This is the story of a company in a nascent startup region innovating in a refreshingly new and growing area of advertising
Think for a moment about how you decide to buy a new item. Maybe you saw an ad for it on a website or on the back of a bus. Chances are, however, that you probably saw a friend or someone whose judgement you trust using that item, and you figured that if it was good enough for them, then you had to have it.
That person, whether they knew it or not, had an influence on you. In years past, we used to look to movie stars and big name athletes for tips on what to buy, making us look better and run faster.
In the digital age, these mainstream stars have lost some of their hold over us as new stars on YouTube, Instagram, and other social media channels have succeeded in building large followings of dedicated fans.
Without big production costs or ad agencies, these generally young stars are creating viral content that reaches millions of people every day. They have fast become a very attractive choice for parking advertising dollars by marketers on the prowl for ways to reach that oft desired millennial consumer that has all but disappeared from many of the traditional channels due in part to the widespread use of ad blockers, and the instinct to skip through ads which has led to a mini crisis for marketers. Interestingly, influencer content has been shown to garner significantly better engagement from viewers. One of the leading factors for this is that the audience has much higher trust in the influencer, and are generally jaded by standard advertising.
With the runaway success of social media influencers, agencies have begun to sprout up to connect the creators and the advertisers, building platforms for monetizing new campaign content.
While this trend has taken off significantly in the US and Europe, with companies like Fanbytes in the UK and TapInfluence in the US, it is still taking some time to penetrate more developing markets.
Looking to take a leadership role in this space for the Turkish market is Rick Koletavitoglu, an experienced entrepreneur based in Istanbul. Having spent a good portion of his time living in the US, he has returned to Turkey with hopes of growing his business there. He is the organizer of FuckUp Nights Istanbul, and is also the co-founder of Influencer Talks, a movement designed to inspire and connect social media creators.
His latest venture is called CreatorDen, which he describes as a full-service influencer marketing platform, enabling social media content creators with technology and providing creative services to advertisers. He co-founded the company with his partner Ozan Tabak in May of this year, growing already to a team of 12.
Koletavitoglu tells Geektime that they have raised a $1 million round thus far from TRPE Venture Partners, and hope to double the size of their staff by the end of 2017.
Asked what led him to open this startup, Koletavitoglu tells Geektime that they recognized what he calls “a fragmented marketplace between public relations, social media managers and influencers,” and saw an opportunity to manage it in a much smarter way.
Still a relatively new concept in the advertising game, many large brands find themselves unable to find the right match with an influencer. Since most of these content producers are individuals or simply small teams of friends making videos or posts with their phones, it can be difficult for a brand to know how to reach out to them.
Moreover, these influencers are at their most effective when they are speaking to their niche audiences, say photographers or Brazilian Jiu Jitsu enthusiasts, so finding the right pairing is critical. As it stands, the scene remains a bit of a Wild West.
Hoping to bring some order, the CreatorDen platform uses a proprietary algorithm to match marketers and influencers automatically. Koletavitoglu says that he hopes to draw on some of the similar digital advertising mechanics of the more traditional marketplace to this space and bridge the gap between influencers and advertisers for branded content creation.
Marketers and influencers can access the platform either on the web or mobile app. Koletavitoglu explains that a marketer can easily set up a campaign request in only 10-15 minutes, putting out requests for creative content. That call for content will then be seen only by the relevant influencers that can provide the desired audiences.
Taking on a challenging market in Turkey
Still one of the smaller tech ecosystems, Turkey represents both a challenge and an opportunity for entrepreneurs.
“When I moved to Istanbul in 2011, there were a handful of funded startups, VCs and institutions backing new businesses,” says Koletavitoglu of how things used to be.
The Turkish startup community faces battles for acceptance in the more conservative society where “startup” is still considered a dirty word by some. On a visit to Istanbul last year, more than one person involved in the local scene told Geektime that they faced pressure from their family “to get a real job” and therefore many worked on their startups only half time while holding down a position at a more established firm. Adding to the trouble among other factors is the gap of understanding by many investors in the country about the nature of startup investing. All too often, they see digital as too unstable and prefer more tangible investments.
However, Koletavitoglu tells Geektime that he does see signs of change as progress creeps forward, noting that, “Over the past five years, I’ve seen a drastic increase in the number of incubators, educational and governmental institutions and angel investors emerging onto the scene.”
Arguably the biggest concentration of innovation in the country is based in the incredible city of Istanbul with numerous initiatives aimed at promoting growth there.
Koç University Incubation Center represents one of the academic-backed programs to help give young companies a boost, while privately owned Kolektif House serves as a co-working space where entrepreneurs and developers can cross pollinate.
Asked what he believes is helping to push the startup scene forward, Koletavitoglu points to people like himself that bring an outside perspective, having lived in the West where startups are significantly more prominent.
“I think one of the driving factors behind propelling the startup ecosystem has been successful first generation entrepreneurs coming back to both mentor and invest in new generations,” he says, noting the importance of the returnees who are injecting their experience into the ecosystem.
While optimistic, he realizes that the path of progress is hardly linear and differs from place to place. This can be a hard lesson to learn when trying to bring a new idea to the fore.
“I think one of, if not the most important thing I’ve grasped in the process of growing up between the US and Turkey, is evaluating the speed at which the adoption of new technologies will take place in lesser developed countries,” Koletavitoglu reflects.
He has seen how the slow pace of change has made his own company’s growth more complicated, fighting an uphill battle to convince marketers of the importance in turning to social media influencers and setting aside a recurring budget for this type of ad format.
“It took a few years for the concept of native advertising to be adopted into the media buying mix, and we believe a similar yet faster trajectory will follow for influencer advertising. It’s our job to expedite the process of convincing media buyers, social and digital agencies to make more of a systematic buy of year-long influencer advertising on behalf of the brands they represent. We believe that this will be part of the digital media buy within 12-24 months, but until that point we will have to be patient and work hard in showing the industry the effectiveness of this type of digital ad format. With that said, PR agencies have shown the best adoption till now.”
CreatorDen focuses on the micro influencer market, citing the fact that it is far more scalable and therefore providing a better ROI for the advertisers. Seeing as they are working in the limited Turkish market with boutique kinds of clients, this would seem to fit their bill better.
“Advertisers need to understand that micro-influencers often have niche interests and narrower focus, making their insights and expertise more relevant to their audience,” says Koletavitoglu, explaining how in Turkey, these influencers are using Facebook, Instagram, Twitter and YouTube as the main channels for reaching their fans. He adds that he expects Snapchat to take an increasing part of the pie in 2017.
Closing this gap has been difficult in part to the newness in the local market and the lack of a track record for many of the influencers. Koletavitoglu hopes that as they carry out more transactions with the influencers, they will be able to “crunch the numbers and better predict the value of an influencer.”
He explains that, “Views, reach and the engagement will ultimately become the driver in determining the price of a post within the marketplace.” If they are able to show strong results, with the lucrative ROIs that have been seen elsewhere, he believes that it will go a long way in adding the necessary liquidity into the marketplace.
Looking outside of Turkey, CreatorDen sees others finding success that they hope to emulate. Koletavitoglu points to companies like Brandnew.io out of Germany as one company that he says has been on the rise. Furthermore, the recent acquisition of Famebit by Google in October adds to the validation of the influencer marketing model, giving them confidence that this is a business that they can grow.
“We believe that influencer advertising will become a $100 million market in Turkey by the year 2020,” he says. “Our aim is to become the regional leader in this space.”
There can be no question that the face of advertising has shifted drastically in the past five years with internet personalities gaining an outsized influence on how the public entertains itself and makes decisions.
This diversification from a top down mode of ad agencies speaking to consumers directly through mainstream channels like television to a new reality where previously unknown creative types can reach out with seemingly more authentic voices to people that love and trust them through various social channels has left brands scrambling to catch up.
Like native advertising, which media houses ranging from BuzzFeed to The New York Times have seemingly staked out as the future, influencers will play an undeniable role in this new system, adding yet another tool for marketers.
At this point, it remains to be seen how big of a slice of the advertising budget pie this segment will be able to mark out for itself. TV still demands the lion’s share of marketing dollars with eMarketer’s study this year showing that $68.88 billion was spent in the US during 2015. While most young people are deeply ingrained in YouTube and social media multiverses, TV and even print still have a strong mass appeal and effect on older generations. Even as mobile and internet penetration in countries like Turkey is fast on the rise, it is unlikely to face a tsunami in the ad game any time soon.
However, the study projects that digital, with an emphasis on digital video like YouTube et al will grow significantly over the next four years, attaining some 44% of the ad spend in the US by 2020.
It will be hard to predict how this shift will look like in Turkey, but there is cause to think that CreatorDen and others looking to capitalize on this trend have a good shot at success.