What Does a Recession Mean for Creators?

GUEST-STARRING Mr. D

The ‘recession’ buzzword is being thrown around a lot right now. As an influencer, what are the steps we can take to protect ourselves if this becomes reality?

By no means am I trying to spread panic. In fact, nobody knows if this is an imminent reality. However, it is important to acknowledge that this could happen in the near future and we would be remiss not to take a few precautionary measures.

To tackle this topic, I invited back Mr. D, my husband, who has previously broken down influencer finances with me on the podcast (Part 1 | Part 2). He spent 15 long years working for a top company on wall street and has learned investing and markets from the inside out. Mr. D shares that a recession is defined as a significant decline in the US economy over two consecutive quarters (or effectively 6 months). The government will analyze such things as job losses and GDP decline.

To put it into perspective, the US economy typically grows 2-3% per year but in 2021, it actually grew 6%. Currently, growth has slowed to around 1%, which almost is like a correction from the extreme increase that occurred in the year prior. Overall, unemployment numbers are not too high in the general economy and industries such as travel are actually thriving. In the influencer space, this is evident in the steady hospitality based brand outreaches and campaigns.

However, if the looming recession becomes a reality, it is always smart to have a plan of action. Creators are essentially freelancers which means we do not have a steady cash flow. So I sat down with Mr. D to discuss what we can do as influencers to mitigate the potential recession.

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1. Save and live below your means.

Always save first. If you can set up two bank accounts, where the first bank account is where money comes in. From there, you take a percentage of that and move it to a separate account. This secondary account will then act as your day-to-day spending allowance.

Additionally, as a creator, it is also imperative to fully understand your average expenses per month. I encourage everyone to sit down and have a hard look at how much you are spending and try your best to reduce this where possible. It also pays to keep emergency savings, especially because we do not have a steady income. Mr. D recommends saving an average of 3-6 months of living expenses saved in a rainy day fund and 6 months to 1 year of business expenses saved to keep your work afloat.

2. Evaluate your niche.

If a proper recession were to hit, there are definitely certain niches that will be affected more than others. Historically, travel and the luxury goods space have weakened as consumers spend less on these types of things. Yet, this is an abnormal time. As we mentioned, travel is very expensive right now, yet people are still booking trips.

In return, any niche that is budget related might see a spike or a boost in sponsorship deals or follower count which can place you in a good position if the recession were to become reality. Another industry that has already been impacted is anything tech related. Mr. D expects this sector to continue to slow for the next year or so.

3. Pitch, pitch, pitch.

Remember - it is all a numbers game. The more you pitch to brands (be sure to follow up multiple times), the more success you will see. In a previous podcast episode (How to Calculate Your Rates), I discussed the concept of CPM (Cost Per Thousand Impression) and I expect that brands will rely more heavily on this in the future. They might even change the way they structure their brand deals and seek out influencers with a high engagement rate and negotiate additional whitelisting rights.

To make yourself as marketable as possible when pitching to brands, provide competitive package rates. Instead of focusing on just one post, propose multiple posts such as a combination of different types of format and cross-posting across various channels. From there, offer a big discount. This bundle concept will be more enticing to brands as they will be actively looking for ways to save money.

4. Always overdeliver.

Additionally, it pays to overdeliver. In fact, I always suggest doing this but it is even more imperative now with the potential recession looming in the distance. By going above and beyond the campaign, you are able to prove to the brand your worth. This good impression will make it easier to get repeat business.

5. Pay attention to the terms.

When it comes to influencer marketing, many brands enact a net payment system. You might recall seeing things such as Net 30, 60 or even 90in your deals. For example, Net 30 means you will get paid 30 days after you send the invoice to the brand once all deliverables are met. It will be beneficial to you to emphasize to the brand that you need the terms in the contract to be Net 30.

For more long term deals (multiple month campaigns), negotiate with the brand for a partial upfront payment. In the past, I have agreed upon installments of ⅓ of the payment throughout the collaboration. This will ensure your business will have good cash flow, you won’t run out of money, and it just offers more financial security.

6. Follow up for your payments.

It is important to note that some brands might not pay you on time (or may even ghost you all together). The best way to follow up is to be polite and cordial but be consistent. You can follow up on a weekly basis and hopefully, the brand will see your email and remember!

You can even look into content creator specific financial companies. Karat offers a credit card specifically for influencers. There is also Willa Pay. If you use their services, they will take a cut of your brand deal but they will pay you upfront and it will be their job to go after the brand for payment.

7. Don’t discount smaller creators.

Creators are still a more affordable way for brands to advertise. This might actually be a great time for nano or micro influencers, as well as UGC (User Generated Content) creators. These are creators that do not necessarily have a ton of followers but can generate organic content that looks like it is from a typical consumer. UGC creators do not need to post on their own feed either. This is proving to be a great return for brands.

Advertising rates are also generally declining which means that things like paid advertisements on Facebook or Instagram cost less to reach more people. However, please note that YouTube heavy creators might also see a dip in their ad revenue.

At the end of the day, many of the large companies will still invest in advertisements of all forms regardless of the economic standing. This is because they will want to continue to foster a relationship with their consumers, increase brand awareness, and ultimately, generate income.

8. Invest, if possible.

If you are patient and do not need your money in the near term, this might be a great time to invest. But do so with caution and always maintain a long-term view. Personally, our stocks have taken a hit, especially because I have a tech-heavy portfolio but we are patient and trust that they will increase again over time.

All in all, the best course of action for content creators is to focus your efforts on growth. Pitching is important but if you continue to grow your account, even in the midst of a recession, you will be in a fantastic position once the economy rights itself. You can start landing even higher brand deals in order to make influencing your full-time career if you have not yet already. The potential recession is scary but be sure to use this as your opportunity to seize the moment!