The promise and perils of the multi-billion dollar influencer industry Paid posts, affiliate links, subscriptions — all ways social media influencers can make money. But how many influencers are actually making a living off their content creation? Not many.

The promise and perils of the multi-billion dollar influencer industry

The promise and perils of the multi-billion dollar influencer industry

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Paid posts, affiliate links, subscriptions — all ways social media influencers can make money. But how many influencers are actually making a living off their content creation? Not many.

LEILA FADEL, HOST:

Social media influencers - they're all over our feed. But how many actually earn a living off the content they make? Darian Woods and Wailin Wong from our daily economics podcast, The Indicator, find out.

DARIAN WOODS, BYLINE: Kendall Hoyt makes short videos on TikTok and Instagram where she dresses in different outfits, mostly thrifted or secondhand.

KENDALL HOYT: For me, it is mostly clothes and fashion, so I'm probably spending a couple hundred dollars a month just accumulating new things. But I also get gifted a lot now from brands.

WOODS: So Kendall is not a full-time influencer yet. She still has to work a day job working in advertising. And I asked her how much of her spare time she manages to squeeze into her influencer work.

HOYT: Many. It's most of my free time I spend making content - 10, 15 hours extra a week.

WAILIN WONG, BYLINE: OK, but how much does Kendall get paid?

HOYT: So for 2022, I made about $15,000, which maybe is less than you'd expect, hearing some other large influencers.

WOODS: So I spoke to an expert in the industry, Ryan Hilliard, to see if this was typical. Ryan is a general manager at a company called HypeAuditor, which analyzes influencer data. And he says you need a lot of followers for a comfortable cash flow.

RYAN HILLIARD: There's kind of a magic number where it becomes, I can do this for a living, and that's probably close to that, I have a million followers.

WOODS: And there's only a tiny share of influencers who reach that level.

HILLIARD: Less than 1% - it's just too hard. There's too many other people doing similar stuff.

WOODS: Of course, everybody's definition of what counts for enough to live off varies. So let's focus on Kendall. By Ryan's calculations, she could be comfortably earning $65,000 a year, maybe even 100 grand.

WONG: Oh, $100,000 - wow, that is such a difference.

WOODS: Yeah. And to understand why, you need to look at how influencers make money.

WONG: Are we talking sponcon?

WOODS: Sponcon, exactly - hashtag ad. These are posts on TikTok or Instagram where the influencer showcases a new bag or a skirt - caption, paid partnership. And Ryan says that based on his surveys, about 80% of influencers' revenue comes from these paid posts. Next up to get money, another 10 to 15% of influencers' revenue comes from affiliate links.

WONG: So this is where a viewer might click on a link on the influencer's profile to buy something, and then the influencer gets, like, 10% of that sale.

WOODS: And there's a third way for influencers to earn money. And that's through exclusive content that people subscribe and pay for.

WONG: OK, so given all of that, why are Ryan's numbers so much higher?

WOODS: Ryan says you can basically divide influencers with large followings into two categories - ones that are actively working with companies for sponsored posts and ones that aren't. So on top of her day job and actually building her following, Kendall says she doesn't have time to proactively reach out to brands to work with. So she's kind of in this bind right now. She's got no time to reach out to companies, but if she does quit her day job, she wouldn't have any sponsors lined up.

HOYT: Like, who wouldn't want to just post a video to make thousands of dollars? But there's a lot more that goes into it to build up a community and be able to get those deals.

WONG: Wailin Wong.

WOODS: Darian Woods, NPR News.

(SOUNDBITE OF MUSIC)

FADEL: You can hear more of The Indicator's five-part series on the influencer industry wherever you get your podcasts.

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