By Davit Kirakosyan
Goldman Sachs estimates that the creator economy currently represents a $250 billion TAM and has the potential to achieve a CAGR of approximately 14% from 2022 to 2027. This would result in a TAM of approximately $480B by 2027.
The bank identified 3 primary vehicles for monetization in the creator economy: (1) ad revenue sharing, particularly for ad-supported short-form videos; (2) brand-direct deals, including influencer and affiliate marketing, and (3) audience-directed monetization through tipping, subscriptions, and similar methods.
The firm believes that the platforms that are most well-positioned to attract creators and capture market share are those that offer multiple monetization options, such as ad-supported revenue-sharing programs like YouTube's Partner Program, on-platform influencer marketing facilitation like Meta Platforms Inc's (NASDAQ:META) Creator Marketplace, and direct monetization tools such as tipping and gifting features.
Regarding ad revenue share, the firm predicts that the growth of short-form video content (both in engagement and monetization) will drive expansion in this market segment over the next several years.
Goldman estimates Instagram Reels' revenue to grow at approximately 63% CAGR from 2022 to 2027, increasing from around $1.8B in 2022 (representing roughly 4% of total IG ad revenue) to approximately $4.0B in 2023 (around 8%) and $20.5B in 2027 (approximately 23%).
In the case of Alphabet (NASDAQ:GOOGL), the firm estimates that YouTube Shorts will generate roughly $750 million in revenue in 2023 (about 2.5% of total YouTube Ads revenue) and achieve a CAGR of around 98% from 2023 to 2027, reaching $11.6B in 2027 (approximately 26% of total revenue).
Goldman highlighted Meta, Alphabet, as well as Amazon (NASDAQ:AMZN), Spotify (NYSE:SPOT), and Roblox Corp (NYSE:RBLX) as the most exposed to the secular growth dynamic and thematic components of the creator economy over the medium-to-long term.