May 25, 2016
From

On a Wednesday morning in April, Caitlin O’Connor, a 26-year-old actress, drove herself to a mansion in the Coldwater Canyon neighborhood of Los Angeles and took off most of her clothes. She spent the next few hours wearing a black bikini and sitting in a hot tub, speaking into a cell phone camera to an audience of several hundred thousand followers, mostly young men and teen boys. A viewer asked if she only dated guys with money. “I love girls who make their own money and don’t rely on men,” she replied. The shoot was for Woman Crush Wednesday, part of the regular programming on ArsenicTV, an underground broadcaster that’s the Next Big Thing in media.

You probably haven’t heard of Arsenic, which airs only on the Snapchat app. Other programming includes the Q&A 5 Snap Facts and Arsenic Flex, a workout segment. And even if you have, you may want to keep it to yourself. The content isn’t pornographic by Supreme Court standards, but as the name implies, Arsenic’s videos can feel a bit dangerous: Think of an American Apparel ad with many, many more thong shots filmed from what would be hard to call a respectful distance. Despite Arsenic having no special placement on Snapchat—it’s merely an account, not one of the channels managed by Vice Media, National Geographic, or People, for instance—its videos attract more than half a million views each in a 24-hour period. In March, Arsenic rebuffed a buyout offer from Playboy Enterprises. “We really like what they’re doing,” says Playboy Chief Executive Officer Scott Flanders. Instead of cashing out, Arsenic has raised money from tech investors. “Snapchat is the future of TV,” says Paige Craig, managing partner of Arena Ventures, who’s also backed Lyft. “And Arsenic is the company that is most adept at using it.”

Calling Arsenic a company is a bit generous. Although Craig was impressed by Arsenic’s audience numbers and message of empowerment—a woman, Amanda Micallef, co-founded the company; models produce their own shoots; and there’s more body-type diversity than you’d find in a lad mag—he says, “It was the longest due diligence process I’ve ever done.” Which makes sense: Arsenic is run out of the kitchen of CEO Billy Hawkins, 41, a Harvard Law School graduate and former Creative Artists Agency agent who previously represented Spike Lee. Micallef, 39, a former movie producer, casts each shoot, and five interns help with the cell phone camerawork. (Models control Arsenic’s Snapchat account during their shoots, editing and posting photos. “It’s driven by the model’s vision,” Micallef says. “They’re the boss of who they are and how they look.”) The only full-time employee manages the flow of portfolios that models submit—about 1,000 a day—for consideration. Given the enthusiasm, you’d expect Arsenic to pay big bucks. But O’Connor doesn’t make a cent in that hot tub: She appears once a week in exchange for the right to embed her social media handles on the videos she records. “Girls want to do Arsenic because they’re getting followers,” she says. “That’s the equity. In the long run, it means dollars.”

This math is becoming more and more commonplace in a media industry in the throes of disruption. O’Connor, who makes money hawking products on Instagram, represents a new kind of celebrity—and Arsenic a new kind of celebrity vehicle—and they’re working together to attract the young audiences conventional media doesn’t. The shifting appetites of a group that advertisers widely regard as the most valuable—young people have a lifetime of consumption ahead of them but haven’t always formed strong opinions about brands—have created an opening for “influencers.” They’re a curious group of former child stars (e.g., Hilary Duff), lesser Kardashians, and obscure up-and-comers like O’Connor who carve out careers as social media salespeople. If you’ve ever wondered why Instagram and Twitter feeds are full of attractive people talking about detox teas, diet shakes, and new apps, it’s because they’re paid to. They’re part of an advertising ecosystem that’s revolutionizing marketing, however confusing its dynamics seem to older generations accustomed to famous spokespeople on TV, usually not in a hot tub.

The Caitlin O’Connors of the internet are a vital part of this economy. Even though she’s a professional actor with a Screen Actors Guild card and has an IMDb page full of credits, O’Connor’s breakout role is as an online marketer. “Social media has 100 percent made my career,” says O’Connor, who moved to Los Angeles from Uniontown, Pa., 10 years ago. She has almost 300,000 Instagram followers, up from about 100,000 when she first appeared on Arsenic’s Snapchat. Because of that following, small brands pay her $300 per post to promote their wares. Recently, she’s talked up EMediaStar, an app developer; FlockU, a college-focused media company; and Recor, a nutrition supplement. (This typical post has received 5,812 likes and counting: “Follow @recornation … They have the best whey protein and pre workouts I’ve tried!!”) In a normal month, O’Connor grosses $6,000 to $10,000. “If you don’t see a line in my post that says, ‘Nobody paid me for this,’ then I’ve probably been paid for it.”

She maintains accounts on Facebook, Twitter, and Snapchat, but she makes most of her money on Instagram. Instagram is big with brands because it’s popular, with more than 400 million monthly users, and not especially keen on privacy. The app provides an application program interface that allows O’Connor’s sponsors to see how many followers she has, how many likes each post receives, and what people say about them. She also talks up sponsors on Snapchat, but for now, the social network’s structure—messages disappear after 24 hours, and there’s no way for a brand to verify how popular influencers are—prevents it from being a major source of income for her. Sponsorships for top players are common on video game platform Twitch and on Musical.ly, a make-your-own music video app, where the top user, a 15-year-old who goes by Baby Ariel, has 9 million followers and has created ads for Nordstrom and 21st Century Fox.

There are maybe 100,000 people like O’Connor, says Daniel Saynt, CEO of Socialyte, an agency specializing in casting influencers for ad campaigns. Rates vary widely: Someone with 100,000 followers might get $100 per post, while an internet-famous celebrity such as comedian Josh Ostrovsky, aka the Fat Jew, can easily pull in more than $5,000. Saynt, a former fashion blogger who later became chief marketing officer for Rebecca Minkoff, recently negotiated what he terms “six-figure” ad campaigns for Adam Gallagher, a men’s fashion stylist and model, and Marianna Hewitt, a beauty guru. Because campaigns that feature mega-influencers such as Kylie Jenner can reach into the millions, many talent agencies, including United Talent Agency and One Management, now have influencer divisions.

Representation agreements, however, are the exception in this world. O’Connor has a manager, but she makes most deals herself, contacting brands directly or going through apps such as Popular Pays or BrandSnob, online marketplaces where advertisers post gigs. “What Airbnb did for hospitality, we’re trying to do for advertising,” says Popular Pays founder Corbett Drummey. Recently, Popular Pays listed sponsorship opportunities for Macy’s and Core Organic, a low-cal soft drink whose name seems workshopped for millennials.

Influence=$$$

Influence=$$$

For now, many brands are sitting on the sidelines, wary that these professional influencers aren’t all that influential. “Unilever, Procter—they’re not there yet. That’s going to take two or three years,” says Gary Vaynerchuk, CEO of VaynerMedia, a new-media marketing agency that counts PepsiCo and Anheuser-Busch InBev as clients. “Right now, you’ve got entrepreneurial people reaching out to these individuals on Instagram and paying through PayPal. It’s rugged.” Or brands are wary about fraud, which is rampant. Instagram followers can be purchased from dozens of shady services that, for about $50, will populate your feed with bots, doling out fake likes and generic comments (“Beautiful!!!”). Saynt, of Socialyte, says he vets prospective spokespeople before hiring them. “If somebody has 100,000 followers but they’re only getting 1,000 likes per post, we assume 50 percent of their audience is inauthentic,” he says. Advertisers also struggle to walk the line between marketing and manipulation. Some influencers label sponsored content with “#sponsored” or “#ad,” but those hashtags are often buried at the end of a post, and many people don’t bother marking sponsored posts at all. O’Connor doesn’t, she says—followers understand that most of her posts are paid.

Arsenic, for its part, has yet to make deals with marketers. It’s “pre-revenue,” CEO Hawkins says, using a tech catchphrase that essentially means, We’re figuring it out. Eventually, the plan is to work with advertisers and share proceeds with models. But Arsenic’s ambitions go beyond babes in bikinis: In April it launched ArsenicAudio, a music-focused Snapchat account featuring interviews with DJs that attract more than 50,000 daily viewers. “We want to be MTV in its glory days,” Hawkins says.

O’Connor says she hopes to use her status to follow the path of other social media stars such as Andrew Bachelor, known on the video-sharing app Vine as the comedian King Bach, and Colleen Evans, of YouTube’s Miranda Sings, who used their perches to win bigger roles on TV. “My goal is the mainstream,” O’Connor says. “I’d love to have a network comedy. I don’t feel like I’ve made it.” Some digital marketers argue that she’s got it backward. “The real celebrities are [the influencers],” Vaynerchuk says. “I’d much rather have a hit show on Snapchat than on NBC or ABC.”