Word-of-mouth marketing for a digital age: Can BrewDog founder’s new venture change the game?

Here’s how it works. Anyone can buy a product, post about it, then claim a cash reward via the new Social Tip platform.

‘Real people trust real people over slick advertising and sponsored content,’ is the philosophy of the new Social Tip app.

Social Tip has already partnered with more than 30 brands such as CBD drinks brand TRIP and gym chain PureGym ahead of its launch this summer.

Shaking up influencer marketing

James Watt stepped down from his role as CEO of BrewDog last month after 17 years building up the globally-successful Scottish craft brewer.

This week, he's announced his next project: Social Tip, which aims to shake up the £24bn influencer marketing scene with an AI-based algorithm to reward ‘genuine, loyal fans’.

Social media users can post about a brand, and are then rewarded according to the level of engagement with their post.

The venture has been inspired by BrewDog’s own marketing success: where it was the brand's consumers that built up a cult following.

"This new business builds on everything I have learned from almost two decades at the cutting edge of marketing whilst building BrewDog," said Watt.

"None of the wildest campaigns, craziest stunts or cleverest advertising even came close to the brand building power of genuine peer to peer recommendations.

"Authentic brand love trumps any other form of marketing, and community is increasingly becoming the cornerstone of any winning strategy."

Trust in advertising at 'all-time low'

People are 41 times more reliant on recommendations from people they know compared to influencers or sponsored content when making purchasing decisions, says Social Tip.

Conversely, trust in brand advertising is at an ‘all-time low’: 69% of consumers say they distrust advertising.

Social Tip is about engaging everyday social media users – including those with private accounts – and rewarding them for shouting out their favorite brands.

Social Tip's theory goes like this: it's far more effective to give actual customers £10 each to create 500 posts about a product, than to give one influencer £5,000.

And the icing on the cake is the money goes to loyal consumers, rather than marketing firms or flaky influencers.

"At the end of the day, people don’t trust adverts, they don’t trust influencers or marketing," said Watt. "They trust people they know."

And it also plays into consumers’ desire for authenticity: through authentic images and opinions.

Haatch, a pre-seed-fund specialist and one of the investors behind the new company, observes that social media plays an integral part in influencing purchases.

"Our attraction to investing in Social Tip is threefold," said Fred Soneya, Haatch co-founder and partner. "Trust in paid advertising continues to fall, rewarding verified purchases who share on social creates significant ROI for the brand while continuing to build loyalty with customers, and backing the B2B platform which is distributed by the largest brands is the scalable strategy."

Genuine reviews?

Watt says that celebrities and influencers have lost their credibility. In fact, his idea takes marketing back to basics.

“This is good, old-fashioned, word of mouth marketing: but amplified for the digital age and inherently scalable,” he explains.    

However, people will be paid for their word-of-mouth advertising: blurring the line a genuine post and an advert.

But Watt says the key difference between advertising and his style of marketing is that people have chosen and paid for the product to start with, and only then are they offered a ‘small retrospective discount' if they then compile a qualifying post (users claiming a reward have to prove they purchased the product).

“As they have bought the item themselves, this makes their view very genuine,” he said. 

At this early stage, the company does not specify what will qualify as a rewardable post: although Social Tip’s guidelines does state that a user has to ‘post positively’ about a product to claim a reward.

Seeking investment

Dragons' Den -  the British version of Shark Tank - famously turned down BrewDog back  in the brewers early days. 

Now James Watt is challenging the Dragons to back his next venture. 

But the app will also follow BrewDog's equity crowdfunding model: where individuals can buy shares in a company they like (similar to venture capital investments but accessible to smaller investors).

The share price and valuation will be listed on Crowdcube.