Nipple piercing IPOs

In today’s Exponential Investor…

  • Pierce it!
  • 30,000 is the threshold
  • E-Sports or marketing & advertising?

I had planned to write about the technology of autonomous systems today… but as you’ll see I haven’t. Instead you can read what I was going to send today, tomorrow.

I was about a third of the way through what is now tomorrow’s essay.

That is, until I was sent a fascinating message via my Twitter account from editor of Capital & Conflict, Boaz Shoshan.

It was an attention grabbing message that simply read,

Nipple piercing IPO… bullish

There was an article attached to it. Which meant I absolutely had to read what this was all about.

I’d suggest you do too. You can find the article here.

In a nutshell, celebrity influencer Chiara Ferragni, an Instagram “star” who once posted about her nipple piercing to her followers, is going public:

Ferragni, 33, is considering a stock market debut to monetise the clothing-to-lifestyle persona she has built over a decade, according to a September interview with an Italian newspaper. An initial public offering in Milan, where she resides, would be a publicity coup for Borsa Italiana’s boss Raffaele Jerusalmi. But it would also test the staying power of the “influencer” business model.

As soon as I saw this it reminded me of something else I’d been reading this morning. Something that made my jaw drop to the ground as equally fast as a nipple piercing IPO.

How big an influence do you have?

According to the UK Advertising Standards Authority if you have more than 30,000 social media followers you are an official “celebrity” in the UK.

The reason for this determination was due to a case over the breach of advertising rules on social media.

According to The Telegraph,

The Advertising Standards Authority (ASA) found mummy blogger, Sarah Willox Knott, breached its rules when she promoted an over-the-counter sleeping sedative, as the size of her Instagram following classified her as a “celebrity”.

The ASA was arguing that Sanofi – the company behind the sponsored post (which was labelled an advertisement) – must not use “celebrities” or social media influencers to endorse medicines.

The ad was subsequently banned.

Do you have more than 30,000 social media followers? If you do, congrats, you’re a celebrity.

I know that over at Fortune & Freedom with Nigel Farage, Mr. Farage would be classified as a “celebrity”. With over 171,000 YouTube subscribers to his YouTube channel and 1.6 million followers on Twitter, that probably tips the ASA’s “celebrity” guidelines.

Me on the other hand? No. Sadly not. I’m about a tenth of the way there. My Twitter accounts has a measly 3,086 followers. Some way to go yet. But if you feel so inclined and you don’t already, come follow me on Twitter and you’ll get a more “warts and all” look into what I’m up to each day when I’m not writing Exponential Investor.

Maybe one day I’ll meet the ASA’s celebrity status.

However, what I found interesting in the ASA case against Sarah Willox Knott and Sanofi was the reference to David Beckham.

Also on The Telegraph article:

[Sanofi] argued that Ms Willox Knott’s following was considerably less than that of other “recognised celebrities” on the platform, citing David Beckham who has 55 million followers.

55 million – wowza! Becks has even more than our Italian nipple-piercing influencer, Chiara Ferragni.

There’s no doubt that Beckham is a global celebrity. A household name in the UK, Europe, the US (where he owns Inter Miami MLS team), Beckham is as big as they come when it comes to “celebrity”.

What people also might not realise however, is that Beckham’s Inter Miami isn’t the only sports team he’s an owner of.

Beckham is also a significant owner of the Guild Esports (LSE:GILD) team.

Or should we say, the Guild Esports marketing and influencing team?

That’s a lot of influencing…

Beckham personally owns 4.78% of the London Stock Exchange-listed Guild Esports team.

While he’s an owner, he’s not on the board or team of executives. That’s down to a number of other experienced people from the world of gaming, esports and global marketing.

However, what I found of great interest is what Guild Esports is really about. You see I certainly believe in the future of esports. I think it’s an industry that deserves a great deal of attention.

It’s also an industry that I don’t think investors properly understand.

People see the word esports, and it instantly turns them away. After all, how much can an esports company actually make? The initial assumption is its revenues will come from prize money from its team winning esports competitions.

Well, that’s some of it, albeit not likely much.

When you look at a company involved in esports, you need to look beyond the “sports” part of it. You need to actually understand where the money is here.

The money is in marketing, advertising and sponsorships ad merchandise.

Companies like Guild Esports are in the esports world, but they’re really in the advertising and marketing industry.

To give you an example of just how much marketing and advertising means to them, you only need to look at the Guild Esports prospectus under the “Use of Net Proceeds” section from the money it brought in for the IPO.

It plans to use £11.69 million of net proceeds from things you’d expect: working capital (£1 million), directors’ salaries (£600,000), operations costs (£1.2 million). Then it’s allocating £1.75 million to “team costs”, which are players, coaches, scouts – which you’d expect from a sports team.

However, it’s the £5.5 million on “influencer costs” that blew me away and made my jaw hit the floor as fast as Chiara Ferragni’s nipple piercing IPO.

Of £11.5 million, £5.5 million towards influencers.

That’s how significant influencer marketing is in today’s world. It’s why a nipple-piercing Italian clothing-to-lifestyle Instagrammer is perhaps doing an IPO. Why medical giant Sanofi pays a lady with 30,000 followers to promote a sleeping sedative.

Why one of the most recognised celebrities in the world has launched and IPOed an esports team.

It might be under the radar, and no doubt misunderstood, but Beckham and Guild Esports might just surprise a few once people figure out what they’re really about.

Regards,

Sam Volkering
Editor, Exponential Investor

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