The phrase "shots on goal" has been part of advertising vocabulary for about as long as there have been goals to shoot at, which is to say since the first person with something to sell realized that some customers buy and most do not.
Now comes TikTok Shop, the social commerce platform that has been adding merchants and creators at a pace that makes previous e-commerce booms look almost leisurely, with a formula for success that would be instantly recognizable to anyone who worked in direct-response advertising in, say, 1997. According to a new report from Flywheel, the Omnicom-owned commerce agency, the recipe is this: send product samples to thousands of small creators, pay them a commission on each sale, and pray that enough of them post enough videos to generate enough transactions to make the mathematics work.
"It's literally the same affiliate thing that you and I who have been doing this for too long would think of in the past," said Deren Baker, chief executive of Flywheel Ventures, in what may be the most candid summary of the creator economy's commercial mechanics offered this year.
The numbers are instructive, if not exactly encouraging for brands seeking efficiency. Of creators who receive product samples, only 47 percent bother to make a video at all, and a mere 14 percent generate any sales. (One imagines the remaining 53 percent enjoying their free merchandise in contented silence.)
The report, which drew on data from 1.5 million samples distributed through the TikTok Shop affiliate software provider Reacher, suggests that smaller creators — those whom Mr. Baker compared to recipe sites and momblogs in the earlier affiliate era — generate disproportionately more sales per follower than their larger counterparts. The larger creators, it seems, have audiences "used to brand things," which is another way of saying that success breeds skepticism.
The other variable is volume. A creator posting a single video generates, on average, $7.19 in sales. A creator posting 20 or more videos generates $74.07 per video. "A lot of brands get really freaked out when you tell them to be successful you're going to need 5,000 videos live a month," Mr. Baker said.
The infrastructure required to manage this volume — automated outreach to tens of thousands of creators, mass communication via Discord and Lark, performance bonuses layered atop commissions — represents the kind of industrialization that tends to arrive once any marketing channel proves it can move product.
So the creator economy, that supposedly novel phenomenon, turns out to be affiliate marketing with better lighting.
Original story published in Digiday: "Future of TV Briefing: TikTok Shop success = small creators + more videos"