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As influencer collaborations continue to prosper, they are becoming a key part of marketing strategies across the globe for mass conglomerate brands to local mom & pops. Uncharted territory brings a lot of questions – how much to pay an influencer is one of the MOST frequently asked questions I receive. How much should you really budget for an influencer marketing campaign 💰?? The short answer is to use this formula for your next influencer marketing campaign:
Retainer Fee + 10% commission.
The long and more accurate answer is, there are different factors about your business that will impact what you should pay influencers for marketing your products🤓.
How to set up a budget for your influencer/affiliate marketing program?
You will attract way more influencers and ambassadors with a payment upfront for their initial efforts and a percentage of commission on the back end. What that upfront payment would look like depends on a couple factors on a case by case basis. There are three main things to take into account when deciding what the upfront payment should be.
The first two things are: How essential is the product in daily life, and what is the price point of the product? Keep in mind these two are not mutually exclusive. For example, a car is essential in first world countries for the most part but obviously is not at a low price point. That means that if a product is a commodity (people “need” it regardless of the price), it justifies a higher price either upfront or commission on the other side because it’s a safe bet that sales will be more steady and consistent with a commodity item.
Where on a scale from necessity to luxury does the product fall, a.k.a. the cost of the product in the first place? If the product is used on a regular basis and falls at a lower price point, it will be easier to drive sales for that product and there should be quicker turnaround time when it comes to seeing a profit. The faster track to profit and more stable sales projections may justify a lower upfront cost and lower commission for the influencer. Whereas, a luxury item that’s nice to have but not essential will be harder to drive sales for and those sales of a higher priced item will be fewer and further between than a necessity. In that case, budgeting a higher upfront cost and lower commission for the influencer may make more sense. Remember that it’s not JUST about what makes sense for your business here. You also want it to be beneficial for the influencer and worth their time to work with you instead of your competitors.
How Do You Measure Influence In Terms Of Price?
The third thing to take into account is who the influencer is and how powerful their influence can be for your brand. This last point is broken up into different sections because when you’re considering the value of an influencer, several things come into play. What you’re really looking at here is what is their worth as a medium of advertisement. I don’t think I have to mention this, but in case I do, we are not talking about their worth as people, actual living and breathing humans and how worthy they are of success or anything existential like that! We’re looking at this from a business standpoint! So here are the different considerations when it comes to measuring influence:
Engagement rate: How valuable is their content to their audience and how is that reflected in through a hard number like engagement rate? This is important because when the influencer starts talking about your product, you want to ensure on some level that they’ll have their audience’s attention and your brand will share in the benefits of that attention.
Experience: Are you dealing with someone that has experience in the industry that the product is in? For instance, in the health and wellness industry, it would make sense for someone who is an actual Doctor or health profession to speak to health claims and topics that carry a lot of weighty responsibility when being distributed to the public than the same messages coming from someone who has no experience in the field and is reading claims from a script. This is about protecting the credibility of your brand, the product, and the public image of the claims you want to make about the transformation your product offers. People who have experience in a field generally make better-received brand advocates.
Professionalism: This one should be obvious and is the most easy to spot in initial contact with influencers, but making sure they present themselves professionally is really important. Does this person speak to their audience like they are putting in half-assed effort with a bunch of spelling and grammatical errors? Do they talk to them like a human or like a robot? All of this has to do with effective messaging that ultimately will be a reflection of your brand if you decide to work with the influencer and you need to make sure you’re aligned. Don’t get me wrong, if they use acronyms and clever slang, that doesn’t necessarily mean they are not professional, but it does show parts of their personal branding that you’ll want to make sure still come across clearly, concisely and correctly to represent your brand well.
Loyalty + Authenticity: Did they recently post about your competitor? In your initial conversations with them, did they mention that they have worked with several other brands in your industry or are actively pitching themselves for campaigns similar to yours? It will likely be a better fit if they want to work with you because they already know, love and swear by your brand. This is important because you not only want to make sure they’re in it for the right reasons and have some kind of loyalty with your brand or products specifically. But also, you want to have confidence that your products or services they’ll be advocating already fit in well with their existing content and audience expectations. To put it simply, if you work with a Makeup Influencer for a Car brand campaign, that doesn’t align whatsoever with their existing content or what their fan base comes to them for.
Need Some Help?
I know this is a lot to take into consideration, but it’s all super important. As a brand, you want to cross all your T’s and ensure to the best of your ability that the influencers you employ for a campaign are aligned with your brand and are compensated according to the amount of power their influence has.
I hope these points were helpful for you and help clear up any confusion about how much you should allot in your campaign budget for an influencer or affiliate upfront and through commission. If you need more help or are feeling overwhelmed by all this criteria, The Influencer Grapevine can help! We’d love to help your brand or business navigate your next influencer campaign and illuminate the grey areas and confusion you’re experiencing. Fill out THIS APPLICATION to get in touch with us and we’ll make sure you get the help you need!