Some Brands Are Backing Away From Sponsorship Deals. What Now?

There’s a rumbling in the creator economy right now — that sponsorships are falling through, that payouts are shrinking, and that some creators are struggling to get brand deals.

In a recent report, Business Insider spoke to 26 creators and 14 talent managers about their sponsorship deals. More than half of them said their experience showed signs of a downturn. For content creators who consider sponsorship deals one of their biggest income streams, here’s what you should know about this worrying trend.

What’s happening?

It wasn’t that long ago that the future seemed bright for content creators. According to a report published by Influencer Marketing Hub, the influencer marketing industry was projected to grow to $16.4 billion in 2022, up from $13.8 billion in 2021. That’s 19% growth. However, it seems like things are now going in the opposite direction.

Fewer brands are reaching out

When you’re an up-and-coming creator, getting the attention of the brands you want to work with can be tricky, and it looks like things might get even tougher. Seth Godwin, a content creator who shares finance tips on TikTok, told Business Insider that he’s getting fewer offers from brands.

Payouts are decreasing

Brand deals aren’t just becoming rarer, they’re shrinking. Leaked Coinbase emails suggest that the crypto exchange is paying creators less for each viewer that signs up for the platform. One creator was earning $40 per signup in early 2022, and saw that number drop to $3 per signup in April.

Deals are getting canceled

In today’s environment, creators will want to latch on to the deals they have already secured. But even existing deals haven’t been spared in this apparent downturn. Nate O’Brien, who runs a YouTube channel on personal finance, tweeted in June that he lost six figures worth of brand deals in 30 days.

Bottom line: There are fewer deals to go around, they’re getting smaller, and they aren’t set in stone. Why is this happening?

Why are creators getting fewer brand deals?

Let’s not forget the broader economic concerns that have been brewing in the last few month. Stocks have been getting hammered across the board, with giants like Netflix and Facebook owner Meta losing a ton of value. Inflation has reached historic levels this year, and the crypto market is crashing. It seems like many aren’t doing too hot financially right now.

Here are a few ways this wider downturn is trickling down to content creators and their brand deals.

Social media advertising is getting harder

In a long-lost time, before 16-year-old TikTok star Charli D’Amelio was earning $17.5 million in a year, social media platforms began experimenting with advertising services. Back then, marketers could pour money into these platforms for cheap, almost guaranteeing that their brands would get good return on investment in this burgeoning market. Things are a little different now.

Alex Dastmalchi, CEO of beauty company Vanity Planet, told Business Insider that the brand had to recalibrate its influencer marketing strategy due to multiple challenges. These include rising costs, as well as Apple’s privacy changes that made targeted advertising more difficult. 

In short, many brands are starting to worry that they aren’t getting as much for every dollar they put into sponsorship deals.

Supply chain issues

If “supply chain issues” was a person, it’d probably be the most deserving of a harsh roast this year. Almost everyone from your local Starbucks to the used car dealership by the highway is still feeling the effect. So it should be no surprise that it’s affecting content creators, too. 

Dorian Holguin, an esthetician and beauty influencer, shared with Business Insider that his brand deal with a makeup brush company fell through because it didn’t have enough inventory to send him free products. And you thought getting your Amazon delivery canceled for the third time in a row was bad.

Budgets are tightening

Layoffs have been rampant these past few months, and the tech sector has been seeing the worst of it.

Substack, the paid newsletter platform, laid off 14% of its staff. MasterClass let 120 people, 20% of its staff, go. Coinbase laid off 18% of its staff. The list goes on and on.

These layoffs are a sign of shrinking budgets and companies having to make every dollar count. And that doesn’t just affect payroll. Advertising budgets often get slashed as well. One TikTok creator Business Insider spoke to said an upcoming brand deal was canceled after her contact at the company was laid off.

What can you do?

It is not all doom and gloom. Some reports are still optimistic about the state of influencer marketing, predicting steady growth despite the speed bumps along the way. And whether we’re looking at a few months of instability or a longer trend, there are things content creators can do to make themselves less at risk — and keep their dream career alive.

Diversify your income

Do sponsorships make up a huge chunk of your total income? Then it’s time to diversify. If your content lives on just one platform, make sure you repurpose it and share it on other platforms as well. That can mean turning video content into a written post for your blog or newsletter.

You can also look into opportunities for your community to contribute directly to your income, through platforms like Patreon or Ko-fi. Additionally, consider creating digital products that generate their own income, like courses or coaching sessions.

Try new types of content

Is all the content you make centered around a specific topic? If so, it might be time to branch out. That’s because not all brands have been affected by this economic slowdown. Travel brands, for example, are still offering lucrative sponsorships. It makes sense when you think about it, as many are looking to travel after two years of lockdown. Do a bit of research, and you’re sure to find other categories you can expand into.

Always be looking for the next big platform

Just a couple years ago, TikTok was seen as no more than an app for dance trends and music memes. Now, some of the top TikTok creators are making millions of dollars, and marketing spend on the platform seems to be the least affected by the current downturn.

TikTokers who got in early had a chance to build a strong following. By finding new platforms before they hit their peak in popularity, you can make sure you aren’t as vulnerable when sponsorships and ad revenue slow down on older platforms.

Hold on!

Sponsorships might be harder to come by these days, and they might be less lucrative than before, but there’s no cause for alarm yet. Economic declines happen, and you just need to hold steady until they pass. Keep creating great content, stay on the lookout for new opportunities, and explore ways to be less dependent on specific revenue streams. Being a content creator is a long game, so don’t give up just yet.

Follow The Leap on TikTok and Instagram for more creator economy news. We also make a newsletter.