Ever find the perfect influencer for your campaign and sit there scratching your head thinking, what the heck should I offer to pay this person? Aside from forgetting to test the basic checklist for influencer selection, we find one of the biggest mistakes brands make when trying to run influencer marketing campaigns occurs in their opening bid to an influencer.
Why is Knowing What to Pay an Influencer So Important?
First off, we find time and time again that influencers are immediately turned off by brands who don’t appear to appreciate the work they do. Brands who look to pay simply on reach alone, are often under bidding on micro influencers or over-bidding on macro influencers because they aren’t taking into consideration factors like:
- Smaller influencers generally have greater organic reach percentages and more engaged audiences, meaning your cost-per-engagement is going to be lower.
- Smaller influencers are also less likely to nickel and dime and, in our experience, consistently over-deliver on the assigned number of social shares and pieces of content as they’re trying to build their business, bringing your cost-per-______ even lower.
- Most influencers these days, regardless of size, are going through the process of hiring photographers and staging photo shoots to deliver high-quality content, meaning all influencers have relatively the same amount of time and hard costs going into getting your assignment done, regardless of their total reach.
We also find pretty often when we start working with brands who have previously done the work in house, they were over-paying influencers. In one case, we found a brand had paid 3x and 5x more to influencers we work with regularly. They received less content and, as a result, far less reach, engagement, and site traffic as well. Over-paying influencers results in two very bad consequences:
- The ROI of the individual campaign is less than it could be.
- A more disturbing trend that we’re seeing those as brands start doing more influencer work themselves, the marketplace becomes inflated. Which means you’ve not only ruined the ROI for your own campaign but cost inflation across the entire market puts the entire strategy of influencer marketing at risk if it can no longer deliver a reasonable ROI. This isn’t good for marketers who will no longer be able to leverage credible, creative voices. And it isn’t good for influencers, who will price themselves out of work.
So onto the answer to your burning question…
How Much Should I Pay An Influencer?
Let’s start with a reminder of why you’re using influencers in the first place and therefore what you’re paying for:
- Engagement / Web traffic
- Content for future use
- Credibility as they share your brand message
- Persona, as you use their content, their story, and their name on owned channels in the future
So to determine what to pay influencers, you need to keep in mind the value all of these benefits have to your brand – said differently, what would you pay for these benefits in other forms of marketing?
Average the “cost per benefit” you’re used to paying and determine what you’d pay for just that benefit. From there, average the costs of all benefits together and multiply by 1.5. That should give you a reasonable opening bid. Some influencers will happily accept. Others might try to negotiate for a bit more money, at which point, you’ll need to decide if the predicted ROI is worth it. If not, are there enough other fish in the sea for you to move on to someone with a better ROI? With this strategy, you'll have the opportunity to stay in the discussion as you shouldn't have offended with an offer that's too low, while you'll still have some room to negotiate up, if needed, while staying in line with the marketing costs you're used to paying in other media.
Of course, the simple equation isn’t so simple when you have to start plugging in the numbers, so let’s break each down factor:
Factors That Go Into an Influencer’s Cost
REACH (CPM) – What is the average CPM your brand pays for premium content placements?
I’m not talking digital banner ad or social news feed ad. I’m talking custom content placement to a targeted audience. These are Native In-Feed ads like the premium placements from Nativo, video interstitial ads, or even a prime-time TV spot. As a benchmark, we use a baseline of $10.40 CPM for these types of placements, though we know they can run anywhere from $5.00-$35.00+ depending on the level of targeting your brand requires.
ENGAGEMENT (CPC, CPE) – What is the average cost-per your pay to get pre-qualified traffic or content engagement?
Pre-qualified is important here. When people have clicked on a piece of influencer content, they’ve already heard the first pitch about your brand. At that point, if they are taking an action, it’s occurring because they are genuinely considering your brand or want to learn more. It’s often a step deeper down the funnel than simple curiosity sparked by the awareness driving creative brands often put out.
CONTENT – How much would you pay to source the same NUmber of custom assets?
For Carusele campaigns, on average, we find the value of the original content (re-usable assets like blogs, images and video) give back anywhere from 20-50% of the brand’s campaign cost in long term value.
First, count up how many of each type of asset you have.
Second, consider the average price you pay for that type of asset. For some brands, that might mean $20K to get 10 magazine worthy photos from a day-long photo shoot conducted by their creative agency. We do not recommend using that number because some but not all photos from a campaign are going to be that level of quality and never will you have that level of specific creative control. Instead, consider what you’d pay if you were to hire a freelancer or content service to create the assets for you. At Carusele, we use the following costs to calculate content value:
Photos = $150
Blogs = $650
Video = $1,200
From there, the math is simple.
How To Calculate the Value of Influencer Content
Content Value = (# of Photos x $150) + (# of blogs x $650) + (# of videos X $1,200)
CREDIBILITY & PERSONA – How much of a premium are you willing to pay for the name?
This is where the math gets fuzzy. Depending on the level of influencer you work with (their level of “celebrity” that is…) the value can vary and their willingness to let you use their name for an extended period of time is unlikely.
There might certainly be cases, like a protein powder partnering with a celebrity trainer for example, that it may make sense to pay for persona rights separately, but our approach generally is to not pay a premium for this in most influencer campaigns.
So, now that we've gone into more detail than you probably cared to consider, drumroll please…
Equation for Calculating an Influencer's Fee
[(Total Anticipated "true view" Impressions*Brand Avg. CPM/1000)+(Anticipated Engagements/Brand Avg. CPE)+(Value of content to be delivered)] / 3 * 1.5
Don't want to have to think about all this math? That's why we're here. We have a variety of full-service and in-house support services to help you find influencer marketing success.