In today's fast-paced consumer market, traditional retail giants face new competition from agile brands launched by influencers. We have seen this influencer-driven brand growth before, recalling Stanley's recent success. However, brands owned by influencers are a new phenomenon. These new entrants leverage their social media followings to carve out significant market share, challenging the market power category leaders have long enjoyed.

The Rise of Influencer Brands

Meet YouTubers Logan Paul and KSI and their new company Prime.

The duo launched their sub-brand Prime Hydration in 2022, and by leveraging their social media following—over 118 million followers—they've propelled Prime to a billion-dollar valuation. Along the way, they have captured an 8% market share in the sports drinks category, growing six times faster than industry leader Gatorade (the pair is explicit in their goal to become the #1 sports drinks brand in the market and take direct aim at Gatorade in their marketing).

This phenomenon underlines a significant shift: customers increasingly gravitate towards brands aligned to their social media habits. Given the performance of these new entrants, brands must reassess their marketing strategies.

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The new economics of discovery and attention

What has happened that has caused this nascent embrace of influencer-driven brands?  

The answer is simple: it's all about discovery and attention.

Anyone with a smartphone (or children over 16) can see that social video (Instagram, TikTok, Twitch, X, YouTube, etc.) has taken off. An eMarketer study shows a dramatic upward swing in the percentage of social media consumption dedicated to video. Daily social video consumption has risen from 33% of all social network media consumption in 2019 to 56.4% in 2023.

This behavior means influencers with huge followings across multiple channels can garner audience attention on video. At the time of this article's publication, Logan Paul has 5.86M subscribers on YouTube, 27M followers on Instagram, 15.5M Facebook likes, and 6.8M followers on X.  

The outweighed attention disparity follows down to the brand level as well. Prime has had 440k followers on X since joining in 2022, while Gatorade has had 328k followers since joining in 2009. Powerade joined in 2010 and has 121k followers.  

This brand difference is magnified when looking at video engagement across Instagram.

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With a minimal budget, Prime has outperformed Gatorade in views by more than 3x.

Bottom line: Any mention of Prime from Paul on his platforms reaches more potential buyers (or their children) and creates a personal walled garden against the incumbents.

Paul and KSI have also created an expansive network of social influencers, athletes, and ancillary sponsorships who promote the drink on their platforms. From UFC to Fortnite, the result is the complete ubiquity of a brand with zero historical pedigree but massive awareness.

An overnight 'everywhere brand.'

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Understanding the Impact

How should market leaders respond to these upstarts? The answer lies in leveraging data to understand these influencer brands' actual market impact and adjusting strategies accordingly. Stackline's market intelligence and shopper analytics solutions unveil learnings that demystify these growing threats. A deep dive into the last 52 weeks (L52W) category performance reveals four KPIs for brands to evaluate influencer brands.

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Brand Awareness

Branded search traffic, the most cost-effective path to driving customers to your product pages, is a fantastic proxy for brand awareness. Think of it as someone coming onto a car dealership's lot. A prospective buyer is showing awareness, interest, and intent for the brand. For branded organic visitors to a product page, this is no different.

This is no different in the Electrolyte and Sports Drinks category. Using the Interests section within Shopper Analytics (formerly known as Stackline Trends), we can see that Gatorade dominates the market with a 50% share of branded traffic in the subcategory.

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It is an impressive position given Prime's 2022 inception. However, it must be more consequential to make Gatorade reevaluate its marketing strategy. Nevertheless, upon deeper inspection, we can see that Prime is taking a bigger bite on Amazon.

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Prime nearly matches Gatorade in branded search traffic on Amazon in just two years, with a 29% overall share. This metric shows Prime's advantage in its built-in audience. Given the organic nature of the traffic, their customer acquisition economics are materially different. Paying less for your traffic means a transformation of your margin.

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Retention Rate‍

Across all categories, customer retention rates are the ultimate yardstick of brand loyalty, product quality, customer satisfaction, and overall business performance. Yes, Prime has done a fantastic job of capturing market share.

But are they keeping their newly acquired customers?

The answer is no.  Especially not when compared to vertical competitors.

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The disparity in retention rate between Prime and Gatorade represents the uphill battle that Prime has ahead. Focusing on product quality, customer experience enhancements, conquesting campaigns, and loyalty programs are all proven avenues to improve retention rates. Whatever their strategy, it must continue to be differentiated.

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Acquisition & Retention Flows‍

For CPG brands, the game is simple. Either create a new consumer market or take away share from your competitors. Understanding this flow is paramount to decoding the questions: Where is the brand acquiring customers? What happens to my churned customers?

Let's answer the first question using the Acquisition flow analysis on Shopper Analytics.

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The diagram shows that of the new customers acquired by Prime Hydration (see bottom right quadrant), 67% (49.6% of 74.0%) are switching in after purchasing another brand, while 33% (24.4% of 74.0%) of them are new to the category. Prime is doing a fantastic job of peeling away share from competitors. More importantly, they bring new people to the Electrolyte and Sports Drinks subcategory.

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But are they keeping them? Let's examine the Retention Analysis within Shopper Analytics.

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The retention story rings differently. Even as Prime drives new customer adoption, they lose the battle for retention.
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The bottom right quadrant shows where churned customers depart. Of all the customers churned by Prime Hydration, 34.7% (20.9% of 60.2%) exited the category entirely, while 65.3% (39.3% of 60.2%) switched to another brand. Upon further analysis in Shopper Analytics, we also find that 89.1% of customers who switched to another brand ended up returning to Gatorade.
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This isn't good news for Prime. Prime's biggest strengths, a) creating a new market and b) peeling share away from competitors, are nullified by churn. Prime is not keeping their customers; they are returning to Gatorade.
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However, it's not all doom and gloom. Imagine if Prime figures out their leaky bucket. The upside is tremendous.

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The Bottom Line

Legacy brands should take note of the success of influencer brands like Prime Hydration. These brands have demonstrated an ability to convert their social media followers into customers and disrupt the industries they enter. Established market leaders should not be concerned about losing their number-one status anytime soon. Nevertheless, this is no excuse to be complacent. The success of influencer brands emphasizes the importance of engaging with customers on social media and partnering with other influencers to compete better online.

The world of influencer brands presents both a challenge and an opportunity for traditional companies. To defend their position and find new paths for growth, they need to implement data-driven strategies and keep up with the changing digital landscape of the retail industry. By doing so, they can maintain their market position and discover new ways to grow their business.

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‍About Stackline

On a mission to fuel the future of commerce by bringing brands and customers closer together, Stackline is the leading AI-enabled retail intelligence and activation platform for the world's most innovative brands. Business leaders, product innovators, performance marketers, and financial firms trust Stackline as the single source of commerce truth. Fueled by proprietary neural networks and deep learning systems, Stackline's market insights, revenue metrics, behavioral data, and autonomous functionality create the actions that determine success or failure.

Founded in 2014 in Seattle, Stackline employs over 250 connected commerce professionals creating value for 7,000 global brands.

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