Here's how it works: Anyone can buy a product, post about it, and claim cash rewards through a new social tipping platform.
“Real people trust real people more than slick ads and sponsored content” is the philosophy behind the new Social Tip app.
Ahead of its launch this summer, Social Tip has already partnered with more than 30 brands, including CBD drink brand TRIP and gym chain PureGym.
Shaking up influencer marketing
James Watt stepped down as CEO of BrewDog last month after 17 years building the globally successful Scottish craft brewery.
This week he announced his next project, Social Tip, which aims to revolutionise the £24bn influencer marketing industry by rewarding “real, loyal fans” with an AI-based algorithm.
Social media users can post about your brand and are rewarded based on the level of engagement they get on their posts.
The venture was inspired by BrewDog's own marketing success, which has seen the brand build a cult following among consumers.
“This new business builds on everything I've learnt at the cutting edge of marketing over almost 20 years building BrewDog,” Watt said.
“No matter how wild the campaigns, craziest stunts or cleverest ads, they can’t come close to the brand-building power of genuine peer-to-peer recommendations.
“Genuine brand love trumps any other form of marketing, and community is increasingly becoming the foundation of any winning strategy.”
Trust in advertising at 'all-time low'
According to Social Tip, people rely 41 times more on recommendations from people they know when making purchasing decisions compared to influencers or sponsored content.
Conversely, trust in brand advertising is at an “all-time low,” with 69% of consumers saying they do not trust advertising.
Social Tip aims to engage everyday social media users, including those with private accounts, and earn rewards for promoting their favorite brands.
Is this a private account?
What is the point of having a private account promote your product if its reach is so limited?
Yes, it's all about quality, not quantity.
Private Instagram accounts have much higher engagement than public accounts, about 8.1 times, because they are friends talking to each other.
Social Tip’s theory goes like this: it’s much more effective to give your actual customers £10 each to create 500 posts about your product than it is to give an influencer £5,000.
And what's even better is that that money goes to loyal consumers, not to marketing agencies and unreliable influencers.
“At the end of the day, people don't trust advertising, they don't trust influencers or marketing,” Watt said. “They trust people they know.”
It also caters to consumers’ desire for authenticity through authentic images and voices.
Hatch, a pre-seed funding expert and one of the investors in the new company, noted that social media plays a key role in influencing purchasing behavior.
“The appeal of investing in social tipping is threefold,” said Fred Soneya, co-founder and partner at Haatch. “As trust in paid advertising continues to decline, rewarding verified buyers who share on social can provide great ROI for brands and continue to build loyalty with customers. Plus, backing the B2B platforms distributed by the biggest brands is a scalable strategy.”
Is this a genuine review?
Watt says celebrities and influencers have lost their credibility, and in fact, his idea is to take marketing back to basics.
“It's old-fashioned word-of-mouth marketing, but enhanced for the digital age and is inherently scalable,” he explains.
But because people are paid for word-of-mouth advertising, the line between genuine posts and advertising becomes blurred.
But Watt says a key difference between the ads and his marketing style is that people first choose and pay for a product, and then the “small retroactive discount” is only offered if they put together matching posts. (Users who claim the reward must prove they purchased the product.)
“They bought the products themselves so their opinions are very genuine,” he said.
At this early stage, the company hasn't specified the specific conditions for posts to be eligible for rewards, although Social Tip's guidelines state that users must make “positive posts” about the product to claim rewards.
Seeking investment
Dragons' Den, the British equivalent of Shark Tank, famously turned down a proposal for BrewDog when the company was first launched.
Now James Watt has asked the Dragons for their backing for his next venture.
But the app will also follow BrewDog's equity crowdfunding model, where individuals can buy shares in companies they like (similar to venture capital investing, but available to smaller investors).
Share prices and valuations will be listed on Crowdcube.
