influencer could provide.

What are we looking for?

Influencers are also driving affiliate marketing for customer acquisition. This performance marketing is using sales-based payment structures in response to economic uncertainty.

Daisychain, a free simplified referrals program, launched its new referral app on Shopify this year, making it easier than ever for customers and store owners to harness the power of word-of-mouth with just a few clicks of a button.

At Science, we continue to build and grow highly loyal fan bases for our products and businesses and motivate those fans to share their love of the product with friends and audiences. We are actively seeking products and services that people want to wear, are proud to consume, excited to use, and aren’t afraid to share what brings them excitement and joy.

Our portfolio consists of products and services that, when a customer uses them, make them feel better about themselves and help further identify their identity — whatever that may be. They see the choice as a good purchase decision and then share that choice with friends.

What’s next?

The bottom line: there is money for brands in influencer marketing, but you have to be smart about it, especially as the market becomes more saturated.

As TikTok slowly surpasses Instagram and more restrictions are put in place regarding ad targeting, we’ll see companies align with individuals who can best spread their message.

But let’s not forget, consumers are getting savvier too — they can see through phony or specious messages. Having a clear and decisive voice, strong word of mouth, and real reviews is when audiences begin to love your product or service and are incentivized to talk about it.

We will continue following consumer behavior and how brands use social to speak to stakeholders diligently, as we’ve been doing for more than a decade, because it’s important to be aware of trends, but it’s even more important to see around the corner.