The Follower Fallacy - Joseph Perello

0:00Hey, welcome to the CMO Whisper Show. I'm your host, Steve Olenski. Part marketing practitioner, part ad agency veteran, part journalist. I was a writer for Forbes for 10 years. I've had so many insightful conversations over the years with business leaders, to athletes, to celebrities, to, of course, CMOs. The only difference now is instead of sharing those insights through written form, I'm doing it this way. My guest this week is Joseph Perrello, founder and CEO of Props. Props is a performance-based creator marketing platform built around a simple belief. The best marketing still comes from people, not metrics.

0:40Instead of chasing follower counts, Prompts uses AI to match brands with creators based on storytelling strength, trust, and audience authenticity. So campaigns are both data-driven and deeply human. AI does the heavy lifting in the background, brand safety, workflow, and precision, while real human creators stay in front and center. Before launching Props, Joe built and ran a digital agency serving brands like Nike, HP, Lowe's Hotels, Betterment, and even Michelle Obama. And earlier in his career, he served as New York City's first CMO under Mayor Bloomberg, helping revitalize tourism and launching the city's first self-sustaining marketing agency.

1:23Finally, let's just wrap it up. Joe sits at the intersection of brand, policy, tech, and creative. I'm so happy. I spent a few minutes with him at Advertising Week not long ago, and we're going to continue that great conversation. You're going to be the benefit of it because we're going to record it. Joe Pirello, my new friend, welcome to the show. Thank you, Steve. You forgot the Yankees, and I'm figuring it's because you're from Philly. I chose to leave that out. Your Yankees are in the same place my Phillies are, watching the World Series at home. Yeah, good to be here. Thank you for having me.

1:55You are very welcome, my friend. And I want to really, I want to just go right into the deep end. And I want to start at the evolution of creator marketing. So before we get into now, though, I want to zoom out for a second. So the creator economy has gone from, quote, brand awareness with big influencers to performance-driven creators who can actually move outcomes. And that's a big shift, right? Strategies, budgets, and even who gets chosen has changed. First question, what has been or what was the single biggest unlock that pushed creator marketing from awareness to a measurable performance channel?

2:32That's a great question. I like to think that props has made a difference in moving creator marketing from squishy metrics to CFO, CFO level metrics. And I think inevitably, I think any new channel starts off exciting and sort of top of the funnel. And then as investments grow, the natural evolution of budget scrutiny requires more bottom of the funnel proof. Right. So, well, I think we did. We did push. We did push people down the bottom of the funnel because we were able to drive measurable business results. I think the industry would have inevitably gone to a place where you're going to have to show business results and out of the world of sort of followers likes, you know, I'll just call it in platform results like in Instagram or in Facebook.

3:39and more on the brands platform on their website, like on their sales? How is your creator marketing impacting their sales? And we played a big role in moving brands that way. And we continue to. I think brands are now catching up to how we do creator marketing, where in 2019, when we first pitched it, they were like, we don't know what you're talking about, but it sounds really good. and you seem like a good guy, so let's do it. Yeah. When did you first see brands stop chasing that celebrity in wanting business? I mean, they're still doing it. I mean, I don't think that's going to end. And I think you used the right word.

4:19We separate celebrity from followers, right? Using celebrities has some risk, but it's always worked. It's always going to work. You got to do it right. Like everything else, you got to do it right. Direct mail works. Just got to do it right. Um, so what's different about props is we're, we're separating followers, essentially eliminating followers as a viable means of distribution. Cause when you find creators, right, you're, you're in the old world, you're looking for, Hey, who can make really good content and then who can distribute it to the right people. So you're asking influencers to do two things, make great content that makes me look good and then distribute it.

5:04We're only asking them to do one thing, make really good content. And so that frees us up to find creators who are actual experts, who have actual credibility, who have, who can tell a great story because we don't care about their followers. Because we're going to use paid media to distribute their content to exactly the right people that you can distribute content or ads using paid advertising. Like the pipes of paid advertising are amazing. They're astounding. Like my prediction is in 18 months, the biggest marketers are going to know who all the people are, and they're going to know three ways to reach them, right?

5:48Your phone, your TV at home, and maybe one other device. So the issue is no longer going to be how do I find these people, right, which was the biggest issue. It is going to be how do I get them to respond or react? And so creative in the ad world and content in my world is the only thing that actually matters. You have to put compelling stories in front of people because people respond to stories five to ten times more than they respond to ads. Whenever I say that, no one says, oh, you're wrong. Ads are better. No, that's number one, right? Number one is stories are better. Number two is people trust people more than they trust brands or institutions.

6:39Since 1967, trust in brands and institutions has declined, according to Pew Research. So we, as you mentioned in the front, we lead with the content creator, who's an actual human who has an actual point of view, who can tell actual stories about, for instance, being on the road, road trips, or adventure travel, which happens to be a great way to attract prospective AAA members. It's very simple. And then the last thing, see, that really sort of connects the dots for the performance marketing nerds out there is all the content lives on our client's website directly. We don't try and get people to engage with the content in Instagram or Meta or LinkedIn or TikTok.

7:30We want to drive them from TikTok to our client's website so that they can engage with the brand there. And then we can do all kinds of things to them, if you will. We can pitch news stories. We can pitch them endorsements, which we do. We drive them down the funnel and cause them to convert. So we're very, very different from the typical sort of influencer marketing platform. And as we say, we pretend that we work for the CFO. So at the end of the month or end of the quarter or end of the year, is the CFO going to be happy with what we did? And the answer is yes, CFO is happy. Yeah. What have brands, in your opinion, had to unlearn, if you will, in order to make creator marketing actually work as a performance Yeah, another great question.

8:14I think brands were sort of hypnotized to drive engagement on Facebook or Instagram or TikTok. There was this sort of mind virus, to use one word, right? Of like, we need more likes, we need more followers, we need more likes, we need more followers. and and for a while that was actually the right strategy because if you had a lot of followers you sort of got quote unquote free distribution right because if you had 10 million followers and you and you put a little post up 10 million people would see that so for a while that made you know reasonable sense and then all the platforms changed how the algorithms work and how sharing works and how organic content works.

9:04And they said, no, it's more like 10%. Because if you really want to sell stuff, you got to pay us. And that's why the best brands are combining authentic content creators with paid media, right? The best brands are doing both because Facebook's not going to give you a free lunch. That is not going to give you a free lunch. But the best brands also know that people respond to stories more than they respond to ads. The best brands know that people trust people more than they trust their own brand or institutions. And so they're combining these worlds of authentic content creation by real people with all the precision and the scale and the accountability of paid media.

9:56You got to put those two things together. So you mentioned that stat that five to ten times storytelling outperforms ads, which is insane. And I'm fascinated with all this evolution, if you will, and media sophistication and everything that we do now. In your opinion, why does creative storytelling still outperform? I think that, I mean, well, look, me personally, I did research and looked at Pew Research, which is widely available. And I have theories about why people are trusting it. But if you look at the brand or institution trust graph on Pew, it starts declining like after JFK gets assassinated.

10:38And then it starts declining again when MLK and RFK are assassinated and Vietnam is in the news. And then it drops precipitously when Nixon resigns. So these are all historical cultural moments that are facts that have slowly eroded trust in institutions. And then as younger people become more independent, right, and more, I have opinions too, which really, you know, if you think about it, didn't really exist post-war America, right? There was no youth culture in pre-war America. There was just culture. There were no cars, really. People didn't have, I mean, there were cars, but teenagers didn't have cars.

11:25There was no popular radio. There was no real rock and roll. There was just culture. And then post-war, there was youth culture. There was a separate culture around youth. And as you and I know, young people are skeptic, which is a good thing. And so when these things that sort of our normal culture, the established culture took for granted, young people were really growing up and saying, wait a minute, what my mom and my dad were thinking is bullshit. Okay, it's bullshit. And so this has not gone away. And so when we say people trust people more than they trust brands or institutions, in my mind, right, as the amateur anthropologist that I am, that is what has eroded their trust.

12:12And it's, look, it's the basis for how we go about creator marketing. And it's the basis for why creator marketing has grown because of this distrust. Okay. Let me throw a monkey wrench a little bit in there. Okay. Well, first of all, let me preface what I'm about to say. Marketers completely, in my opinion, underestimate the knowledge of a consumer, meaning the consumer knows we marketers, we're trying to sell you something. Okay? That's not a secret, right? We get it. I mean, consumers are a lot smarter than we think. That's what I'm trying to say. Okay? Now, building off that, when a consumer sees a creator, an influencer representing a given brand, right, there's probably a natural assumption that there is some kind of compensation happening between the brand and the creator.

13:04So how can brands protect that authenticity? How does it not feel like a script? And that may be the magic elixir, but that to me seems like a really big deal. Yeah, it's a good question. So the answer is, it depends. The best companies that we've seen are using content creators to tell stories that are relevant to their brand or their experience, but they're not selling. Some content creators are just telling a story that's relevant to the brand's experience. Now, further down the funnel, those stories will be more of an endorsement of an ad. But at the top of the funnel, the best in the business are just telling relevant stories.

13:56For example, this is an interesting example. If you want to sell a home equity line, a credit, what you would say are rates, maybe a special technology that the company has, maybe a fast approval rate, right? All sort of product and price focus. The best way to sell a home equity loan is to talk about redoing your kitchen. That's the best way. There's no better way to get a qualified person to your website and then pitch them on the rates and the features is by pitching a story by an expert about how to redo your kitchen. Right. For example, right? And the creator should be an expert designer.

14:40And you know why? Because you're going to attract someone who owns a home because nobody who is renting is going to redo their kitchen. And most of the people take out home equity when they redo their kitchen. And so you're going to get the right person. And by the way, you didn't sell a damn thing. All you did is talk about your kitchen. You do it on your website. Now you got them, right? So that is authentic storytelling in my mind, right? And then the creator may say, hey, you should try this bank. We have really good rates, blah, blah, blah. Then you sell. It's such a simple example, but that's what makes it perfect.

15:14It is. It's like, look, we do this, right? This is what we do. So when we say here's how we're doing, people are like, I wish I'd thought of that. No, if you hit them over the head to keep your analogy going, we have the lowest APR. Stop. People can find low APRs. Hit them emotionally what they can do with that home equity loan. Exactly. You could just go into Google or go into ChatGPT or go to the six zillion loan aggregator sites and find the lowest price. But that takes work. Yep. how do brands or the smartest brands, I guess, how do they earn? And I'm going to put you in front of a room full of CMOs right now.

15:54Hey, this is great. But how do I earn credibility when I work with creators without, I guess, smothering the message, if you will? Well, I think number one is when you pitch a story to an audience, if that story is about redoing your kitchen versus our great product, you're already a step above. because the reason why people love content, quote unquote content, so much is because it's giving something to the audience. Whereas ads are really asking for something from the audience. Right? Content is giving. So you're automatically, you know, you have the high ground. You're giving information or entertainment or inspiration or knowledge.

16:39So step one is, you know, you're already ahead of the game from a trust and a credibility standpoint. point. Now, that's provided that you've vetted the content creators, and they're not insane, and they're not racist, or they're not crazy, right? And they don't say stupid things, which is not that difficult today, especially if you're using, you know, AI to help you do that. So assuming you've done all that, you're getting high quality, high content creators, and they're telling really good stories, and you've earned the credibility, you've earned the trust right at the start. Interesting. We've talked about paid media before it came up, and we're at a really interesting intersection right now where paid media and creator content they're no longer separate right they're definitely blended and the precision of paid targeting with the humanity if you will creator storytelling that's where wins are happening as you know as well as anybody does anything change or should it change when creator content is also treated like a performance media number one is you've got to change you've got to make content for every level of the funnel because people consume they don't consume content the way we think they buy right people who are in the market, they don't need this story.

17:43They just want to buy. People who are not in the market, they may need some inspiration. They may need to know that this exists. The first thing is, if you make content for the top of the funnel only, you're going to get top of the funnel results. If you make content for the bottom of the funnel, you're going to get very expensive bottom of the funnel results. If you make content for every level of the funnel, you're going to do really well. The other thing is attitude, Steve. This is sort of different you have to have the right attitude our chief client officer i'll give lee a plug for a second he's he's he was from hearse and yahoo and timing before that right he's a great guy really funny when when he started at props he's like you know joe the the content industry is allergic to responsibility they're allergic to being held to account for some result And that's what's different about your attitude and your company.

18:40I was like, Lee, that's genius. No one's ever put it to me that way. And so I would say, you have to have the right attitude going into an engagement or approaches. Don't be allergic to driving results. Don't be allergic to being held to account. Because if you start there saying, I'm willing to be accountable, then you're going to make sure you're choosing the right creators, making the right content, tracking it all properly, setting expectations the right way. It just sets the stage for proper accounting right out of the gate. It just sounds so incredible that you literally had to say the words, don't be afraid to be allergic to results.

19:21Yeah. Well, yes. You know what I mean? They're allergic to results. Don't be afraid. Don't be afraid to be held to account for results. It's okay. you'll you'll do great exactly and it's such a great word that he used right because it just summarizes like oh no oh i can't touch that you know i'll break out i'll break out in hives yeah you know and there's another great podcast on this i think it was the freakonomics guys right and and they did this whole study that this is a long time ago but but the people at yahoo when they were when they were selling banner ads right on yahoo they would say hey you know You're going to get 50 million people are going to go to the website and we could actually track the clicks for you.

20:04And the client was like, we don't want you to tell us what the clicks are because that would mean we would have to report on clicks and we don't want to do that. That's being accountable. Oh, my God. It sounds so counterintuitive. Yeah. It's incredible. You can't be afraid. You can't be afraid. Exactly. I'm going to use a word here, soul, in the context of creative soul. How do brands keep that creative soul when they start to optimize and A-B test and they tie it to ROAS, right? It's a balance, right? That's a really good question. Look, I think there is a place for soul, and it is in the creator search and content selection space.

20:46And then there is a place for science. And the science is what sort of results did you get? And so the soul is in the beginning, right? Because you want to find creators if you're, if you're, look, if you're a bank, I don't, you know, I don't know where soul plays. It does, right? Like I said, like the redoing your kitchen, you could do that with some soul. I mean, I don't know how much, but it depends on the product. But I think that the place for soul is in the curation and story selection space. And the place for science is in the optimization. And then you can optimize, Steve, for the right objective.

21:26So if your objective is cheap subscribers at any cost, you're going to optimize for one thing. If your objective is I lifetime value clients, you'll pay a little bit more for that. Then a piece of content with some soul may be the thing that you need. So it really depends on what you're optimizing for in the performance marketing space. Right. It's almost cliche time, but it is case by case. Yeah, it is. And it's what are the business goals? Right. So soul may be great for retention or loyalty or renewal. It may not be the best thing for acquisitor. Good point. Right? The context, is it contextually relevant to the goal?

22:14Yes, because if someone's already bought into your brand, right, and they're already using your brand and you want to make sure they don't leave and you want to make sure they don't, you might want to say, hey, I wish they would use us more. Well, soul, you don't need a technical argument for them. They've already bought in. Right. Right. So you, you may want to use something with more emotion. Yeah. Yeah. And don't complicate it. Exactly. Yeah. Keep it simple. Keep it simple. I don't know where I heard this term. It might've been from you. I don't know. The follower fallacy. Yeah. I started off really that, that way where.

22:47Yeah. I mean, I think. Well, it's just getting brands. We both know forever. They, the brands chase the biggest follower counts, right? Numbers, numbers, numbers, quantity, quantity. And then they realized those audiences were passive, misaligned, or just dead. No offense. Now the focus has shifted from how many people saw it to who actually cares. So first question under the follower fallacy umbrella is what's the biggest misconceptions brands still have about follower counts? Yeah. Number one is followers are an unreliable source of distribution. The reason why people liked followers in the past is because people saw things for free, quote unquote free.

23:27So it was a means of distribution at one point. Here's what's changed. Number one, there's lots of bots. So maybe 30 % of the followers aren't actual people. Number two is you don't really know who they are. Where are they? You don't really know who the followers are. Number three, you only see 10 % of the followers. so when you if you have a million followers as a successful influencer and you share a piece of content about the this show only 10 only 100 000 people of those followers are going to see it not a million so it is an unreliable form of distribution and it shouldn't be used as a gauge for um whether uh influencers are valuable or not there that that's different than shareability okay shareability is driven by really two things one is is the person a celebrity that doesn't mean you have a lot of followers that you're a celebrity and just because you're a celebrity you may not have a lot of followers celebrity is a separate thing celebrity is a big driver of shareability the other part of shareability is number one is is it controversial brands don't want to be controversial right second is is it funny usually funny on the internet is almost always at the expense of someone else so okay now look i don't have any science behind what i'm saying steve it's just i'm a consumer social media and i know what gets shared and what gets propagated by the algorithm and it's usually something controversial or something funny at the expense of another person and neither of those things are acceptable to cmos right go to go viral now look there are exceptions right and those exceptions are amazing the exceptions are amazing and those are basically hits i call them hits right so you're in the you're in the music industry you got to make 15 songs for one hit and and so the if you want to be in the a virality space, right?

25:38You got to be in the hit business and the hit business is unpredictable and very hard to do unless you're Rick Rubin, right? If you're Rick Rubin, you can rip out hits and there's like four Rick Rubins in the world and none of them are in the advertising.

25:56So this is my case for coupling compelling creators with predictable paid media, right? Because you're in business and you're not in the music business and you're on the entertainment business, which accounts for hits. You're in the credit card business of the banking business or the insurance business, right? Or in the e-commerce business and you need to sell things every single day. So you can't leave it. You can't leave it to chance. So what metrics do you – should replace follower count? That's like kind of the North Star when a brand is selecting a creator. Well, I think, look, some followers shows that you can put a sentence together and you can tell a good story, right?

26:39So some followers is a good indication, but that's not the benchmark for how much we're going to pay you. The way you select creators is based on their, can they tell a good story? What's their aesthetic, right? It's easy to really understand their aesthetic. What's their expertise? Do they know a lot about knitting? Or do they know about fly fishing? Or do they know about interior design? Like, what's their focus? It's more qualitative. Okay. And then there are AI. We built an AI to make sure that these people are legitimate. Sure. And then we're also using AI to make sure that they're staying within the bounds of the compliance requirements of whatever brand we're working for.

27:22So that's necessary. By the way, this might be the longest I've gone in a recording that those two letters have not been brought up. AI. Oh, yeah. I mean, it's important. Of course it is. We use it. Everyone's using it. You've got to use it. You know, it's integrated into our platform. There's not many processes inside props, our company that does not use AI. But there is, you know, we're, we're, we're, our approach, our attitude, I don't know if this is your question, but our attitude was let's use it so that high value people can stay focused on high value target, high value tasks. I like that.

28:04Like curation. Yeah. You know, creator curation is very, very important. It's high value. It requires taste, you know, like an editor of a magazine needs to have taste. And these, you know, these people are important people. And, you know, we recruit them from the best in the business. And we invest in them because they have a sensibility. Right. And we're counting on that sensibility. We're going to use AI, right, to do all the grunt work. Of course, which makes them even more productive. It does, yeah. All right. It's time for some fun. it's time for the random five if you've heard any of my episodes do i what do i have the helmet on or something yes what do i have to do yes and you cannot get out of this these are five personal questions okay so the audience gets to know you better here we go number one before you led or did anything in marketing what did what did you think younger you're going to be when you grew up did you have anything when you were a kid oh when i was a kid what did i think i was going to do yeah what did you want i just when i was a kid i just wanted to be my dad i just wanted to have a nice car put nice suits on and go to new york city you know he was in the ad he was in the print advertising business in like the 60s 70s and 80s right so the heyday you had a mad man advertising in you know at the latter end of the madman field yep was an amazing sales guy was wonderful, had great relationships with people, you know, drove into the city, wore Paul Stewart suits.

29:41So when I was a kid, I didn't, I had no idea what my father did, but I was like, I don't know. I want to have a gold American Express card, drive a Cadillac Eldorado, you know, wear Paul Stewart suits and go into the New York City and schmooze with people. Oh my God. That's what I wanted to do. That's awesome. And I think I might know the answer to this next question, but maybe not. Okay. Who is one person outside of work who shaped how you lead or how you show up? Is it your dad? Outside of work? Yeah. Yeah. I mean, it was definitely my dad, without a doubt. And then having sons, having two sons shaped sort of you have to sort of take what you think is natural.

30:25And then you have to like put it into words and put it into action. and and when i had sons i sort of realized what kind of man i was and i didn't really know until i had kids and i had to like set the right example right and and so you know it's not quite answering the question but definitely my dad in terms of not work you know in terms of the not professional space my dad and also his friends who i played golf with when i was like 18 19 or 20 years old his friends were universal in their wish that they had started their own company wow they were young about that they were all successful guys all wonderful i grew up in north jersey they were all amazing guys great family men lovable successful and they all said i wish i had started my own company because they were getting to the age where they you know i see it today you know they were getting to around 50 they were all sort of highly paid and you know their necks were on the chopping block in big corporations yeah and so i never steve i never forgot their faces when they said they wish they had started their own company that's powerful yeah that really is and you probably didn't realize it at the time but as you got older and you started your own company that entered your subconscious for sure yeah and my father never did either you know he he was very successful as uh you know print sales guy right in new york city extremely and made a wonderful living like sent us all the i went to private school my sister and brother went to college he paid for everything yeah had a great childhood um but he didn't own the company different generation yeah totally different generation my father was the same way Yeah, same way.

32:21Okay, next one. What's a book, show, or movie that everyone swears is brilliant and you secretly think is overrated? I thought you were going to ask me what is brilliant. That's too easy. What's overrated? What is overrated? You're going to have to edit out all my thinking here, Steve. That's okay. I think today magazines are overrated. Magazines in general. Yeah. They were once a source of knowledge that came close to books. Interesting. Okay. And they are no longer a good source of knowledge with the exception of some good, you know, magazines like The Economist. Right. is probably still good.