Influencer marketing is a huge market that is expected to exceed $21 billion this year. However, the effectiveness of influencer marketing is declining. This is understandable – who would trust paid posts? So, we need mechanisms to ensure the honesty of advertising. It turns out that such mechanisms exist, and they are already working! Here are some examples.
The essence of the project
At first glance, The Desire Company’s website is a regular website with videos from various experts.
There are tutorials and short explainers on how to do things in fitness, self-care, interior design, cooking, wine selection, dog training, software use, and a bunch of other topics.
And also – video reviews of products related to these topics. Product reviews are made by the same experts who record tutorials and explainers.
On the page of each lesson, there is a list of product reviews related to the topic of the lesson.
For example, the list of product reviews in the previous image is taken from the page of this massage lesson.
The main feature is that the startup claims that the product reviews on their website are: a) honest and b) created by real experts in these topics.
The level of expertise is determined by the quality of the lessons and explainers published by the expert.
If the user of the service actually watches these lessons and considers them useful, then he trusts the presenter and considers him an expert. In order for as many people as possible to be imbued with the expertise of the masters of their craft attracted by the startup, access to all lessons and explainers is free.
The honesty of the reviews is determined by the scheme of their creation:
- The brand sends its products for testing to the startup.
- These products are sent to testing experts in the relevant topics.
- If the expert considers the product to be good, the startup, together with the expert, records a video review of this product for publication on the website.
- If not, no reviews are recorded.
The startup and experts earn on commissions from the sale of products that are purchased from links from the published reviews on the website.
Hmm, but that means that experts are interested in giving their recommendations and recording reviews of all the products sent to them?
But then another interesting mechanism starts to work.
The startup is not limited to reviews of products that are sent to them by brands and for the sale of which brands are willing to pay commissions. The startup also searches for interesting products itself – and also sends them for testing to experts. True, in this case, no one will pay commissions for the sales of these products.
The trick is that experts don’t know which products they’re getting for testing – the ones the startup found itself, or the ones for which the brand is willing to pay commissions.
Experts are usually not ready to spend time recording reviews on all the products sent to them. Therefore, when choosing products to record reviews, they have to rely only on their own opinion of them – which makes the reviews subjective, but honest
In addition, such a model of mixing “free” and “paid” products for testing allows the startup to have a sufficient number of product reviews on any topic on the website, even if not enough brands send them their products for review.
I first paid attention to The Desire Company in late 2021, when they raised $8 million in funding. Now they have raised an additional $8.36 million, bringing the total amount of investment in the project to $19.4 million.
What’s interesting
More and more people are making purchases these days because they read about the products from someone on Instagram. However, very often, these posts are just advertising for which the influencers were paid. And people take it for granted.
Of course, not everyone is stupid That’s why the effectiveness of traditional advertising through influencers is declining, as people are gradually losing trust in it. And this is a big problem that various startups are now trying to solve.
The general approach to solving this problem is the same for all startups: influencers should talk about products that they actually like and use.
I first noticed this trend this summer in a review of the startup Zipr, which created a platform that allows brands to offer people discounts on purchases in exchange for a promise to write a post about the product if they like it.
Since the publication of the review, the platform’s mechanics have become even simpler, turning into an AI machine that “calculates” the possibility of giving an exclusive discount to a buyer in exchange for their future post.
In November, I wrote about the startup Stack Influence, which allows brands to send their products to micro-influencers in exchange for social media posts that they can write if they like the product.
Similar mechanics of trying out products and services, but with a focus on local influencers and local offline stores and establishments, are used by the startups Hummingbirds and SnapAds.
Posts with honest opinions of people who have actually tried a product or service are much more effective than traditional social media advertising. The aforementioned startup Zipr claims that the return on investment on “discount in exchange for a post” was 3 times higher for their client brands than the return on investment in traditional social media advertising.
Today’s The Desire Company echoes them, claiming that the conversion rate to purchase from expert video reviews on their website is 3 times higher than the conversion rate for traditional advertising.
Zipr, Stack Influence, Hummingbirds, and SnapAds connect brands with regular influencers, focusing on micro-influencers, i.e., influencers with a small number of subscribers – because their recommendations are more often perceived as personal recommendations, not as advertising.
However, creating a marketplace that connects brands with millions of micro-influencers (for example, Stack Influence has information about 11 million influencers on its platform) is a big headache.
The Desire Company decided to approach the task from the other side, creating something like MasterClass, a well-known website with video tutorials on various topics from famous people – but changing the business model that is typical for such services. Instead of paid subscriptions to courses, commissions from sales of products on the topics of these courses.
However, such a business model will not work with low conversion rates to purchase. Therefore, the startup is counting on the fact that conversions can seriously increase due to the growth of trust of viewers in the published reviews and recommendations.
Where to run?
The influencer marketing market is growing. It is expected to exceed $21 billion this year.
However, the market has begun to see a problem with the effectiveness of influencer advertising, as people have become less trusting of their recommendations about products and services – quite rightly considering them to be paid advertising.
Accordingly, the first direction of movement is the creation of mechanisms and platforms that could increase the level of trust in influencer advertising.
From a fundamental point of view, there is only one way – to ensure that this advertising becomes as honest as possible, expressing the personal opinion of the influencer. And for this, there are only two ways – either to turn your real buyers into influencers, or to make influencers your buyers Possible mechanisms can be borrowed from the startups mentioned today.
The second direction of movement is the possible return of the business model of content projects to the old advertising model, but which would provide normal payback for their creators.
Today’s The Desire Company is testing this model, attracting visitors with free content, but hoping to make good money on honest expert reviews with good conversions and commissions.
It would be interesting, of course, to look at their real economy. However, judging by the fact that The Desire Company managed to raise another round of investment, the hope of the profitability of such a business model is present and is confirmed by current indicators. And this immediately leads to two thoughts.
The first is whether it is worth starting to create an analogue of The Desire Company before someone else copies this model
The second is, in what other areas can you experiment with a similar model? What could something similar look like on the online education market, for example? Or what other area seems more suitable for this?
About The Company
Desire
Website: thedesirecompany.com
Latest round: $8.36M, 15.12.2023
Total investments: $19.4M, rounds: 2