Influence Weekly #331 - Potential TikTok Buyer Wants To Ditch The App's "Secret Sauce" Algorithm

Influence Weekly #331
April 4th, 2024
Executive Summary
  • TikTok Shop's Era of Super Subsidies Is Ending
  • Swedish It Girl Matilda Djerf Takes Over NYC With Haircare Empire's Pop-Up Salon
  • Potential TikTok Buyer Wants To Ditch The App's "Secret Sauce" Algorithm
  • Inside Pinterest's Big Coachella Partnership To Stay Trendy
Great Reads

Move Over Verizon, AT&T, Creator Owned Mobile Networks That Connect Fans To Their Favorite YouTubers? This Company Plans To Make That Happen
"A new startup called PassionFruit aims to enable creators with large followings to launch their own branded mobile networks, tapping into the lucrative wireless services industry.

Co-founded by Matthew Hewston, David McElligott and YouTuber Dan Malone, PassionFruit wants to be the leading platform for these ""creator-led mobile networks."" The idea is for influencers to effectively become the brand and distribution channel for wireless services, bundling unique content and fan experiences.

PassionFruit partners with creators, leveraging their audience data to estimate revenue potential. The company facilitates network branding, subscriber acquisition, and developing exclusive offerings like game sessions or live streams for fans who sign up.

The startup is pitching creators on the recurring revenue model of mobile networks and potential for high customer retention rates among loyal fanbases versus one-off merch sales. PassionFruit operates as a mobile virtual network operator, negotiating wholesale wireless access from major carriers.

While still in its earliest stages, PassionFruit has initiated conversations with interested telecom partners and creators across different verticals. It is closing an angel funding round to onboard an initial wave of influencer mobile networks in the coming months.


Spotify Just Stepped Into The Billion Dollar Online Course Market With This UK Video Expansion
Spotify is testing a significant expansion into video-based online courses through a new offering launched in the UK. The audio streaming giant has partnered with educational tech companies BBC Maestro, PLAYvirtuoso, Skillshare, and Thinkific to bring purchasable video courses directly into its platform.

UK users can now find courses across categories like music creation, creativity, business skills, and healthy living alongside Spotify's existing audio content. Users can trial at least two lessons per course for free before deciding to purchase remaining videos.

The move sees Spotify stepping into the booming online course market, estimated to surpass $1 billion in value by 2025 as learners seek affordable, convenient digital education. Around half of Spotify's premium subscribers have engaged with educational podcasts, signaling audience demand.

Spotify's VP of Product Development cites providing both users and creator partners expanded opportunities as the key driver behind testing video courses. Learning-focused users gain seamless access to high-quality video lessons, while creator partners can potentially reach Spotify's massive audience.

The expansion exemplifies audio streaming platforms evolving into multi-dimensional educational and creative hubs beyond just music and podcasts. For businesses in the creator economy, it signals robust demand for diversified digital learning offerings spanning video, audio, written materials and more.


Social Messaging Platform Discord Is Pushing Targeted In-App Ads In A Bid for Revenue
Social messaging platform Discord is pushing into targeted in-app ads in a bid for new revenue. Originally designed for gamers, Discord will now display ads from game studios and developers through its Sponsored Quest system where users complete tasks while friends watch to earn rewards. The ads will target users based on gameplay habits, age, and location.

Discord is hiring over a dozen staffers for the ad initiative as it looks to diversify beyond its paid Nitro subscription which offers enhanced features. With over 200 million monthly active users as of March, the push into advertising opens up a new monetization stream for the $15 billion valued company that had previously explored acquisition opportunities.
Campaign Insights

Meta Claims Instagram's New Feature Boosts Sales 10%+
Meta has launched a new advertising capability on Instagram called "Ads with Promo Codes" globally. The feature allows brands to include redeemable promotional codes directly in their Instagram ad captions to drive sales.

This seamlessly integrates the path from product discovery to purchase within Instagram. Users can now go straight from viewing an ad to checking out with a discount, without having to hunt for codes elsewhere.

For brands, promo code ads provide enhanced attribution to track sales conversions from paid Instagram posts. Access to redemption data on unique codes gives clear insights into how effectively ads translate to real purchases.

Meta cites promising early results, with advertisers seeing a 9.1% median reduction in cost per purchase and 10.1% median increase in conversions using the new format.

The launch aligns with larger industry shifts around social commerce and influencer marketing proliferating on Instagram. It opens promo code capabilities to Instagram's over 1 billion monthly active users.


Inside Pinterest's Big Coachella Partnership To Stay Trendy
Pinterest is making a major play to cement its role as the go-to destination for festival fashion and beauty inspiration through a new partnership with Coachella.

The image-sharing platform sees tens of millions of searches related to Coachella each year, with Gen Z users driving 40% of that interest as they seek self-expression through style.

For 2024, Pinterest predicts aesthetics like "Lana Del Rey core," "fairycore," "dark feminine" and a nostalgic "2014 core" revival will trend. The company partnered with celebrity stylist duo Chloe and Chenelle Delgadillo to curate shoppable festival fashion boards utilizing new sharing features.

But Pinterest is taking its Coachella activation further with the "Pinterest Manifest Station" - an on-site experience spanning both festival weekends allowing visitors to explore self-expression through photo ops and beauty/styling activations.

Pinterest's VP of Global Consumer Marketing highlights how the platform aims to help users "navigate those trends" from the inspiration phase all the way through shopping looks.

The Coachella partnership represents a major investment for Pinterest to position itself as an authority and commercial driver of cultural moments, starting with the trendsetting festival season. 


Texas Cracks Down On Political Endorsement Of Social Media Influencers
Texas is cracking down on undisclosed paid political messaging by social media influencers and online creators. The state's Ethics Commission has given initial approval to a new rule that would require influencers to disclose if they are being compensated for sharing or creating political ads and content.

The move comes after a 2022 report revealed a secretive firm called Influenceable LLC paid influencers, some with millions of followers, to voice support for the state's embattled Attorney General Ken Paxton ahead of his impeachment trial. Influenceable has ties to prominent Republican groups and digital marketing firms.

The firm allegedly offered some creators $50 to share specific pro-Paxton posts accusing his critics of a "witch hunt." Influencers then did so without disclosing they were paid. The tactics sparked outrage from some Republicans over the covert influencing tactics.

As misleading political influencer campaigns proliferated in the 2024 election cycle, calls grew for more transparency around paid online endorsements. The proposed Ethics Commission rule aims to shed light on these practices by requiring clear disclosure when influencers are compensated for political messaging.


How YouTube Sensations Brought Universal Appeal To Smoothie King's New Limited Edition Drink
Smoothie King has teamed up with YouTube sensation Dude Perfect to launch a new limited-edition "Dude Perfect Smoothie" nationwide. The collaboration blends the nutrition expertise of Smoothie King with the massive online following and family-friendly appeal of the five Dude Perfect stars.

The smoothie itself features the superfood blue spirulina along with pineapples, bananas, apple juice blend, protein, frozen yogurt and turbinado. It provides 14 grams of protein, antioxidants and omega-3s while adhering to Smoothie King's strict "No No List" of over 75 banned ingredients.

The five Dude Perfect members created smoothie recipes and had one selected by Smoothie King's R&D team for the nationwide limited-time offering. With 60 million YouTube subscribers and nearly 16 billion total views, Dude Perfect brings major star power to market the new drink to its global fanbase of all ages.

For Smoothie King, partnering with digital creators offers a way to connect its functional nutrition products with younger, mobile-first audiences. The promotion includes behind-the-scenes videos, collector's cups, exclusive merch and a $10,000 sweepstakes.

The partnership highlights how food and beverage brands are leveraging influencers' authentic content and digital reach to drive product launches and cultural relevance with modern consumers.


E.l.f. Creates Original Song to Celebrate First-Ever TikTok Shop Super Brand Day Sale
E.l.f. Cosmetics is making waves in the creator economy by becoming the first brand to be featured in TikTok Shop's Super Brand Day sale. From March 31st to April 3rd, the brand will take center stage on the popular social media platform, marking a year since its adoption of TikTok Shop.

The Super Brand Day coincides with E.l.f.'s 20th anniversary celebration and will showcase its newest product - the $10 Power Grip Dewy Setting Spray. In a unique marketing move, E.l.f. has written an original hip-hop song detailing how to use the setting spray, set to debut during the event.

Kory Marchisotto, E.l.f. Beauty's Chief Marketing Officer, expressed excitement about this disruptive campaign uniting product launch, original music and TikTok Shop presence. Customers spending $15 or more will receive a free Power Grip Primer Mini.

Nico Le Bourgeois, Head of TikTok Shop U.S. Operations, praised E.l.f's creative engagement with the TikTok community. The Super Brand Day allows E.l.f. to further build on its success as an early TikTok adopter in the creator economy space.


Influencers are Japan's secret weapon to promote niche tourism spots
Japan is using influencers as a secret weapon to promote niche tourism spots and alleviate overtourism issues in major cities like Tokyo and Kyoto. With social media being a top source of travel information for foreign tourists, government agencies like the Japan National Tourism Organization are partnering with popular influencers to spotlight off-the-beaten-path destinations.

Well-known influencers like South Korean YouTuber Chomad have featured places like the Ama Hut seafood grill run by female free divers in Mie Prefecture. Beijing-based Chang Feifei, who promotes Japan to millions of Chinese followers, has discovered hidden gems like Hida beef in Gifu through brand campaigns.

By getting influencers to show their authentic experiences in rural areas, Japan hopes to steer travelers away from overcrowded hotspots while revitalizing dwindling communities. The strategy leverages influencers' perceived authenticity and ability to inspire their niche audiences.

As influencer marketing takes off globally, Japan is at the forefront of utilizing it to reshape tourism flows. For businesses in the creator economy, Japan's strategy offers valuable lessons on partnering with influencers to achieve marketing objectives beyond just product promotion.


Influencers Chosen To Unveil KitKat's New Flavors In Hershey's Marketing Move
Confectionery giant Hershey's has embarked on an influencer marketing strategy to promote its latest product novelties like the new KitKat flavors Apple Pie, Key Lime Pie, and Birthday Cake. The company has selected influencers who genuinely enjoy its products to share authentic experiences with audiences.

The Hershey Company has not historically been very active with the influencer world, said Jessica DuQuesne, Brand Managery. We leveraged influencers because we wanted to share something new and exciting, and make sure everybody could hear the news about the KitKat flavors.
Interesting People

Swedish It Girl Matilda Djerf Takes Over NYC With Haircare Empire's Pop-Up Salon
Swedish influencer Matilda Djerf is bringing her fashion, home and newly launched haircare brand Djerf Avenue to New York City for a one-week pop-up experience.

The temporary retail space in SoHo opens today through April 2nd, featuring expanded shopping areas to browse Djerf Avenue's apparel and home goods compared to last summer's successful pop-up.

But the main draw is a full salon setup with Dyson tools where visitors can experience the brand's new vegan, eco-friendly haircare line - the On the Go Styling Gel and Breezy Styling Mist. Djerf's signature hair has generated viral interest on TikTok, making haircare a natural brand extension.

The influencer aims to create an elevated consumer experience after last year's event saw long lines. Amenities include custom dressing rooms and Scandinavian minimalist decor mirroring Djerf's Stockholm home.

While no permanent retail plans are set, Djerf remains open to brick-and-mortar as pop-ups continue building rapport with consumers through immersive brand activations.


Potential TikTok Buyer Wants To Ditch The App's "Secret Sauce" Algorithm
Former U.S. Treasury Secretary Steven Mnuchin is assembling investors to potentially buy TikTok, but his plans to ditch the app's core algorithm are drawing skepticism. Mnuchin aims to acquire TikTok within 180 days before a U.S. ban takes effect, as proposed in a bipartisan House bill citing data security concerns over the Chinese-owned app.

However, Mnuchin intends to rebuild TikTok from scratch using U.S. technology without its original recommendation algorithm - the "secret sauce" driving the app's viral success. He claims this proprietary Chinese code cannot be included due to export restrictions.

But experts doubt whether replicating TikTok's algorithm, which major tech giants have struggled to match despite massive investment, is feasible in Mnuchin's ambitious 6-month timeframe. One source told The Washington Post "It can't be done in 180 days - or even years."

TikTok's parent ByteDance spent years refining the algorithm to accurately predict user interests and serve an addictive infinite video feed. This technology is considered TikTok's most valuable asset underpinning its massive popularity and user engagement among over 170 million U.S. users.


How UK's Influencer Collective The Sidemen are setting their sights on food
The Sidemen, a hugely popular YouTube influencer group with over 150 million subscribers, are making a major push into the food industry. Following the wild success of KSI's Prime Hydration drink with Logan Paul, The Sidemen have launched a healthy cereal brand called Best and a meat snacking brand called Sides in the UK.

While The Sidemen's lighthearted content is aimed at youth, their business is dead serious. Their videos get over 300 million views per month. Brands like Prime showcased their ability to drive huge demand through personal connection with fans.

Long-term success isn't guaranteed, as Prime's sales have dropped since its peak. But The Sidemen aim to sustain momentum through constant innovation, with plans to expand Best Cereal into tableware and baked goods based on fan feedback.

Not everything they launch will endure, but The Sidemen's unparalleled reach and experimentation-driven approach give them serious potential to create hit food products. For these new "pop stars", food is no mere side gig - it's core to their business ambitions.


Vtubers are doing 'next level stuff' on Twitch, says streamer who invites viewers to help break his Helldivers 2 streams
Twitch streamer "Shindigs" is pushing the boundaries of interactive livestreaming by integrating creative features that let viewers help shape his broadcasts. In a recent stream of the game Helldivers 2, Shindigs' Twitch chat became "Bug Twitter" - a parody social media feed for the game's alien bugs, with viewer messages popping up on screen.

Shindigs, who streams using a virtual avatar, spends hours before each broadcast hooking Twitch chat into various programs to enable interactive elements. Viewers can use Channel Points to trigger in-game effects that alter the stream. Shindigs says this interactivity helps the audience feel they are "co-creating" the experience.

Other innovative streamers, especially those using virtual avatars, have also been finding novel ways to involve viewers, such as building RPG towns staffed by Twitch chatters. Shindigs regularly highlights these boundary-pushing creators and says seeing viewers recall participating in streams from long ago motivates him to keep exploring interactive possibilities. He has plans for longer story arcs and integrating live music into future streams.



 
Industry News

Competition Heats Up: Commerce Startup Flip Secures $144 Million in Funding in Its Bid To Take on TikTok and Amazon
Social commerce startup Flip raised $144 million in funding led by Streamlined Ventures, valuing it at $1.05 billion. The round includes a $50 million investment from ad firm AppLovin. Flip is an online marketplace with product review videos from real shoppers who've purchased the brand-name items featured.

Founder Noor Agha positions Flip as "the last honest place" showcasing authentic customer reviews. Reviewers earn money from video views and sales. Flip occupies a niche between Amazon's vast selection and TikTok's social shopping feed, targeting more affluent consumers. For AppLovin, the investment allows expansion into e-commerce, leveraging its AI ad tools to drive Flip's growth quickly as competition intensifies among Flip, TikTok, Amazon and others in video-driven social commerce.


Over 14 Million Engagement Signals Analyzed: The Platforms Where Top Brands Win (And Why)
Exclusive data from influencer marketing platform Captiv8 reveals contrasting engagement patterns across Instagram and TikTok after analyzing over 14 million engagement signals.

On Instagram, a clear inverse relationship emerges - as an influencer's follower count rises, their engagement rate falls. Nano-influencers under 10,000 followers boasted the highest engagement rate at 6.23%, underscoring the value of tapping micro-influencers' niche but highly engaged audiences.

In contrast, TikTok's "All-Star" influencers over 1.5 million followers enjoyed heightened organic reach with a 4.95% average engagement rate. Larger followings don't necessarily reduce TikTok engagement, likely due to top creators' consistent posting cadences.

The data also benchmarked engagement across industries. QSR, automotive and retail brands thrived on the highly visual, youthful TikTok. Instagram's emphasis on aesthetics made it ideal for fashion, beauty and educational finance content.


"Shorts Changed The Game": How YouTube's Billion-Dollar Bet Is Paying Creators
YouTube's Shorts feature, which allows creators to share videos under 60 seconds, is rapidly emerging as a major monetization opportunity.

Just one year after introducing revenue sharing for Shorts through the YouTube Partner Program, over 25% of monetizing YouTube channels are now earning income from the short-form video format.

Several top creators are already seeing substantial financial gains from Shorts, in some cases covering full-time income or production costs:

Over 80% of new creators joining the Partner Program via Shorts viewership thresholds are going on to monetize their long-form YouTube content as well through ads, fan funding, and more revenue streams.


New Influencer Marketing Impact Report Reveals Which Strategy Is The Best Bang For A Brand's Buck
A new report from influencer marketing platform Traackr reveals the latest trends in how U.S. consumers engage with social media content and influencers for product research and purchases.

While legacy platforms like Instagram, Facebook and YouTube remain dominant, consumers prefer different platforms for different activities - using YouTube for product research, but making more purchases through Facebook and Instagram.

Short-form video under 3 minutes is the most engaging content type, peaking at 75% of respondents. Live streams also ranked highly, signaling growth potential.

Humor resonates best for driving interactions like comments and shares. The report cites L'Oreal Paris using humorous TikTok creators to promote men's hair products.

Consumers value feeling a sense of community and consistency in their social experiences. Over half would try a new platform if a trusted influencer posted there.

For purchases, fashion is the top category on social, followed by beauty and home goods. Key priorities are product quality, affordability, sustainability and ethical values aligning with consumers' own.

However, creators may face monetization hurdles - only 41% would pay influencers directly for content, while 56% would buy an influencer's own product brand.


TikTok Shop's Era of Super Subsidies Is Ending
TikTok Shop, known for its ultracheap prices and subsidies to sellers, is increasing fees for sellers starting today. The fees, which were previously 2 percent of the order price, will now be raised to 6 percent and will further increase to 8 percent in July. This move marks a crucial moment for TikTok Shop and its users, potentially resulting in higher prices and testing shopper loyalty to the platform's ecommerce offerings.

TikTok Shop gained popularity among influencers and entrepreneurs, surpassing competitors like Shopify and Amazon in terms of seller growth. However, the platform has been criticized for hosting deals that seem too good to be true, often featuring deeply discounted and potentially counterfeit products. By raising fees, TikTok Shop aims to demonstrate its sustainability and long-term viability. Smaller businesses that have benefited from the platform's incentives may face challenges if fees continue to rise. While TikTok Shop's fees are still lower than those of Amazon, the platform's unique model relies on capturing users' attention through loud and engaging pitches.


Less Than A Year After Launching, Podspace Becomes Sweden's Second Biggest Podcast And Ad Network
Just under a year after its launch, the podcast distribution platform and marketplace Podspace has become the second largest podcast and advertising network in Sweden. According to data from Poddindex, Podspace saw 21% growth in unique listener reach in 2023, significantly outpacing the 13% average growth across major platforms like Acast, Bauer Media, and Swedish Radio.

This rapid expansion has pushed Podspace past 1 million weekly unique listeners, solidifying its position as one of the Nordic region's podcast leaders. Podspace CEO Carl Fridsjö credits the company's focus on serving large enterprise publishers, along with a flexible and results-driven strategy, as keys to their success in the mature Swedish podcast market.

Fridsjö stated "Rapid growth in a mature and competitive market is a testament that Podspace has a unique offer. The key has been our recent decision to focus the platform and our services primarily towards large enterprise publishers, combined with a flexible and results-driven approach." 
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TikTokers say 'challenges' are one of the platform's 'best-kept secrets' for creators, paying some 10s of thousands in a month - Business Insider
TikTok's Creative Challenge allows creators to submit user-generated ads for brands on the app and earn a share of the ad revenue based on performance. Creators can also unlock cash bonuses from TikTok of $300 to $1,000 for participating. The program, which opened up more broadly last year after being invite-only, is emerging as a lucrative income stream for some TikTokers.

Multiple creators told Insider they are earning tens of thousands of dollars per month from the program. One couple said their Challenge earnings helped eliminate credit card debt and save for a house down payment. There is a learning curve, as creating effective ads for brands requires different skills than organic content.

Online communities and TikTok-sponsored mentors are helping more users learn the program's strategies. Creators who coach others on making Challenge ads say understanding marketing and thinking like a brand is key to success. As TikTok adds more brands, it needs a steady influx of new creators to produce ads, incentivizing current users to spread awareness through mentorship opportunities.


Snapchat's Friend-Ranking Feature Adds to Teen Anxiety - WSJ
The Snapchat+ friend-ranking feature, which allows paying users to see their position in their friends' digital orbits, is reportedly adding to anxiety among teenagers. Snapchat+ subscribers can check where they rank with specific friends based on communication frequency, and the result is displayed in a solar-system metaphor. This feature has caused distress among teens who place significant value on their friendships and are affected by the rankings.

Some teens have experienced relationship issues and heartbreak when they discover they rank lower than expected. The feature has led to friendships breaking apart and has even prompted some teens to sign up for Snapchat+ to check their status with a crush. While the feature can be turned off, it is on by default, and concerns are being raised about its impact on young people's mental health. The effects of social media on youth mental health have been the subject of attention from lawmakers, doctors, and parents, with efforts being made to better protect minors on social media platforms.


How The New York Times is using visuals to boost podcast discovery and grow listenership - Digiday
The New York Times is utilizing visuals to enhance podcast discovery and grow listenership. The newspaper is experimenting with images and videos on platforms like YouTube and its own audio app to promote its podcasts and attract new listeners. The strategy involves using episode-specific artwork on audio platforms and the Times' audio app, allowing for graphics and photography relevant to each episode's topic. This approach aims to make the podcast content more visually appealing and engaging.

Additionally, The New York Times plans to incorporate more video content into its audio app, similar to how short animation clips appear in its core news app. The newspaper has already posted fully-filmed episodes of some podcasts on YouTube, recognizing the platform's potential for viral hits. While the growth in podcast listenership has been continuous, The New York Times acknowledges that it takes time to build a substantial audience and emphasizes the importance of consistent weekly shows to establish listener habits. The newspaper also plans to promote its audio app and new podcast shows within its core news app to further expand its reach.

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