#ConversationsThatMatter is a content series curated by our expert consultants and strategists to ensure brands are harnessing the power of persuasive storytelling. By dissecting the next marketing and PR catchphrases, we explore communications trends which shape conversations that can build value, inspire action, change opinion and ultimately grow reputation. As part of Volume Two, which can be downloaded here, we delve in to the ‘Fan Economy’.
What is the ‘Fan Economy’?
The fan economy refers to a business model in which the economic value and revenue is generated via interactions between fan communities and celebrities or influencers. It is abundant in the modern entertainment industry, product sales, and services sectors. In recent years, the prevalence of internet and social media has changed the face of fandom, shifting the role of fans from passive recipients of marketing campaigns to active members of fan communities with original content (fan art, videos, merchandise, and events for example).
Fan Economy Communication Trends:
Traditionally, the entertainment industry and professional sports, such as football clubs, have capitalised on fan loyalty for many years by selling branded merchandise. Not until recently did the fan economy begin to shift in nature. One of the most notable shifts in characteristics lies in the purchase of products attached to idols, with massive endorsement deals designed to boost the commercial value of these wares. As product consumption within a fan-driven economy rides on emotional value beyond functional elements, this has proven to be an exceptionally successful marketing strategy.
The fan economy is not only confined to celebrities, but also digital influencers who leverage their sway to promote and recommend products on social media platforms. These influencers impact the fan economy by boosting their incredibly loyal followers within a given area of specialty, who act and purchase based on the endorsements of these personalities. As a result, brands have sought partnerships with digital influencers to produce sponsored videos, individual promo codes, and even collaborative products, all to gain a share of the online fan economy. In the height of the COVID-19 pandemic, when the public was homebound, live commerce saw a large boom in China and SEA countries on platforms such as Taobao, Douyin and Shopee. Combining instant shopping with audience participation, live commerce encompasses the entire consumer journey, from awareness to transaction.
From custom-made merchandise to advertising billboards, fans who actively participate in the process of promotion and other meaningful activities, such as fundraisers for campaigns to express their idol devotion, are commonly referred to as “fansumers”. The term combines the words “fan” and “consumer”, demonstrating that nowadays fans not only follow and purchase endorsed products from their idols, but they also express a desire to engage in the image making and value building of their idols.
“Fansumers” are often characterised by their high spending power and influence on an idol’s development. Hence, brands have made “fansumers” a key target, not only from a consumer perspective, but also by embracing their creative powers in the co-creation of products and marketing activities in order to establish engagement and deepen connections amongst fans and consumers alike.
For the past decade, Korean pop culture has been the dominant force across key regions within the APAC region, with K-pop and K-drama idols causing a craze across the local “fan economy”. With the pandemic still affecting every part of the world, a shift towards achieving increased local resonance within individual markets is becoming more of a priority for many marketers. Take the Hong Kong market as an example, we have seen a rising trend centered on the preservation of local culture and identity, from supporting traditional shops and local produce, to embracing local idols. Since the debut of the boy group Mirror, from the variety show King Maker, the Mirror phenomenon has reignited the local “fan economy”, while at the same time boosting the awareness of other local entertainers and celebrities.
Fans find special resonance in reality television programmes, as they witness young and ambitious locals achieving their dreams. From a commercial aspect, brands are hoping to translate that emotional pull and loyalty by adopting and collaborating with local idols in order to connect with their enthusiastic fan base, who also possess high purchasing power.
The notion of virtual idols has long existed, however, technological innovations and AI have elevated this concept to new heights. Virtual figures, such as “Lil Miquela”, resemble real life people in appearance, style and values, and have accumulated huge followings, comparable to actual influencers. Virtual KOLs can not only adapt their appearance and thoughts to appeal and connect with specific audience segments, they are also widely adopted by brands for their perfect image, a risk-free approach that prevents negative backlash that sometimes comes from working with real-life influencers, who may potentially become involved in scandals under the heightened scrutiny of the internet.
Given their popularity among digital savvy audiences, luxury brands like Tesla, Dior, Balenciaga and Vogue have worked with established virtual KOLs in the China market, whereas brands such as Estée Lauder have launched a self-developed virtual model for their own use. From virtual live-streamers (VTubers to virtual reporters and even virtual alter-egos of actual influencers, the potential of future applications for virtual KOLs is limitless.
In conclusion, as this marketing sector continues to surge, fans are the most important assets. When utilised appropriately, the ‘fan economy’ will bring about tremendous value for brands. As the concept evolves, fans strive to increase their idol’s value through frequent purchases of endorsed products and generating volume on social media. Brands who wish to leverage the fan economy need to trigger this emotional capital by establishing a close association with suitable endorsers, illustrating resonance between, and finding ways to involve fans in the creation of products and marketing initiative so as to build the brand’s awareness and loyalty amongst the fan community. While fan economy traditionally focuses on celebrities, as we progress towards an increasingly digital future, social media influencers and virtual KOLs have grown significantly in recent years and constitute a growing share in the market given the abundance of options for brands to select from.