Ali Montag on Linear Commerce, Nickelodeon, and Bows... Lots of Bows
|Aug 6, 2020||17|
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Hi friends 👋,
Happy Thursday! To my New York/New Jersey/Connecticut friends, I hope you’ve gotten power back. If not, light a candle, dim your phone, and get ready to read.
After I sent Monopolies and Magnolias a month ago, on July 2nd, I got a lot of nice replies from many of you. “Loved this!”, “Holy shit this was made for me”, and “This was the best piece you’ve written yet!” Chip Gaines himself even replied to the tweet about it! And don’t get me wrong, I appreciate the kind words, but… I didn’t write it. Ali did.
Ali Montag is the author of the new-and-can’t-miss Letters From Home and Away. She’s back for her third guest post because she’s way better than I am at telling stories about brands and people with huge audiences and businesses that most of us rarely think about. So when Ali pitched me the idea of building on the Magnolia piece a series on Hidden Linear Commerce Empires, I said yes before she could finish the sentence.
Today’s post is on an empire that is hidden from those of us who don’t have kids, and likely very much not hidden from those who do: JoJo Siwa. This former Dance Moms star has accomplished more in her 17 years than most of us will in a lifetime by building and understanding a massive tween following and giving them what they want — loud, shiny, parent-approved everything.
Let’s get to it.
A guest post by Ali Montag
Audience is the New STEM
In the late-2000s, career advice for young people sounded ambitious. Study math. Learn to code. Take engineering classes. Get a job in Silicon Valley. Apply for Y Combinator. Make it big. Make a difference. The hacker-coder image of a 20-something, idealistic Mark Zuckerburg—that was success. Tech was The Dream.
But the dream needed to be financed. The answer? Ads. "The best minds of my generation are thinking about how to make people click ads." Jeff Hammerbacher, a 28-year-old Silicon Valley engineer told Business Week in 2011.
The attention economy was born.
Then, our career advice for young people started to shift. Businesses were built on top of Instagram. Elections were won on Facebook. Brands were launched on YouTube. Suddenly, the most valuable skill became commanding an audience. Who follows you? How loyal are they? What can you promote to them? The advice became: Build a community. Grow a following. Share a message.
The best minds of my generation are thinking about how to make people click “Subscribe.”
One result is the rise of linear commerce—audience-centered brands built to sell products. Linear commerce drives many of the fastest growing consumer brands today.
Here’s the definition of linear commerce, from 2PM’s Web Smith: “The lines of demarcation between media and commerce are fading ... Brands will develop publishing as a core competency, and publishers will develop retail operations as a core competency.”
Last time, we took a look at Magnolia, a linear commerce company selling home goods out of Waco, Texas. Magnolia’s Chip and Joanna Gaines rose to fame through HGTV’s Fixer Upper, and built a sprawling business on top of their Southern, middle-aged audience.
This week, we’ll look at the business of JoJo Siwa. Siwa uses her audience on YouTube, TikTok, and Instagram—which she started building as a 12-year-old on the Lifetime show Dance Moms—to sell millions of dollars worth of merchandise to children and their parents.
If you’re not familiar with the JoJo Siwa empire, let’s break it down.
11.6 million followers on YouTube
26.9 million followers on TikTok
9.7 million followers on Instagram
A 52 city live concert tour in 2021.
Hairbows. Siwa’s line with Claire’s has over 7,000 varieties
A line of children’s clothing with Target called JoJo’s Closet
A line of toys with Build-A-Bear
Birthday party decor at Michaels
A line of fruit juices called JoJo’s Juice
$30 per month toy subscription boxes
$19.95 monthly hairbow subscription boxes
16 published children’s books
Merch. The merch is never-ending.
JoJo Siwa’s YouTube channel is awash in glitter, rainbows, and high top sneakers. It’s fun. It’s loud. It’s age-appropriate for her audience, which ranges from age three to nine.
Siwa’s YouTube popularity sold 40 million of her signature hair bows in 2018. In a 2020 interview, Siwa said her brand has sold 80 million hair bows over the last four years. Each bow costs ~$10. That’s big business.
So how did Siwa turn a two-season appearance on Dance Moms into a merch machine?
Step No. 1: Build an audience. Siwa began gaining traction in 2015 with a boost from cable TV. “JoJo’s YouTube and Instagram followings were thriving thanks to Dance Moms. She also had a signature look: the bows and the Lisa Frank-esque color-vomit fashion sense,” according to Rolling Stone.
Step No. 2: Get licensing deals. Siwa’s first licensing deal in 2016 was a line of hair bows for Claire’s. The bows were sold as a test in a few stores. “The test took off immediately,” Julie Splendoria, Claire’s senior global license buyer, told Rolling Stone. The sales caught the attention of Nickelodeon. In 2017, Siwa signed a multi-year talent deal with Nickelodeon, allowing the cable franchise to manage all aspects of the licensing of her brand.
Nickelodeon brought global distribution and direct connections to brand partners like Target, Walmart, Michaels, Payless, and Build-a-Bear. 500 people at Nickelodeon contribute to managing the JoJo Siwa brand, Siwa said in a March 2020 interview. Nickelodeon also promotes Siwa to its own audience. Here’s where the linear commerce flywheel really starts to turn.
“[Siwa’s] live appearances drive sales of her branded products,” according to Viacom, the parent company of Nickelodeon. “Last summer, bow sales increased by 40% in Chicago after she performed at SlimeFest and 60% in the Anaheim area after VidCon.” Both events are owned by Viacom.
Last but not least, there are the events Siwa creates for herself. Siwa sold 506,184 tickets for her 2019 DREAM tour, a live concert series performed across the country, netting $26.9 million according to Billboard.
More concerts, TikToks, and YouTube videos mean more followers—more followers means more JoJo Siwa hair bow sales. It’s a classic linear commerce business.
But the business is unique for one critical reason: Siwa’s audience is children. And the business of selling to children is tricky.
For one thing, children have increased privacy regulations. Congress passed the Children’s Online Privacy Protection Act, known as COPPA, in 1998 to protect the identities of children under age 13. It prevents ad targeting and is enforced by the FTC. The rules apply to any websites or platforms that “collect, use, or disclose personal information from children.” Kids under 13 aren’t allowed on Instagram. YouTube was fined $170 million in 2019 for COPPA violations. TikTok was fined $5.7 million for COPPA violations.
Brands can’t target digital ads at kids. Kids can’t sign up for newsletter campaigns. Kids don’t listen to podcasts. Kids don’t watch much TV. Kids don’t read news or magazines.
What kids do is watch a lot of YouTube.
“YouTube is the most popular babysitter in the world,” Eyal Baumel, the CEO of a YouTube celebrity management company, told Forbes.
The licensing agreement with Nickelodeon helped Siwa dominate this market, growing her audience of kids online while placing toys on the shelves of the stores parents shop. Ryan Kaji, the 8-year-old star of Ryan’s World, and YouTube’s top earner two years running, has a similar licensing deal with Nickelodeon and pocket.watch (a portfolio company of Viacom) to develop toys for Walmart, Target, and more.
Creating content for kids is also tricky. How do you make content that continues to be relevant to five-year-olds when you yourself are aging? Siwa, now 17, is often asked when she’ll be too old to keep making videos for kids. Even Kaji, still in his single-digits, is asked the same question.
And there’s a deeper question about the toll of kids running linear commerce businesses. The business is entirely dependent on the audience. The audience is entirely dependent on the creator.
What if JoJo turns 18 and decides she’d no longer like to wear neon pink hair bows? What if she decides she’s tired of the barrage of negative comments below her videos?
Lessons for Grownups
Silicon Valley is obsessed with growth, virality, scale, and influence. Adults on Twitter marvel at the rise of TikTok stars like 16-year-old Charli D'amelio, 19-year-old Addison Rae, and other members of the LA Hype House. “What were their strategies? What can we learn from their growth?” adults muse. Brands see dollar signs. Retailers see partnerships. Spotify sees new podcast ideas. Parents have no grounds to argue against it; their kids’ earning potential is higher on TikTok than it could ever be at a nine-to-five job.
But these kids are just kids. And other kids are watching. American children were three times more likely to aspire to be YouTube stars than astronauts, according to a 2019 survey.
"Every time I go to schools, the most said thing from 90% of kids is, 'I want to be a YouTuber,'" the YouTuber DeStorm Power told Business Insider."They want to be social-media stars."
Today, with kids stuck at home, uncertain when they’ll be able to go back to school and isolated from their friends, relationships with creators like JoJo Siwa matter. Math textbooks, science experiments, and history lessons feel far away. YouTube is right there. The pressure to “be a star” is immense.
What will be the repercussions of adults confirming that audience-building is the most valuable skill kids can develop? What will be the experience of the millions of kids who never go viral? Billion dollar brands will be built. But what will be the cost to everyone else?
Adults operating companies or managing brands can learn a valuable lesson from Siwa. The flywheel she’s created to turn YouTube videos, TikTok dances, and live concerts into merchandise sales is enviable by any consumer products company. It’s the same strategy media businesses like Food52 use to sell skillets, and magazines like Hodinkee use to sell watches. It’s why Buzzfeed sells muffin tins, and why the Wall Street Journal sells a wine subscription. Grow thine audience. And then sell things to them.
But when it comes to children, it’s worth asking: What ambitions are we modeling?
For Siwa at least, the merch business is exactly what she wants to build.
“I love what I do, but I think a lot of people are in it at such a young age, and they didn’t really have the choice, and they don’t genuinely love it,” Siwa says. “I genuinely love it.”
Major thanks to Ali for sharing her knowledge with us! If you like Ali’s style and want to read her weekly book reviews, you should really subscribe to Letters From Home and Away.
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If you’re looking for something to hold you over until Monday, here are my two favorite articles and one favorite podcast from the week:
Read: TikTok and the Sorting Hat by Eugene Wei
Listen: Matthew Ball: The Future of Media on Invest Like the Best
Thanks for reading and see you on Monday,