The paradigm shift from traditional marketing to partnerships

[00:00:01] Canned Intro Welcome to The Partnership Economy. This podcast explores the power of partnerships through candid conversations with industry leaders. Join our hosts Dave Yovanno, CEO and Todd Crawford, co-founder of impact.com, as they unpack the future of partnership as a lever for scale and an opportunity to put the consumer first.

[00:00:24] Dave Yovanno Welcome back to The Partnership Economy podcast for our final episode of season four. This is your host, Dave Yovanno, and I’m thrilled to introduce you to today’s guest, Tara McNulty. Tara manages strategic partnerships at YouTube shopping, a brand that needs no introduction, and she specializes in creator partnerships. Over the past decade, Tara has paid close attention to the digital revolution that has completely transformed retail has been passionate about moving forward with the industry. Today, she’s part of the core team that drove YouTube’s affiliate program from inception to public release. In today’s episode, we discuss the paradigm shift from traditional advertising to partnerships. Strong examples of brands who are leveraging creators in the right way, and the evolution of YouTube as a platform for users, creators, and brands. Tara, how are you doing today?

[00:01:23] Tara McNulty I’m doing great, Dave. Thanks for having me. I’m super excited to be here and talk all things YouTube shopping.

[00:01:29] Dave Yovanno Me too. I’m looking forward to it. So maybe just to get us started, what does managing strategic partnerships at YouTube shopping look like? Can you give us just a little bit more of a background on your role there?

[00:01:40] Tara McNulty I work on the business development team at YouTube Shopping, and I am specifically the creator lead for our affiliate program. That is my strategic partner, the creators, and this affiliate program. And being the creator lead, it really means that I’m in charge of driving creator success in the program. This is a newly launched program. It just came to market in June. We’re super excited about it, and I was lucky enough to be part of actually the core go to market team who took this program from inception to beta to public and really worked closely between creators and our product team to build, test the program. And we’re really excited about where it is today, about six months later.

[00:02:22] Dave Yovanno All right. This is already getting me excited for the conversation that you and I are going to have here today at the intersection of a lot of players in The Partnership Economy. And one thing that we’ve come across is that people have very different definitions on terms like affiliate and creator. What do those mean at YouTube?

[00:02:39] Tara McNulty Right now we do use the term affiliate for what the program looks like today. And it’s sort of 1.0 version. We call it the YouTube Shopping Affiliate program. And that means essentially we are brokering where creators get paid commission from brands for sales. So a sort of a monetization sharing program. The product that it exists, oh, is really just the 1.0 version of what this is going to look like. And we have big plans for 2.0, 3.0, 4.0, etc.. And so it will look very different in six months from now, a year from now. And we’ll go beyond the world of traditional affiliate. And we’re really excited. Just a note on the word creator. We actually use the word creator at YouTube for all content creators and basically an influencer of sorts. So anyone who’s creating content on the program, whether or not they’re monetizing it or not, that’s the term that we use.

[00:03:34] Dave Yovanno When YouTube shopping uses the term affiliate, does that only include performance-based compensation to creators, or does it is it any sort of partnership that a brand would have with the creator that you do not have to create?

[00:03:47] Tara McNulty It’s kind of everything. So we’re using it as a blanket term, right? We for any sort of partnership, etc.. In terms of the YouTube shopping affiliate program, we really see it as being four point marketplace or economy that really connects creators, brands, the viewer, which is the consumer and the form and where every player can equally benefit. And we know we’re just have the first step now, but we are looking to build this economy out and we’re excited to see where it goes.

[00:04:19] Dave Yovanno Okay, I’m going to come back to that because there’s a lot to unpack there. But before we get too far into the weeds there, I was just curious. I’m sure our listeners ask about just learning a little bit more about your background. Like how does someone end up in partnerships at YouTube?

[00:04:34] Tara McNulty Yeah. Great question. I’ve sort of an interesting background. I really started my career in buying and merchandizing in corporate retail for large brands, Gap, Free People, North Face, and what I was doing was a lot of physical product development of apparel, literally designing sweaters. I’m a big knitter. I’ve done that for my life, and this was a really fun and creative role. But as my career progressed, I started to see in this retail industry a huge shift into digital commerce of all kinds. So I made a decision to pivot my career into digital transformation strategy for retailers. And this had varying degrees of success, as you can imagine, because this was 10 years ago and this digital transformation was slow and cumbersome, and retailers weren’t necessarily totally set up for it. At the same time in parallel, I had actually risen to become a successful monetizing content creator myself. I was an early adopter in the fashion blogging space in the early 2010s, and I just posted outfit photos that I used to take on myself. I used a tripod and a cumbersome large digital DSLR camera before iPhone cameras got really good, and I was able to actually monetize that blog using both ads, brands and editorial partnerships and most successfully actually affiliate links. I saw the power of influencers and the rise of influencer driven content, as opposed to brand driven content, to sort of power and drive the entire marketing sales funnel, starting from brand awareness all the way down to sales. And this was a huge shift in the entire industry. And I could tell it was just the beginning of something big forward thinking retail, e-commerce space. That kind of led me into the world of tech and led me to Google Shopping, which is where I was before YouTube. And at Google Shopping, I really helped to develop the AI driven shopping tab in Google, and this is sort of my true passion. This sort of entrepreneurial space for creators to build partnerships with brands and continue to develop what the future of e-commerce looks like.

[00:06:43] Dave Yovanno How would you describe YouTube’s journey alongside yours?

[00:06:47] Tara McNulty Yeah, it’s pretty interesting because YouTube has evolved a ton over the past since it was incepted in 2006. And it really it’s interesting because specifically to shopping, YouTube has always been a shopping destination with a ride reach of audiences. Commerce has existed on YouTube since before partnerships were a thing. And we were it became profitable. People have been doing commerce related videos since the beginning of YouTube, doing tutorials, filming reviews, unboxings, etc. etc.. So even without like our program, as of December, there were 350 million shopping related videos on YouTube. And so what we’re seeing is YouTube just reacting to where the market is going. Google and YouTube have traditionally been these forward thinkers in the ad space, and now that we see diminishing returns of ads and we see brands looking for alternative methods moving a little bit away from traditional media, I think YouTube is really at the forefront of it and is also anticipating this market shifting and now going into the world beyond ads of what does organic driven content look like, and how can it support the monetization of that economy for both creators and brands in a different way than a traditional ad? So we’re really excited because our YouTube shopping and the affiliate program really supports this economy. And 70 percent of total viewers say they bought from a brand as a result on seeing it on YouTube. And we are just looking to really evolve what that looks like, make it more visually appealing and push this affiliate world forward.

[00:08:26] Dave Yovanno Yeah, when I think about this journey for YouTube as a platform, if I think back 10 years ago relative to now, and we’re not talking about like that much time, really like the quality of content, the critical mass of content is mind blowing now compared to back then. Like back then, like just the quality was there, wasn’t thinking of like always going to YouTube or searching for things that I want to learn more about. It could be a product, could be how to do something like woodworking project or anything. My kids will hit me up and say, Dad, you might look it up on YouTube, like somebody some expert has got something on there for literally any question that you would have to learn more about something. And it has become this like tremendous resource, I think, for everyone. How do you recommend creators keep that kind of passion and authenticity at the forefront of their content today, just knowing that there is a more meaningful way to monetize the content that they’re creating?

[00:09:19] Tara McNulty Great question. And the question that we do get asked a lot from creators is I don’t want to come off too salesy because that’s not why they started. And what we always tell them is go back to the roots of why you have gained popularity on YouTube. Go back to the roots of why you have this community of fans, and it’s because you are presenting your authentic self, and people are really connected to you in that way. So it is natural for them to want to use you as a resource to influence what they’re purchasing out in the world. I know for me, one of the reasons why I was attracted to the fashion blogging world is okay, I could find girls who were the same size as me, who had the same lifestyle as me, and they could give me better recommendations on what clothes I should wear or what brands I should buy, than maybe I was seeing in traditional media of a brand just creating an ad with traditional models. So what I tell people today is, you know, it doesn’t have to be that you’re selling something, but your fans are looking to you to influence their purchases, whether consciously or subconsciously, and providing them that information easily and is what the YouTube shopping product can do for you. It can be more passive or less passive depending on how you want to do it. You can literally say in your video, you can buy, you know, these are my top 10 favorite buys from this for savings event. You can buy them by clicking on this link. Or you can do your makeup routine and get ready with me and say, if you are interested in what I’m wearing, check out the link below and I’ve linked everything. So I think there’s different ways that you can do it depending on your audience. And I would say to creators, just continue to be authentic to you and why your community loves you, and it won’t come off too salesy, and it’ll just come off like you are a valuable resource to them.

[00:11:18] Dave Yovanno And I think. And I think any creator playing this, the short game will be exposed, right? I love the checks and balances that a platform gives you has built in where you can like you can, you know, come down, there’s comments, there’s a subscribe or the unsubscribe rate. Those are not like natural built in checks and balances to kind of keep the creator honest. But I think most creators, if they’re serious about being a creator, are thinking about and playing the long game, which means put your your audience front and center, they are the star of the show. You want to be authentic. They’re coming to you for a trusted opinion on something not to be sold, something necessarily.

[00:11:55] Tara McNulty Exactly. And we all know that even if you don’t mention something we all have seen, if you’re talking about something else, the comments are going to be filled with, where did you get your shirt from, where your earrings, what shade of lipstick, what are your sneakers, etc. and so why not just give them that information upfront and a little bit more frictionless way? And I think it’s important to remember that YouTube is a really powerful search engine and giving valuable information. People are coming to YouTube to make good purchase decisions, as we said before, and are searching for this valuable information. So it also is to your benefit to make sure that you’re authentically showing up, giving good reviews, but also utilizing the search capacity that people are looking to make a purchase.

[00:12:41] Dave Yovanno Are there any key insights that you can share with us? Is there any anything that’s worth calling out while we’re on that topic?

[00:12:46] Tara McNulty Ever since I joined in June of last year YouTube shopping. We’ve just seen tremendous growth and shopping overall on the platform and using our features to aid shopping. Today we have over a million videos who are tagged with products and are shoppable within our native products, and there are over 150 billion views on YouTube short videos and live streams with affiliate and first party tagged products in 2022.

[00:13:20] Dave Yovanno Pretty impressive and we continue to grow. There was a survey that was done I saw recently, the number one job that people want coming out of college, they want to be a creator. Basically, they want to travel the world to be a travel blogger and that sort of thing. So I would imagine that supply is going to continue to grow.

[00:13:34] Tara McNulty What I’ve seen throughout my career is how being an influencer become a real business that should be taken seriously. You have people like Mr. Beast who are teaching all the other creators how to build a business around this, and these are big businesses, as we know, and they’re also driving this for major brands in terms of driving sales. I mean, a good, easy example of this is the Stanley Cup, which is Stanley’s a little brand from Seattle that was in the camping space, and they probably never thought that their audience was going to be millennium, gen-z women. But a couple influencers with a lot of reach and a lot of influence can completely open up a sort of new channel, a new audience for you that unlocks something big. And I think their sales are now like 350 million last year, where they were two years ago, 35 million. So this is a real viable sort of industry, and it’s a real viable selling channel for brands. And that’s what we are helping to facilitate also with YouTube, which I think is it’s really important.

[00:14:40] Dave Yovanno Yeah. Yeah. So maybe then shifting to the business side, I think we’re witnessing a real paradigm shift for large platforms like YouTube, who are used to focusing on advertising as the primary means to to monetize. And people are creating content and then YouTube is selling and serving ad around that content. But now we’re seems like we’re focusing on monetizing partnerships and supporting creators and the content that they’re creating. Is this where you see the market going? Could you explain that a little bit more?

[00:15:08] Tara McNulty I do see this is a big shift in the market and in sort of the advertising market that YouTube is facilitating and leading. And really, I think at the end of the day, what it comes down to is brand driven content to gain awareness and sales versus creator driven content for sales. I think that’s just the difference, but it really shifts the economy and how the all the mechanisms of traditional marketing and advertising work. Viewers and audiences, they would much rather hear from their favorite influencer creator on what to buy versus the brand itself. So what we’re doing is literally just working to help shift this, help work with this economy as it shifts and supports all of the players. There’s something really magical and special about an influencer being an advocate for a brand that they just really love, they might have found on their own, and they are a big advocate for it. And that can just be really powerful and drive a lot of sales. So it’s exciting to see this shift. In YouTube, we call this ad content versus organic content really coming from the creator. And I actually wish that more retailers would also lean in more and lean in a little bit to releasing a little bit of the control, putting that brand voice into the voice of your creators and seeing what audiences can come back with that, what audiences come back there and what impact that can have. I think a lot of the retailers that are really forward thinking in this day and age have really and I’m thinking specifically, actually, Abercrombie and Fitch is one that comes to mind. They were a really popular brand in the 2000, and then they decided to basically build from the ground up and see what they could do differently to build their brand back. And they did it. They didn’t do any traditional marketing or any traditional advertising. They went fully early on into using influencers, using creators to do content creation and to drive sales and to drive brand awareness, and it really worked for them.

[00:17:18] Dave Yovanno I think that’s the critical point of evolution that brands are at right now. Do you want to work with their creator and pay them to run an ad for you, and or do you want to create a partnership with them to where you’re informing them? That’s almost like more like a PR motion, right? You’re feeding them information, you’re trying to educate them and trying to draw an alliance with them, with the hope that they talk authentically and hopefully positively about your product. But I think shifting gears to maybe the more tactical side of things. I’d love to get your thoughts on the different ways in which brands can partner with creators, like, how do you recommend setting up an ideal partnership?

[00:17:58] Tara McNulty Yeah, absolutely. Right now, a combination of affiliate commission links. So percentage of sales and in varying degrees and then flat fees to create content that is based on their product. And these two things can be hand in hand or can be separate. And I think this is great because it does put a lot of flexibility in terms of what the brand once and what the creators bring to the table, and also allows for upward movement and upward mobility of creators in this marketplace. There’s always going to be some a new riser that comes to the top, and we love the idea that also anyone can enter the traditional affiliate commission market. At YouTube, our affiliate program, we do have some eligibility criteria, but we are looking to lower that because we really want to support an economy where no matter how big your audience is, you should be a partner with that brand and you should be getting paid for that service that you did by trying the product, by evangelizing it, all of that. And we want to support that at every single level. For a brand, most platforms it supports affiliate and brand partnership programs do provide a service to both the brands and the creators where they give interchange information. For us, that means if we have rising stars who are selling a lot of products, getting a lot of clicks, all of that, getting a lot of views, we do give that data back to brands so they can have real data to see who is able to make a difference and make an impact for them, and who are the best ambassadors, because it’s not always that obvious. And that’s something that we’ve really learned. Is it’s not just about subscriber count. We’re actually seeing that creators with lower subscriber counts tend to have a really engaged audience, and they’re actually making the most money in terms of commission and monetizing their videos. There isn’t always a one to one ratio of views and subscribers, so much more nuanced than that. I think brands should be looking for can use traditional affiliate and sort of commission sales to identify who is a good ambassador for them, and then maybe they want to go into a long term partnership with them. You know, we’re seeing that in some of the partnerships in the market that it’s not just one to two videos anymore. It might be a year long partnership with a creator, and maybe you pay them a flat fee for that. And then you also give them a commission for sales. And I really think that that’s where that’s going.

[00:20:37] Dave Yovanno Yeah, that’s a data point that actually came out and some research that we did at impact.com recently. And it found that on both sides of the table brands as well as creators, both are prioritizing long term partnerships. And I think part of that is it’s hard to find creators that are a great fit that can really move the needle, like it’s it takes a lot of effort. If you’re treating it as like a typical campaign, you work with them on a short term basis. Then you got to go find another creator, train them up. They got to test the product, create content, get it out there. And I think both brands and creators are interestingly ranked that as a very high priority to to have fewer, higher quality, longer term partnerships with each other. And I was curious like the what I heard you say is that the contracting like the contracts that brands and creators have with each other, what I heard was it’s a mix of performance based like a commission based contract or some fixed fee arrangements. I was just curious, does that affect the type of content that creators are producing? So, for example, do fixed fee contracts give brands more control over the message and they’re paying upfront for that partnership material?

[00:21:43] Tara McNulty In general, yes, I would say that’s true. And normally there’s some sort of an approval process by the brand. There should be a trust in that relationship there that the brand likes the content that the creator creates, that the creator is representing accurately. And if they’ve already done a bunch of sales, it’s an indicator that they love your product. So inherent in that partnership should be this positive experience that the creator is going to represent you well in the market. We really encourage brands to let the creators do their thing. They know best. They know how to connect with their audience. They’re the masters of selling for their community and letting them do their thing is really important. So that’s something we always like to remind brands. The other thing that’s interesting is the rise of user generated content, which I actually think is a big future trend in this whole world. And essentially it’s brands paying for content that they can use on their socials, in their advertising campaign, all of that. So instead of just having their brand appear in creators content on the creator’s channel, they might have a channel of their own and or they’re running ads on a platform using organic content created by an influencer. A lot of times, this also doesn’t have necessarily an influencer space in it, so that it can be used in a more generic way. And I think this is really interesting. This is another way that I think brands are getting savvier on how to be more efficient with content creation. And I would say to them, this is a great strategy because a lot of brands five years ago, etc., were creating a lot of their own content in-house to put out there and have a presence. And by paying for content made by creators who have a professional set up, who have an interesting point of view, all of that, it’s actually a more efficient way to create your own content. And I think we’re going to continue to see the rise of that.

[00:23:42] Dave Yovanno I’m glad you clarified that, because people who have been around for a couple decades, especially when social media platforms came about, we refer to everything as UGC. User generated content was just content generated by any user in any form. And it seems like in the marketing environment, essentially that term has evolved to mean what you just said. And I’m just underscoring it, which is a brand essentially licensing a creator’s content that they’re essentially going to boost or repurpose and run within their channel, on their website and their ads. And that’s become, I guess, the modern use of that term in the marketing sense. Would you agree with that?

[00:24:18] Tara McNulty Absolutely, yeah. I think licensing is like the perfect word for it. And I think a lot of actually users don’t realize how much they are seeing ads in their feeds that are user generated content ads that look more organic, look like a creator has created on their own. So there’s going to be this like blurring of lines with things, which I think will be interesting to see how creators react to that and how creators continue to evolve their own content to make it more authentic and true to themselves, which I think will be both the challenge and also the fun, creative part of it.

[00:24:54] Dave Yovanno Yep, great. In my conversations with various creators and I’ve had at least two on this podcast, I hear the same thing, and it’s that they prefer to have more creative freedom, and when they do, their audience responds better to their content. We also hear that they love working with YouTube from a platform perspective. I was just interested to hear like, why you would recommend that brands and creators use YouTube. What are the primary benefits of the platform?

[00:25:20] Tara McNulty Yes, I think there’s a couple of things. First of all, YouTube is forever, which there have been a lot of different trends and social media platforms. I mean, I kind of miss the Myspace days a little bit, but there have been trends, but YouTube has been around for a while now and it’s not going away anytime soon. Literally, we’re seeing that 93 percent of teens use YouTube every single day, and it’s only going to get to probably 100 once we get to Generation Alpha, who are when toddlers are now watching YouTube and in all their car drives on all their road trips. YouTube is going to be around for a while, and I think that being able to keep and own your own content on a platform that is evergreen is a real benefit to to YouTube as a whole. That goes back to another thing is that your content is really evergreen on YouTube. Our algorithm, it doesn’t have as much of a recency bias as it has a relevancy bias. So that means that if you’re making really great content and you have use good SEO and you have good thumbnails and all of that, your content can be making money for you, whether through ads or through affiliate links or affiliate program for years to come. And we’re seeing this all the time. Our affiliate program, which is not so much a link, it is a actually product feature and a pop up shopping menu. It is built to be completely dynamic, so it actually updates as the retailer updates. The pricing is dynamic. If it goes in and out of stock, it will tell you out of stock, back in stock, etc. it will update if products get changed by their name, the colorways, etc. and it’s really meant to be a platform that you can make passive income actually on all of your old content. So that’s one of the biggest things, is that we often hear from creators get frustrated and other social platforms because they have a minute of virality, and they get really excited about it and then they can’t ever get it back. And I think YouTube is a place where you can you it might be harder to initially get that audience and go viral. But once you have it, it’s way easier to keep it and to really develop and engage community. It’s a place where you can make friends with your fans, develop them over years and years, and be able to monetize that as well.

[00:27:46] Dave Yovanno Another thing I would add in comparison with other platforms is even if you’ve built up a large audience, if you publish something that doesn’t match the algorithm, it may never be seen, that sort of thing. And yeah, I think just the searchable nature of YouTube use the term evergreen. I interpret that as I can look at videos that were produced a couple of years ago. They’re still very relevant to what I’m searching for. It could be any topic, highly specific content. It could be how to do something about a job, how to make a joint, and woodworking, anything. There is a timeless nature to some of those, and it’s still provides a benefit to the creator. Like they’re still able to monetize through affiliate links or YouTube revenue shares still relevant to the brand who might have a partnership with that creator. They’re still getting sales from those referrals for content that was generated a couple of years ago. And there’s a lot of like, highly relevant real time stuff there as well. But that’s one big thing compared to other platforms where it’s a bit of a flash, right, that content is there and it’s gone. And if it’s not matching the algorithm to where it’s going to be recommended to your audience, it may never be seen sort of thing. I think it’s a very interesting comparison.

[00:28:53] Tara McNulty Yeah. And the search algorithm will continue to help you. We were seeing, for instance, during the holiday season, the Sephora savings event, the searches for top 10 items I should buy at Sephora. Some of the most popular videos were five years old, and that’s something that I think is so great about YouTube and feeling like you have that control over your own destiny, which I think is something we also hear. The algorithm is it is what it is. Once you get the hang of it, you can make it really work for you and longevity.

[00:29:26] Dave Yovanno Speaking of trends, as we look to wrap up here, I did want to ask, what trends are you focusing on for 2024? What’s top of mind for you?

[00:29:35] Tara McNulty So for upcoming trends, one of the things I think we’re really going to see, especially on YouTube, is the integration of multiple format. So something that we’re seeing with the shorts coming on board to YouTube is that it does give the ability to for you to reach and bring in audiences that maybe are a little bit younger and are used to that short form content. And for a while, we’ve been trying to figure out where the place is for live shopping in the US. We know that it’s very popular in Asia, and I think we’re going to continue to see people figure out that format. And I love to see a creator who just is able to seamlessly use all these to bring in new audiences and build community. The other thing is, I think it will be interesting to see where AI really fits into content creation and what that looks like. I know YouTube is looking into how can we use AI to help creators create better content. Now we have a product that does cut down longform into some great series of short for making it easier. And I think we also have a great product that dubs over you and dubs in many languages, multiple audio format using AI, which is super cool. We’re going to see the globalization of influencers and the globalization of content, which I think is super, it’s super cool.

[00:30:54] Dave Yovanno Tara, thank you so much for joining me today for this extremely dynamic and insightful conversation. There’s so many solid takeaways for me and our listeners. And that’s it for today’s episode of The Partnership Economy podcast. Tara, thanks again for joining the show. And thank you to our listeners for tuning in. We’ll see you next time on The Partnership Economy podcast.

[00:31:13] Tara McNulty Thank you. This is a lot of fun.

[00:31:18] Dave Yovanno I thoroughly enjoyed my conversation with Tara and reflecting on the evolution and benefits of YouTube’s platform. Something that stood out to me was the idea that commerce has existed on YouTube since its inception. Your product reviews, hauls and unboxing videos. This content has always been there, along with the ability to link out the products. But the difference today is that content can be monetized and drive tremendous growth for brands. The rise of creator and YouTuber partnerships really highlights the trajectory of this industry and where the market is going. Forward thinking brands like Abercrombie and Fitch and Stanley are placing more and more value on creators and authentic content, as opposed to depending entirely on traditional advertising. And YouTube’s platform is unique in that creator content is highly searchable, easy to link products from an evergreen. As Tara put it, YouTube doesn’t have as much of a recency bias as it does a relevancy bias. It was also interesting to discuss the importance of UGC or user generated content, which has come up a lot in my recent conversations. Brands who are looking to make the most of their creator partnerships and maximize efficiency need to consider licensing creator content on their own channels for their own advertisements. Thank you, Tara, for joining us for this final episode of season four, and thank you for listening.

[00:32:35] Canned Intro Thanks for listening to The Partnership Economy brought to you by impact.com. If you enjoyed today’s episode, be sure to subscribe to the show and rate and review it on Apple Podcasts.