What is the monetary value of influencer marketing? It’s a question we get asked all the time, especially when it comes to allocating budgets toward influencer programs.
After all, influencer marketing has been heralded as a way to receive a strong return on investment for smaller budgets than traditional advertising requires. So why are influencer rates all over the place, and why can it seem so expensive to launch an influencer campaign? Let’s break it down:
Know what goes into influencer fees
When you book an influencer, you are paying for:
- Creative direction
- Photo/video editing
- Agency fees (potentially)
- Usage rights (potentially)
- Exclusivity (potentially)
All within that one influencer fee, whereas those costs are spread over multiple departments, employees, and outside services for most companies.
While many companies measure traditional marketing efforts in terms of CPM, that metric traditionally only accounts for media fees. When calculating influencer CPM, you must also account for influencer, agency, production, usage, and exclusivity fees in addition to media fees, so it’s a bit of an apples-to-oranges comparison.
Additional factors can also have an impact on what an influencer charges for a project:
- Scope of work
- Production costs
- Exclusivity and usage rights
- Brand affinity
- Influencer demand
- Caliber of influencer
- Engagement and conversion rates
There is no formula for influencer rates.
Each influencer has the ability to set their own price for branded content, combining both quantitative (following, engagement metrics) and qualitative (demand, brand affinity) factors to determine what they charge. This is why you can speak to two influencers who on paper have near-identical profiles and present two varied fees for the same project.
Working with an agency such as The Digital Dept. will help you understand the larger landscape of influencer rates. While there isn’t one “industry standard” for determining rates, we continuously monitor project fees in this ever-changing industry and can help you separate the realistic numbers from the outrageous.
Provide clear and fair payment terms.
Paid partnerships are the main source of income for many influencers, so it is important to present clear and fair payment terms when partnering with influencers. For one-off partnerships, a net-30 or net-60 payment is typical, but for larger programs, we suggest being flexible with payment terms to ensure creators are receiving compensation in a timely manner. This may come in the form of 50/50 payment terms so that influencers aren’t waiting until the program is complete to receive any payment.
Including payment terms that are fair and get influencers compensated in a timely manner will only improve your reputation amongst influencers and help keep the influencer marketing industry transparent and fair for all.