Although some marketers have questioned the value of influencer marketing, itÂ has become one of the most effective marketing tactics for many successful brands. Research from Sway Group reported marketers who implemented an influencer marketing campaign earned an average of $6.85 in media value for every $1 they spent on paid media.
Thatâs not surprising when you consider consumersâ trust in brands has continued to decrease year-over-year, while their reliance upon and trust of word-of-mouth has increased.
Recent Nielsen research found that word-of-mouth recommendations continue to outperform all other advertising types. NielsenÂ found 83% of Americans somewhat or completely trust endorsements and recommendations from people they know. This is followed by customer opinions posted online at 66%.
One of the biggest challenges brands face with influencer marketing is calculating how much they should pay.Â Are you offering too little? Does the quote you got from an influencer seem a little high? Not to worry. Here are some tips to help you determine how much to pay influencers.
Determining the Value of an Influencer Collaboration
Celebrity influencers get lots of press around their multi-million dollar earnings and the brands that are writing those checks. But are they worth it? The answer, which will vary from brand-to-brand, is âit dependsâ.
First, you need to identify your brandâs goals and objectives for partnering with an influencer for a marketing campaign or content collaboration. Are you approaching it just as renting their audience? Or are you looking to form a longer-term relationship with the influencer, including co-creating content that lives on both of your platforms? Does the influencer have an engaged niche audience you havenât been able to otherwise attract to your brand?
New influencer marketing research from Traackr found the top influencer marketing goals to be improving brand advocacy (94%), expanding brand awareness (92%), and reaching new target audiences.
Lead generation was cited as a goal by significantly fewer marketers (67%), as many brands are still struggling with identifying how to work with influencers on collaborations that can directly drive sales.
âWe were looking to bolster sales immediately upon the launch of our new site,â says Jason Parks, marketing manager atÂ DermWarehouse, of a recent influencer marketing campaign they produced. âI would say we were not successful in this area. We did generate some sales but not enough to warrant the time commitment on our end. The second purpose was to acquire content. It was definitely worth it on this front as we were able to essentially get all of Q1 content for advertisements and website creative based off of the influencer campaign.â
Think about what you are looking for the influencerâs audience to do as a result of the collaboration. Are you looking for a lift in brand awareness metrics? To gain social followers? Or are you looking for a direct sales opportunity as an outcome of the partnership?
Itâs important to understand both your and the influencerâs typical conversion rates so you can calculate your potential ROI on the collaboration. Without doing the math on what your likely outcomes are from your influencer marketing program, you canât appropriately value the influencerâs contribution or set your budget for the effort.
Similarly, think about what your brand would otherwise pay for creating the same type of content with the same ROI. If you would pay a video firm $10,000 to produce a 3-minute video for your website, keep that in mind as a value reference point when approaching an influencer for doing something similar.
âEvery opportunity listed on the Pop Pays marketplace is a paid gig,â notes Aana Wherry, the director of marketing and PR ofÂ Popular Pays. âYou canât pay student loan bills with free samples. We believe in always paying creators for their content because that content has value for everyone involved. Not only are brands getting distribution to each creatorâs individual followings, theyâre also getting an exclusive license to use the creator’s content across their owned and paid channels.â
To Pay Influencers or Not to Pay?
Some brands pride themselves on working only with unpaid brand advocates in their marketing efforts. But brand goodwill only goes so far.
Itâs entirely possible a brand fan will let you use some of their user-generated content without asking for a fee. But itâs unlikely youâll be able to convince an influencer to create original content for your brand without some means of compensation. This is especially true in B2B marketing, where many of the top influencers are consultants who make their living from charging for their time and ideas.
There always needs to be something in it for the influencer. This can be cash compensation, product gifting, promotion of their platforms by your brand, exclusive event access, or myriad other possibilities depending upon the influencers and their goals.
For example, SuperOffice.com partnered with customer service industry experts whom they provided with exclusive research data in exchange for their participation. According to their digital marketing manager Steven Macdonald:
âNo payment was made to any of the influencers. In order to get the influencers to take part in the campaign, we gave them an exclusive look at a new customer service study that was not published online. Using influencers as part of our campaign launch lead to increasing website traffic by 77% and leads by 100% compared to the same period last year. This doesn’t include the long-lasting impact it will have on our SEO traffic given the global press coverage we’ve received. The biggest advantage is the number of business leads we’ve been able to generate at zero cost. The ROI on this influencer campaign is priceless.â
Itâs up to each marketer to weigh the pros and cons of payment for themselves and evaluate on a case-by-case basis.
âThe pros are that you can almost always expect an increase in traffic and social media interaction, purely due to the social media following that these influencers have,â says Rugby Storeâs Max Robinson. âHowever the main con is that often this alone isn’t enough to warrant the price that some influencers will charge.”
All Influencers Are Not Created Equal, &Â Neither Is Their Compensation
Many influencer marketplaces focus exclusively on celebrity-level influencers with more than 250,000 followers on their social media platform of choice. However, having an impressive amount of followers doesnât necessarily equate to an influencer being able to drive their fans to action. Especially if many of those fans are bots or were possibly purchased.
Thatâs why you need to consider more than potentialÂ reach to determine how to fairly compensate an influencer.
Instead, you may want to focus on micro-influencers. These are peopleÂ with significantly smaller social media followings, but may have more of an ability to influence purchases by their audience. Although the influencer with 250,000 followers may be able to boast of high impression numbers, they may not be able to say the same for their engagement rates.
Many micro-influencers on the other hand, have high engagement rates and are frequently asked for their recommendations online. That means your one-time collaboration may reap benefits for the long-term if it is a successful collaboration on both parts.
Celebrity-level influencers setÂ their rates based on the access you’ll gain to their large follower base. The elite tier of such influencers will have an agent or agency representative you must work through to come to an agreement.
Micro-influencers, on the other hand, may have a significantly lower cost-per-engagement, and be able to drive more qualified traffic to your website.
How MuchÂ Influencers Are Earning
Just as there is no one-size-fits-all algorithm you can use to evaluate an influencerâs value to your brand as a collaborator, there’s no blueprint forÂ payment either. However, there have been a few recent surveys that have looked into typical influencer content creation rates.
Influence.co recently published the results of their research into Instagram influencer payment. They looked at the average cost per Instagram post and found:
- The overall average price was $271 per post.
- The average price forÂ micro-influencers with fewer than 1,000 followers wasÂ $83 per post.
- The average price for influencers with more than 100,000 followers was $763 per post.
Dummies.com looked at the cost of working with bloggers who partner with brands on sponsored posts and their amplification. Here’s what they found:
- $175 per collaboration for blogs with 10,000 monthly impressions.
- $500 per collaboration for blogs with 100,000 to 500,000 monthly impressions..
- $1,000-$5,000 per collaboration for blogs that receive 500,000+ monthly impressions.
Remember, these numbers are not set in stone or the “official” pricing for all influencers. Some may charge less and others might charge significantly more. But you can use the figures above as a starting point.
It can get discouraging to see the big numbers celebrity influencers are raking in for their brand endorsements, but that shouldnât scare you off from pursuing a paid social media influencer marketing campaign. If you identify an influencer who is a good brand fit with a high level of audience engagement, itâs likely you can identify a mutually-beneficial collaboration you can both afford.