MrBeast Is Writing a New Consumer Playbook

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by Lindsey Francy Nov 24, 2022 News
MrBeast Is Writing a New Consumer Playbook

What was the most significant deal of the year?

Penn bought 36% of Barstool Sports for $162 million in August, completing a multi-year acquisition.

David Friedberg said on the All-In that it was the most important deal of the year because it shows an important consumer trend: people buying consumer products from influential people.

I would like to explain his argument with an experiment.

Imagine if you worked for P&G and wanted to sell a mop called the Swiffer. How would you sell it to so many people? The first thing you would do is create the product and then buy ads where the attention is focused.

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The creation of popular consumer products is done in the reverse order. They build huge followings on social media and then go out and create products to sell to that audience.

Jimmy Donaldson is a perfect mimic of that. As of last week, his original channel had 112 million subs, making him the most followed person on the internet.

He's selling to that audience.

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MrBeast created a delivery-only burger chain in December of 2020. He created an ordering app for consumers and partnerships with 1000 locations in Europe and the US. Tens of thousands of fans showed up for the opening of MrBeast Burger's first physical location at the American Dream Mall. Feastables, a chocolate bar created by MrBeast, has sold more than $10 million.

David Friedberg says that distribution is the number one problem for consumer goods and services. You will not be able to compete effectively if you don't have a naturally created content business.

What's the reason? Story and content is the best way to stand out because consumer goods are so competitive and easy to substitute. People are more likely to consume said content on social platforms.

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Traditional consumer brands spend a lot of money on advertising. The world's largest advertiser is P&G, which spent $11.5 billion in the year that ended in June.

MrBeast commands the attention of millions of people. Mrbeast has expenses. Any ad money he makes from the site goes back into the business at a rate of $8 million a month.

Advertising a product can create short-term interest, whereas making content can bring in new fans and keep them coming back.

Is Mr.Beast replicable by those who aren't one of the world's biggest YouTubers?

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Ben Mathews is a general partner at NightVentures, a VC fund connected to Night Inc.

Mathews says that there are less than 100 celebrities who are big enough to carry their own brand. It's better for everyone else to do a licensing deal than it is for them. It is difficult to do it yourself.

The main trade-offs are margins, product quality, and ownership. Night Inc. launched a $100 million fund to help other internet creators navigate these trade-offs and build a MrBeast-like consumer empire.

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Barstool Sports has partnerships with a number of interesting products.

Spittin' Chiclets, which is co-hosted by two former NHL players, was launched by Barstool Sports in October of last year.

Whitney's favorite drink was pink lemonade. The pictures of fans making the drink at home started going viral and Barstool CEO Erika Nardini was interested in partnering with E&J Gallo to make that drink combination. When I wrote about Pink Whitney in March of 2021, it had sold more than 100 million bottles. I was a guest on the show to discuss the FTX debacle. No pink lemonade was drunk.

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Big Deal Brewing was launched a month ago in partnership with Labatt USA.

The beer industry is on the decline according to conventional wisdom. If your audience trusts you and follows you, you can take the risk. Hockey fans might be a small niche compared to the total audience, but as the success of Pink Whitney shows shows, you can have a huge hit with the right product and strategy.

Penn Entertainment was attracted to the sports and comedy platform due to its large audience. Barstool launched an online sportsbook that brought awareness to the casino operator's properties which would otherwise be a big marketing expense.

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Content and commerce can be found in other areas. Every industry has a duty to fight for attention.

I used to work at The Hustle, a tech and business newsletter with 2 million subscribers, which was acquired by the marketing software firm HubSpot. Investment platform AngelList is one of the software firms that acquired media operations.

The risks of building brands tied to an individual are obvious. In the past month, Adidas AG and The Gap Inc. canceled lucrative contracts with West after he made anti-Semitic comments. Adidas is responsible for 45% of the company's net profits due to the sales of West's shoe brand "Yeezy"

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According to recent reports, the super-YouTuber is looking to raise $150 million for his business empire. It will be a big deal if the deal goes through. The most important M&A deal will be a huge creator buying out a legacy brand.

Is Adidas going to have a golden age?

The brands are discovering their animal spirits.

Chris Bryant is the Red Bull billionaire's secret winning recipe.

The opinion of the editorial board is not reflected in this column.

The Sat Post newsletter is written by Trung Phan. The lead writer for the Hustle was him.

There are more stories on bloomberg.com.