Influencer marketing is on the rise. According to the State of Influencer Marketing report published by Linqia, 94% of marketers that have used influencer marketing found this as an efficient way to promote awareness around their brand.
However, while influencer marketing has proven itself to be an effective strategy for many businesses, marketers and business owners are quickly learning that it is not without its challenges. One of this is figuring out the right price to pay influencers, especially after Digiday ran an article where one marketing executive admitted that they realized too late that they spent too much for their influencer marketing campaign.
As a business owner, I know exactly how frustrating and disappointing that can be. That’s why I’ve written this post to help you know the things you’ll need to consider so that you can set the right price for your influencer marketing campaign.
Common Influencer Marketing Pricing Models
Pay Per Post
Also sometimes referred to as a la carte pricing, this pricing model compensates the influencer based on the number of posts that he or she creates for a brand. This can be in the form of a blog post, a tweet, Instagram photo, or a Youtube video.
The rate influencer charges using this pricing model depends on the type of content and their number of followers. Below are the current average rates an influencer may charge for a single post.
Although this pricing model can eventually be the most expensive option long-term, paying an influencer based on the number of posts created is a good option if you’re new to influencer marketing and would like to do a test run on how well the influencers you’ve chosen will help you reach your business goals.
Another pricing option commonly used when working with influencers is to offer them a fee for a specific number of posts across different channels. Typically, this type of pricing is done with influencers that own a blog and multiple social media accounts.
Below are average bundle pricing rates for one blog post and two social media posts.
This pricing option is best to offer to influencers with whom you've worked with in the past, and have gotten outstanding results. Some startups and B2B marketers also consider this an excellent option to use if they're looking for a more holistic influencer marketing campaign that would reach a broader range of audience.
Cost Per Engagement (CPE)
This pricing option is best used with influencers that own either own a blog or are active on a social media channel that gives provision for clickable links like Facebook, Twitter or LinkedIn.
Unlike the first two pricing models, CPE doesn't pay influencers upfront. Instead, they are offered a commission based on the number of conversions that the post they created makes. This can be either a newsletter signup, request for a demo or trial or an actual sale.
Factors That Affect Influencer Marketing Price
If you want to get influencers to work with you, you need to make sure that they're adequately compensated. If you offer a rate that's too low, the influencers will feel that they are being taken advantage of, and would not be willing to work with you. On the other hand, paying too high of a sum would mean that you may not hit your expected ROI.
There are six different factors affect an influencer marketing's price tag. Let's take a look at each of them more closely.
1 Influencer’s Audience
The first thing that you need to consider when determining the rate you’re going to offer to an influencer is his or her audience.
Most marketers merely focus on the number of followers an influencer has. While this is important, it's crucial that you pay careful attention on their followers' demographics and how well do they align with your buyer persona.
2 Influencer’s Affinity With Your Brand
As we mentioned earlier, choosing an influencer who is already an avid user of your product or advocate of your cause can be very advantageous to your business. Not only will they be able to create content that looks and sounds exceptionally genuine, but they'll also be willing to produce content for you at a much lower rate compared to those that have not tried or heard about your business or your products. Some who are incredibly loyal to some brands that they would even be willing to create content in exchange for free products or services or even for free.
Using an influencer marketing tool like Gatsby.ai can help you search your customer database for micro- and nano-influencers that you can connect with and offer an opportunity to collaborate with you.
3 Influencer’s Level of Engagement
Another factor to consider when determining the price to offer an influencer is the level of engagement the influencer has with his or her followers. How often does the influencer you've chosen to work with publish posts on his or her blog and social media accounts? Does he or she publish once a week or several times within the day? Knowing this is crucial since it will determine whether or not the post produced for your business will have enough time to be seen by the influencers' followers to generate results.
At the same time, you’d want to also look at how the influencer interacts with his or her followers, especially when it comes to answering questions. An influencer that takes the time to answer questions left by his or her followers on behalf of the brands that they work with deserve to be paid a higher influencer marketing rate.
4 The Content Produced
There are three things you need to look into when factoring in the content that will be produced by the influencer to the price that you’ll be willing to pay:
- The type of content the influencer will produce;
- How many pieces of content; and
- The quality of the content produced
If you want to make sure that the price you offer to influencers is fair and appealing, you need to make sure that the rate adequately matches the amount of work you require an influencer to do for you. "The amount of work rendered should be given the right compensation, especially if an actual testing, review, and write-up are required,” explains Mai Flores-Campos, a travel influencer based in the Philippines who runs a highly successful budget travel blog and shares her travel adventures on Instagram through her account @budgetbiyahera.
5 Usage Rights and Exclusivity
This is particularly true if you're planning to tap micro- and macro-influencers. That's because these are the types of influencers that have been used by various businesses in your niche, including your competitors.
Naturally, if you want an influencer to not take on offers from your direct competition, expect that you will need to pay them a significantly higher rate for the exclusivity.
6 Number of Platforms
Just as influencers are not created equal, so is the level of influence they have on different platforms.
Take Michelle Phan, for example. Her YouTube channel has close to 9 million subcribers.
Her Instagram account (@michellephan) on the other hand has over 2.1 million followers as well.
Belinda Selene, another beauty and makeup influencer, may have only 488K followers on YouTube, which is considerably smaller compared to Michelle Phan. She also has over 128K followers on Instagram distributed among her two Instagram accounts.
As a general rule of thumb, influencers that have considerable followings in more than one platform will command a higher rate compared to those that have a massive audience on just one platform.
Also, take note of whether or not the influencer's audience extends to traditional media like TV and radio. Getting exposure to these traditional forms of media can be extremely valuable for your brand, so expect that the influencer may assume a more premium rate.
The Challenges of Pricing Influencer Marketing Campaigns
Adding to the complexity of setting the correct price for influencer marketing campaign is the challenge faced by B2B marketers when it comes to figuring out the ROI of an influencer marketing campaign. In fact, 78% of marketers that used influencer marketing campaigns point to this as their biggest challenge.
Much of the problem in figuring out the ROI of an influencer marketing campaign lies in the challenge of determining how you should pay influencers that you reach out to for your campaign. That’s because many of the conventional practices in setting a marketing budget can’t be applied to influencer marketing.
Instagram’s Unclickable Links
B2B marketers and startup business owners are more accustomed to basing their marketing ROI on three pricing models: cost per thousand impressions (CPM), cost per click (CPC), and cost per acquisition (CPA).
For both CPM and CPC, B2B marketers and SaaS startup owners measure the success (or the lack of it) based on the post's click-through rate, which is the ratio between the number of times the post is clicked versus the number of times that the post is viewed. On the other hand, the success of the CPA is measured by the number of sales conversions made.
As you can see, each of these three pricing models is dependent on being able to direct those that view the ad to their website or landing page. While these pricing options may work if the influencer you want to work with owns a blog, it can be quite problematic if the influencer is more active on social media.
According to the 2016 Global Influencer Survey, 80% of micro-influencers use Instagram as their primary platform to create original and branded content.
Unfortunately, the links included in Instagram posts are not clickable, which makes it challenging to measure the success of these pricing models.
Followers Don’t Equal Impressions
One of the characteristics of a social media influencer is that they have a huge following. According to Isaac Lekach, CMO of Repped.io—one of the leading influencer marketing agencies today—micro-influencers are those that have between 10K and 100K followers on their social media accounts while nano-influencers are those that have 10K followers and below.
At first, these numbers look very promising. The reality is that the number of followers an influencer has doesn't equal the number of impressions that the branded content your influencer creates will get.
For starters, people own accounts on multiple social media sites. In the US, 56% of adults that use social media said that they have more than one social media account.
What’s important to point out here is that although the number of people using Instagram has grown to 32% in 2016, this is still a far cry from Facebook, which is the social media channel used by 79% of internet users.
Source: Pew Research Center
Also, not all of the accounts on Instagram are active, including those that are following influencers. In a report published in the Business Insider, as many as 30% Instagram accounts are inactive (posting only once a month or less). However, what's more alarming is the presence of fake followers. Nearly 8% of Instagram accounts are fake. Sadly, these counterfeit accounts find their way into the follower base of even celebrity influencers like Taylor Swift and Justin Bieber.
As a business owner, it’s understandable that you’d want to make sure that your campaigns will be worth the time, effort, and financial resources you invest. It’s for this reason why many startup business owners, and even B2B marketers from well-established companies, opt to go for performance-based pricing.
Just as its name suggests, performance-based pricing means that influencers aren't paid a flat fee upfront for the content that they produce. Instead, they are paid based on the results of the content they provide, whether that is getting their followers to sign up for a newsletter, avail of a free trial or buy your product or service.
The challenge here is that most influencers aren’t too keen on collaborating with businesses that will pay them based on the performance of their content. According to Mike Dossett, manager of the digital marketing strategy agency RPA, influencers are used to getting paid a flat fee to produce content based on their followers.
Business owners and B2B marketers view this as a considerable risk. So while there's no doubt that influencer marketing has its benefits, the asking price many influencers tend to expect from brands can be quite steep, especially among startups that have to make do with a very lean budget.
To Pay or Not to Pay?
Perhaps the most significant question brands face when embarking on an influencer marketing campaign is whether or not to compensate an influencer in the first place financially. That's because believe it or not; there are lots of micro- and nano-influencers that would be willing to produce and promote content for your business in exchange for free products and services. Many of these are those who are existing users of your products and services, so the content that they produce will come across as authentic and not "salesy."
While this may appear as a win-win arrangement between your business and the influencers you collaborate with, not financially compensating influencers does have its disadvantages. For starters, you have no control over the quality of the content the influencer will create for your brand. You can't review the content that the influencer will produce for you. Influencers will also not be in any obligation to share their data or analytics with you.
On the other hand, paying an influencer to promote your content gives you the ability to write up a contract listing your expectations from the influencer. This includes being able first to review the content the influencer produces before it's published as well as requesting for access to their data and analytics to get a clearer picture on how the post generated for your business' brand and products or services is performing. Financially compensating influencers you collaborate with will also make them feel more appreciated, and they will be more than happy to work with you long-term.
However, it's not without its disadvantages. For starters, you need to make sure that the influencers are clearly labeled the content they produce for you as sponsored posts based on FTC guidelines. Otherwise, you run the risk of not only getting penalized but also the reputation you worked so hard to build will be ruined.
Before Making the Final Offer
So far, we've talked a lot about the different influencer marketing models used, the various factors that affect the price, and the challenges businesses face when it comes to getting their ROI from influencer marketing.
One crucial question remains: how to ensure that your influencer marketing ROI is going to be worth all the effort. After all, creating an influencer marketing campaign is no small task. In fact, it can be an incredibly tedious process, especially if you're running a startup. That's why I created an influencer marketing guide that you can download to help you through this process.
You can check out my blog post on creating an influencer marketing campaign or download a copy of the guide to help you through the entire process.
The key here is to make sure that you partner with the right influencer for your business. Here are six things to consider before making your final offer.
1 Make Sure That Your Marketing Goals Are Clear
This, for me, is one of the main reasons—if not, the main reason—why many businesses struggle with measuring their influencer marketing ROI. As with other types of inbound marketing strategy, many marketers tend to approach influencer marketing without having a crystal clear goal of what they'd like to gain from this.
If you’ve been following my blog for some time, you know how much of an advocate I am when it comes to setting SMART goals. That’s because these types of goals make it easier to determine the metrics to measure when running your influencer marketing campaign.
For example, if your SMART goal for your influencer marketing campaign is to grow your business’ account’s social media following, you can check on the number of followers you’ve gained that came from the influencers’ social media account or blog as one of your key metrics.
Having clear marketing goals is also crucial when discussing the campaign with the influencer. You need to make sure that the influencers and you are on the same page. That way, you can lay down your expectations and terms clearly, especially on the aspect of getting paid.
2 Alignment to the Influencer's Brand
Influencers have worked hard to build their brand. Their followers have grown to expect that the content they put out consistently conveys the influencer's brand and message. Most—if not, all—of them are vigilant in protecting their brand so much that they are willing to turn down a high paycheck if they see that the product or service that they're being asked to endorse doesn't match with what they're advocating.
This was precisely the case with Kat Geronimo-Garcia, a health and wellness instructor and Instagram influencer based in the Philippines that has collaborated with prominent brands like Calvin Klein, Vitamix, and Under Armour through her Instagram account @bodybymamakat.
During an interview I had with her, I was surprised to learn that she turned down a 6-figure influencer marketing contract to work with another prominent brand in the fitness industry and instead chose to promote one that compensated her with free products a few years back. Naturally, I was curious to find out why.
Kat explained that the reason why she chose to turn down the contract was that of the product that she was being asked to endorse.
“The contract was for me to endorse an energy drink,” she explained. “My followers know me as a strong advocate of using all-natural products to stay fit and healthy. This product wasn’t. So even if the contract was a big one, I chose to go for the other one [that’s just offering me free products] because aside from it’s all-natural, my family and I use it.”
3 Understand Influencer Marketing is Long-Term
While it’s true that influencer marketing can provide immediate results, like a spike on your website traffic or social media account followers, you’ll only be able to get your ROI if you delve on this long-term.
A perfect example of this is the online retail store, Fashion Nova. It may seem that their rise to become one of the most popular brands because of Kyle Jenner’s infamous Instagram post.
Screenshot from Kyle Jenner’s Instagram feed
The truth is that Fashion Nova has been using the power of influencer marketing to promote its brand and products for three whole years. During this time, they collaborated with over 600 fashion influencers on Instagram, which include reality star Cardi B (@iamcardib) and fashion blogger Ivette Saucedo (@ivettesaucedo).
4 Have the Funds on Hand
In line with number 3, you need to make sure that you have a set budget to keep the influencer marketing campaign running. This includes not only the rates you'll pay to the influencers who will collaborate with you but also other aspects of the campaign that you'll need to invest in.
For many startups, this can sound pretty daunting, especially now that we know the average price range that influencers charge per post and for content bundles. This is why many choose to work with influencer marketing agencies like Repped.io that can provide them cost-effective influencer marketing solutions that yield results.
5 Be Willing to Trust the Influencer
If you genuinely want to get an ROI on your influencer marketing campaign, you'll need to be willing to give influencers the freedom to create the content they'll publish on their blog, or social media account for your business. Remember, nobody understands their followers better than they do. They know exactly what type of content their audience will be most willing to prompt them to take the right action so that you can get the result you expect.
Of course, there's nothing wrong with providing the influencer with specific guidelines you'd like them to follow. For example, if you have a particular feature in your product that you want them to highlight or an event you'd like them to take part of, then, by all means, let the influencers know. However, when it comes to the way that a post is written or a video is produced, you should be willing to trust the influencer to create this as he or she sees fit.
6 Do a Test Run
Although there's no doubt that influencer marketing has proven itself to be a robust marketing strategy, the truth is that this marketing strategy will not work for every type of business. Rather than immediately jumping into the influencer marketing bandwagon by making a considerable investment, opt to do a trial campaign by tapping a few micro- or nano-influencers to see if this will be a profitable strategy to use for your business.
In this post, we've seen how complicated it can be to measure influencer marketing ROI. That's because unlike other types of online marketing strategies, influencer marketing heavily relies on people to help you promote your brand and products, making it highly unpredictable. However, by taking into account the different factors and points to consider I've listed in this article, you can increase your success of offering the right price to influencers that's both fair and profitable.
What pricing model have you found to be the most effective for your influencer marketing campaign? Share it with us in the comments below.