In an era where consumers are becoming sick of mass-produced, fake ads, influencer marketing is a great way to reach new audiences and build trust in your company. Customers are more likely to follow the advice of influencers (61%) than they are to follow the advice of a brand's social media account (38%)
Everyone appears to have an opinion on influencer pricing, regardless of whether or not they are aware of influencer marketing or branded content. Finding the perfect influencer for your company, deciding which platforms you want them to broadcast on, and figuring out how much you should pay them may be challenging because there is no universal method of measuring effectiveness in influencer marketing.
Considerations for Forming Influencer-Based Partnerships
Think about your strategy and objectives before contacting influencers.
Where do you want to go?
Outline your objectives and key performance indicators (KPI) in a spreadsheet or planning document so you can evaluate the efficacy of your collaboration. These key performance indicators are an excellent place to begin:
Raise Product Recognition
The need to drive sales
Boost your fan base
In affiliate marketing, a company will pay an outside affiliate to promote its products or services to the affiliate's audience. In exchange, the middleman earns a referral fee. Due to the low barrier to entry and the fact that affiliates only earn a fee when a sale is made, most businesses offer some sort of affiliate programme.
Always take the time to do things right when establishing an affiliate marketing business, including the way in which data is recorded and analysed.
Arrangements for Production
Even if you probably won't have to deal with production arrangements, it's still a good idea to learn as much as possible about them. There are a few things to think about if you're in business with a partner:
It's important to know if your key opinion leaders will need to travel, and if so, what preparations should be taken.
Should they get a studio?
To what extent do they need to invest in specific tools for the generation of content?
Plans for releasing new material
Be sure to account for the time it will take the influencer to provide the material you require. Influencers who are in high demand may be hesitant to accept your offer if you want them to publish several content pieces in a short period of time. Plan on needing a few more weeks for talks and finalising plans as a result.
Pricing for Instagram Influencers
An Instagram post averaged $1170 in 2021, while an Instagram story cost an average of $906. In spite of the fact that these numbers are just averages, they can still be useful for planning purposes.
Pricing for influencers should be determined by the number of followers and the percentage of engagement they receive. However, other factors, such as talent and access to a specialised audience, can affect a rate.
It is common practice for influencers to publish rate sheets detailing the types and amounts of content they are willing to create. You can use those rates as starting points for your models and projections. Given their familiarity with their followers, influencers may be able to strike a deal without much discussion. Instagram influencers typically charge based on the following rate sheet, provided by InfluencerMarketingHub:
Ten dollars to a hundred dollars for each blog post for micro-influencers (1,000 to 10,000 followers).
$100-$500 each post for micro-influencers (10,000-50,000 followers).
$500-$5,000 per post for mid-level influencers (50,000-500,000 followers).
Prices range from $5,000 to $10,000 per post from macro influencers (those with 500,000 to 1,000,000 followers).
One million plus followers from a mega influencer: $10,000+ each post
One hundred dollars for ten thousand followers is the minimum acceptable rate in the market. The following equations can serve as rough benchmarks:
The total fee is $100 per 10,000 followers plus the number of posts plus any other relevant criteria (such as the cost of the shoot, the length of time the content will be used, and any exclusivity requirements).
In the alternative, you may determine an influencer's base rate by dividing 4% of their following by the number of posts plus extra parameters.
Pricing for TikTok's Influencers
A sponsored TikTok typically costs $3,514 dollars. In comparison to YouTube's $4,491 per video, that's quite a little. It takes more time to create video content than it does to create a photo, which is why the cost of a TikTok is three times that of an Instagram post.
It's ideal to work with a TikTok influencer if you're trying to reach a youthful demographic on the cheap. It is expected that this year TikTok will have 41.4 million Gen Z users, which is more than Instagram's 37.3 million. In addition, the technology behind TikTok enables a higher degree of involvement, increasing your video's potential to go viral.
TikTok is a somewhat more recent app than Instagram, thus prices are even more all over the place there. Based on the influencer tier, the average cost per TikTok is as follows, as reported by IZEA:
Minimal influencers (between 1,000 and 10,000 followers) might charge $800 each article.
$1,500 per post for micro-influencers (10k-50k followers)
Those with 50,000 to 500,000 followers are considered "middle tier influencers," and are offered $3,000 for each post.
The going rate for posts from macro-influencers (those with 500k-1m followers) is $5k.
One million plus followers from a mega influencer: $7,000+ per post
In order to determine the worth of an influencer, David Gaylord, whose firm Bushbalm provides products to treat razor burn, black spots, and other widely overlooked skin irritations naturally, utilises the following formula:
An average number of views, likes, and comments on the influencer's past five pieces of content divided by the cost per piece of content yields the influencer's cost per thousand (CPM).
Image from idea catalogue/Unsplash: Influencer pricing: lady lounging on the carpet while using a laptop
Variables that impact influencer pricing
Aside from the size of their following and the intensity of their involvement, there are a number of other elements that go into determining an influencer's fee.
License to Use
Your influencer's pricing may change if you wish to retain ownership of the material they create for your own promotional or repurposing purposes.
You should factor in the expense of an exclusivity agreement that prevents your influencer from working with your rivals. Take this into account when making offers or setting prices, since it might prevent people from accepting enticing bargains.
Compensation for the Services of an Agency
Agencies and managers that represent influencers sometimes ask for commissions on top of their base salaries.
How long a campaign lasts
The cost of an influencer campaign will rise or fall depending on how long it lasts. An endorsement deal that lasts for years will cost more than a contest or campaign that just runs once. When figuring out how much money to set aside, it might be useful to construct a risk model that lays out the best-case scenario, especially for long-term relationships.
You may ask your influencer to make content for two or more channels if you're interested in leveraging more than one platform. The increased cost of the post combination is worth it because it increases the number of people who will see the campaign.
Cost to rush something
Existing contracts with influencers are not rare. A rush fee may be charged if an influencer is given a short deadline for their output.
A link in the bio is an excellent option if you want to increase clickthroughs from social media, as you can't include one in a TikTok or Instagram post. This is an optional item that will probably cost more.
Influencer pricing metrics that matter
We've spoken about the aspects that go into influencer pricing and what to think about before forming a partnership with an influencer. However, these measures should not be ignored when calculating monetary results. Consider the following measures for your economic model:
Sponsored pieces often perform poorly in terms of interaction, especially when many influencers share them. If you want to make accurate effect forecasts, you should look into how this could change things.
Campaign analytics can be informed by demographics as well. If your influencer has 30,000 followers, 5% engagement and 50% of their following is in the United States (and your business only ships to the United States), then your effective model may predict about eight eligible customers assuming a 1% purchase rate on interaction.
Adoption Rate Increase
Your ad can attract a lot of attention if the influencer who shared it is quickly expanding their audience. It's a useful tool for influencers, who may not be aware of how quickly their following is expanding in comparison to others.
Before partnering with a potential influencer, always verify their real-life engagement and the following count. Keep an eye out for these three red flags that might indicate bot traffic:
irregular increases in the number of followers
Various levels of participation
Poor participation quality (such as repetitive and vague comments)
The Value of Influencer Marketing
Finding out if you're paying the proper amount for an influencer may be made easier by measuring your return on investment (ROI) in influencer marketing. Here is a formula for determining return on investment:
Return on Investment = (Total Return on Investment - Investment Cost) / Investment Cost
A return on investment of 350% would be achieved, for instance, if an influencer marketing campaign cost $2,000 and generated $9,000.
Although knowing the return on investment (ROI) from working with an influencer is a smart way to choose whether or not to maintain the connection, this information is unavailable before the influencer is hired.
Collect a rating sheet from a potential influencer by asking for one. This will feature not just their ratings and rankings, but also their performance metrics.
There are several forms of collaboration between influential parties.
The pricing and sorts of relationships that an influencer is willing to offer may usually be found in their press kit. What follows is an exploration of the many influencer relationship promoter models and advice on how to select the one that will help you reach your goals in the most efficient and effective way possible.
As was previously said, affiliate marketing is a type of sales strategy in which an influencer is compensated by a business for promoting the brand's products or services in exchange for a commission on purchases made as a direct result of the influencer's recommendation.
Brands love affiliate marketing because there are no initial investments required. The commission rate might range from 5% to 50%, depending on the influencer.
Promoter of the brand
An ambassador for your brand is a key opinion leader who will persistently promote your business and its offerings. The brand ambassador you hire will have a significant impact on the public's perception of your company, so be sure they're someone you can work with for the long haul.
A picture or video clip with a descriptive description is typical for a sponsored social media post. As a rule, the influencer will produce the material, and in certain situations, they may even include the product or service in the piece.
Some companies may provide free merchandise to social media stars in exchange for a favourable review. While smaller producers can be influenced by offering gifts in exchange for promotion, this strategy has much less clout when used to larger creators.
Promoting your company and gaining new fans with contests and freebies is a win-win. Multiple influential parties can participate in these temporary alliances.
The expenditures, the prize prices, and the expected return should all be spelt out in your budget for the contest. As a rule, freebies have a positive return on investment, so you should expect to make money off of your promotion.
The whole amount spent on the influencer campaign, including the budget and the prizes, must be less than the amount gained from the sale of the product. Prize and influencer costs for awareness campaigns should be smaller than the returned media value.
Finding an industry similar to benchmark against is one technique to estimate media value. This may be done by counting the number of impressions, followers, engagements, or whatever else is being measured.
Mention in Caption
Comparable to a sponsored post, but without an accompanying image, is the caption mention. You may use them for any sort of call to action, and they'll cost you less to make.
The Conquest of the Platform
To "take over" a platform means to have an influencer produce content for a brand's account for a limited period. Instagram, TikTok, and Snapchat are where you're most likely to see a takeover. It's ideal for attracting new customers and spreading awareness of your company.
Because of this, you may want to employ a formula that factors in the influencer's hourly pay for organising the takeover, the amount of new followers you may get from the relationship, and the various sorts of posts that will be a part of the takeover.
Build sustainable alliances with like-minded influencers who are also within your financial means. Influencer marketing is so effective because it relies heavily on social evidence and user endorsements. You don't know how to network with influential people.
How much information about an influencer's price structure do you need before reaching out to them?
Before discussing a project and pricing with a potential influencer, it is important to understand your company strategy and what success looks like.
What factors into the cost of your influencer marketing campaign?
First, you should decide which payment model best suits your needs. This might be an affiliate agreement, a set payment, a gift, an hourly fee, a licence contract, or a hybrid of these.
How do you determine which influencers would be most beneficial to your company?
Look for an influencer who has worked on campaigns like yours before, and inquire about their pricing.
In addition to the mentioned gains, what else can you anticipate from a fruitful collaboration with an influencer?
You'll form lasting bonds with the artists you collaborate with. In the influencer community, sales trust may be strategy-built making builtgbuilt via genuine friendships. Make sure your connections are always in the forefront of your mind, and your influential followers will spread the word about you.
How can you make sure your influencer marketing strategy goes off without a hitch?
Connect your whole strategy-making process to a numerical framework. It is preferable to have a standard against which to measure your assumptions.