Lumanu talks about influencer AR challenges
Mention social media influencers, and you’re more than likely to get a few scuff marks. But the content creation economy is a multi-billion dollar industry, and influencers, YouTubers, and other digital creators have become valuable marketing partners for brands across industries.
As this economy grows, however, many creators are struggling to figure out how to turn what might once have been a hobby or occasional sideline into a lucrative business in its own right. As entrepreneurs, these creators need technology and solutions to run their business, with invoicing and payments often one of their biggest issues.
Tony Tran, CEO of Lumanu, says price negotiations and accounts receivable (AR) communications continue via direct messages (DM) on social media platforms, and payments are often made by paper check. or by promise of a possible PayPal transfer. In a recent conversation with PYMNTS, Tran discussed how influencers and other content creators can advance their business legitimacy by adopting automated accounts receivable technology that supports both their cash flow and relationships. with the brand.
Formalization of customer accounts
As a relatively new business model, the influence of social media and content creation are still solving some issues along its journey to monetization. There is no doubt that this economy can be lucrative for content creators, but figuring out how to price services and establish monetary value for account subscribers and product exposure is not always straightforward.
Some influencers may figure this out as you go – the industry as a whole tends to operate without technology specifically designed for the content creation ecosystem.
This creates particularly big problems when it comes to getting paid, according to Tran.
“When we started, we asked the creators, ‘Who owes you money right now?’ It was surprisingly difficult to answer that question,” he said, noting that the content creators have tend to check their email and social media accounts to identify who owes them money, while mom and pop stores can bring up QuickBooks to see their accounts receivable. Often there is no formal contract, but rather a discussion via Instagram posts and a compensation agreement. “It was basically the paper trail: a DM,” Tran added.
Failure to rationalize accounts receivable can lead to missed or forgotten payments and a serious lack of visibility into capital inflows. This challenge is exacerbated by the fact that influencers and creators may lack awareness or education regarding appropriate AR strategies, including how to invoice and collect payments. The result, Tran said, is often that creators deposit paper checks into personal bank accounts.
Legitimize the company
There are many factors that add friction to the B2B payment process between the brand and the content creator, many of these challenges often existing on the accounts payable (AP) side of the brand.
In some cases, Tran said there could be a “psychographic element” to paying an influencer. When that creator uses Gmail or Instagram to communicate with a brand, it can be difficult to ensure the level of seriousness it takes to ensure creators get paid on time.
“Gmail’s email address and DMs just don’t have the same level of severity as if I emailed someone at BMW,” he said.
This challenge is fading somewhat as more brands eagerly – and legitimately – embrace this marketing strategy. Yet B2B payment problems remain, often due to the brands own AP infrastructure: AP solutions were not designed to facilitate payment for dozens or even hundreds of creators who operate primarily as independent vendors.
“When I talk to payers, they tell me that one of their biggest problems is having to hold hands with creators when they go to Bill.com or Tipalti or collect W-9,” he said. he declared.
A complex ecosystem evolves
Lumanu, which is now running in beta, offers a business management platform for the content creator ecosystem, allowing creators to collaborate not only with brands but also with managers and agencies who are also diving into it. industry.
With more parties involved and money exchanging more hands, B2B payment delays can increase even more. In addition to supporting e-invoicing and payments, the Lumanu platform also introduced EarlyPay, allowing influencers to connect faster to the money owed to them, for a discount.
A strong AR foundation will be vital for the content creation industry as it evolves and continues to promote its legitimacy. While in the early days of this business model it might have been acceptable for a brand to dictate pay and pricing terms or late payments, creators are increasingly knowledgeable and business savvy on how to operate. .
Tran noted that creators are a tight-knit community and, therefore, promote awareness of issues such as the “influencer pay gap,” where creators of color are often paid less. Closing this gap will require diligent and informed billing and collection strategies, but it will also require the help of industry-specific FinTech.
While having 150,000 Instagram followers may not convince a traditional bank to provide a loan, Lumanu’s proprietary underwriting strategy, which takes into account industry-specific data to facilitate its EarlyPay offering, may support financial health. of these solopreneurs – and gradually create an attractive market for banks. It’s a win-win solution for creators as well as for brands that use their services.
“If your creative partners aren’t stressed out about paying rent, they’ll spend more time brainstorming great, crazy ideas for your marketing campaign, producing an impressive result,” Tran said.