Influencer marketing is a term making that has been the rounds in the digital universe for a while now. The internet has given birth to social media influencers who are a sort of internet celebrities. In this article, we’ll take a closer look at the actual cost of influencer marketing. And what’s in it for you.
Google Trends show that over the last two years, there has been a steady drop in searches for “print advertising.” It further shows that there has been a steady growth of “influencer marketing” searches in recent years. Many marketers have started making it their primary marketing strategy after realizing its benefits.
But what exactly is influencer marketing? It is a marketing strategy which involves identifying and partnering with key people who have influence over your potential customers. Influence that’s powerful enough to sway their purchase decisions.
A perfect example would be Kylie Jenner’s association with popular clothing brand FashionNova. Her Instagram post promoting @fashionnova jeans, garnered more than 2.5 million likes.
This is what popular brands are paying for nowadays. Even small businesses and startups are spending on relevant social media influencers to grow their businesses.
Why is that? Partnering with influencers helps businesses get exposure to their target audiences. The right consumers who are not only interested in, but who would also pay attention to what the brand has to offer. This is directly the opposite of traditional advertising on television and print media.
Social media influencers are primarily based on social media platforms such as YouTube, Instagram, Facebook, Twitter, SnapChat, etc. Millions of people spend time on viewing content created by and posted by these influencers.
And the best part? Its effectiveness is not limited to mainstream niches alone. You can find influencers in any niche you can possibly think of. From beauty to technology, there’s an influencer for everyone.
The best influencers know that audiences have a very short attention span. They can leave at anytime if they’re uninterested, so they need to be treated well. This is why popular influencers integrate brand campaigns with their posts in the form of unique stories. This makes it look authentic and organic.
Why is Influencer Marketing Right for Your Brand?
Influencer marketing is among the most popular strategies in the digital marketing industry today. It has become so popular, that most marketers are either running influencer campaigns or considering using them.
Influencer marketing provides many benefits. However, the cost of collaborating with celebrity influencers can be quite significant. With brands beginning to invest more in influencer marketing, many influencers are in demand, and highly sought after.
Of course, you can also work with micro- or macro-influencers at much lower costs. Even then, the cost of collaborating with influencers is increasing at a very high rate due to its popularity.
Remember, only if there are substantial returns in terms of deliverables should you consider spending that money. So it is important that brands understand the actual cost of influencer marketing, and its benefits.
Here are 4 major reasons for you to consider influencer marketing as a primary marketing strategy:
#1. It Builds Trust Among Consumers
Trust is an important factor in marketing. Without it, consumers may not buy from you. Thankfully, influencer marketing has all the qualities that’ll help your brand emerge as a trustworthy one. Being recommended by influencers whose audiences trust them to the core can greatly benefit your brand.
To understand the value of influencers, in 2016, Twitter partnered with Analect to study “The Value of influencers on Twitter.” This study found that 56% of Twitter users rely on recommendations from friends to make purchase decisions. The same study also found that 49% of Twitter users rely on recommendations from influencers.
Influencer marketing greatly helps brands enter the circle of trust of consumers in an organic way. And it does so without appearing pushy.
#2. Ad Blockers Do Not Affect It
A PageFair study showed that more than 615 million desktop and mobile devices use some sort of ad-blocking technology. This means that 11% of Internet users worldwide are using ad blocker programs. The study further showed the growth rate of ad blocker usage increased at a rate of 30% in 2016.
Because of ad blocking technologies, utilizing traditional forms of internet marketing such as pop-ups and banners has become quite difficult. The ad blocking apps and software block all forms of online advertising, which means visitors will not be able to see them. In effect, marketers are paying for advertisements which consumers don’t even see due to the installed ad blockers.
So even if you have a fantastic advertisement, there are chances that your campaign may fail. Simply because users having ad blockers enabled on their devices may not encounter your offers.
Influencer marketing conquers all of these barriers, and helps your brand deliver highly relevant and visible messages via a trusted face. This is a major reason why brands are utilizing influencer marketing instead of running traditional advertising campaigns.
#3. Amplifies Your Brand Awareness and Authority
Collaborating with relevant influencers helps your brand by placing the branded content in front of interested audiences. They save you a lot of money that’s usually spent on testing and finding the target audience.
Influencer marketing strengthens your brand’s value. As collaborating with an influencer creates a positive perception and image. Every influencer stands for certain values. So partnering with them attaches those values to your brand as well.
Influencers being authentic with their content, and unbiased in nature is why millions of people follow them. This is the reason why working with the right influencers helps you build credibility and authenticity for your band.
Even if your own content is perfectly authentic, it might be perceived by some audiences in a skeptical manner. Influencers do not directly work for you, so them promoting your brand looks more genuine.
Influencers post branded content on social media. And because of the trust that their followers place in them, these posts are deemed valuable. Additionally, many followers even share the branded content on social media. This further boosts brand awareness and drives conversions for your brand.
#4. It is Cost-Effective
Influencer marketing is largely touted as one of the most cost-effective methods for marketing a brand. So much so that in 2017, 39% of marketers expected a rise in their influencer marketing budgets in the months to come.
This cost-cost effectiveness coupled with the high return on investment gives brands a lot of breathing room. They have the financial freedom to experiment with different influencer marketing strategies and learn from their mistakes. It allows them to refine their marketing strategy as they strive to get more out of it.
Of course, with a larger influencer marketing budget, you can rely on data-driven decisions. You can leverage analytics for better influencer and audience targeting, which results in more effective advertising. Thereby, lowering your influencer marketing costs further.
The Big Question: What is the Cost of Influencer Marketing?
Determining the actual cost of influencer marketing for brands can be tough. With different agencies providing different quote, costs greatly vary from influencer to influencer. While some influencers seriously undervalue their fanbase, others place a premium charge on collaborations.
At the end of the day, an influencer's value is based on how engaged their followers are. Keeping this in mind, your choice of influencers needs to be reviewed carefully. Without it, there are high chances that the influencer you partner with may have paid or fake followers.
For years, many marketers have questioned the value of influencer marketing. Despite the fact that it has emerged as one of the most effective digital marketing strategies.To understand exactly what influencer marketing delivers, TapInfluence conducted a definitive study on influencer marketing. The study showed that influencer marketing delivers 11X higher returns on investment.
This isn’t very surprising. Especially because of the decreasing trust in brands over the years, and increased reliance on word-of-mouth.
One of the biggest challenges marketers face is in determining how much they should pay influencers. Or, in other words, the cost of influencer marketing.
Determining the Cost of Influencer Marketing
The answer to this question depends on various factors that are well beyond your influencer’s reach. First, you need to understand the difference between “micro” and “mega” influencers. This is simply because they do not follow the general pricing guidelines with it comes to brand endorsements.
To determine the cost of influencers marketing, brands must set crystal clear goals for their influencer campaigns. Marketers should ask themselves the following questions.
Am I only looking to increase brand awareness?
Do I wish to establish long-term relations with the influencer and allow co-creation of content?
Does the influencer I wish to collaborate with have a niche that aligns with my brand’s message?
Try to think about what exactly you are expecting from your influencer’s audience when you collaborate with them. You should understand your brand’s and your influencer’s conversion rates so that you can effectively calculate potential ROI.
By doing the right calculations on potential outcomes, you may be able to value your influencer’s contributions appropriately.
Once your brand has strategically planned an influencer marketing campaign, you should consider analyzing the below factors. These factors will help you determine exactly how much you should pay your influencers.
One of the major factors that determine the cost of an influencer is their fan following. Traditionally brands contact publishers of print media and other media outfits for audience demographics. What marketers really look for is engagement and impact when it comes to partnering with influencers.
The main purposes for running an influencer marketing campaign are to increase brand awareness and drive conversions. However, you should remember that influencers who have a large fan base may not necessarily generate relevant leads for your brand.
You should also not overlook the fact that there are many “fake influencers” out there. An influencer may have bought most of their fan following, and may be charging you for it. If you partner with an influencer who has 600K followers, but half of them are fake, that’s only 300K followers.
Cosmetics giant L’OREAL has partnered with popular Chinese supermodel Ming Xi for some of their campaigns. As Ming works in the fashion industry, and has around 1 million followers, she was the right choice for L’OREAL. In the above post, we see that Ming is promoting her collaboration with L’OREAL. The post has received more than 26,000 likes or engagements.
This brings us to our next point of discussion. Engagement rate.
For a successful influencer marketing campaign, brands need to measure just how active their potential influencers are on social media. Engagement basically refers to the number of likes, comments, and shares an influencer’s social media post receives. Retweets or reactions can also be considered as engagement when working on platforms such as Twitter, Facebook, etc.
You need to ask yourself the following questions. These will help you understand if your potential influencer can provide the engagement you need.
How often does your influencer post content on social media?
Which brands have they mentioned in their posts?
How often does your potential influencer engage with their followers?
Although it sounds complex, determining the engagement rate is pretty easy. Just have a look at the last 10-15 posts of your potential influencer. Find the average number of likes, comments, and shares on their posts.
Then divide that total by the total number of followers they have on that particular social platform. This will give you the average engagement rate your potential influencers.
This analysis of an influencer's social activity levels will help you determine what exactly their motivation is. It’ll also help you gauge how successful your influencer marketing campaign could be if you partner with that particular influencer.
If you analyze the average number of likes Kylie Jenner’s posts get, you’ll notice that it’s more than 5 million. Her engagement rate is around 7%, which is great for a mega-influencer. This shows that Kylie Jenner can be a great influencer when it comes to engaging her followers.
#3. Number of Platforms
Every influencer is different from others. In the same way, their influence levels on various social media platforms too, is different.
Consider the example of popular beauty influencer Shannon Harris. Shannon is known for her popular beauty based YouTube channel, which has around 3.1 million subscribers. On the other hand, her Instagram account has 1.5 million followers.
Tamira Laboy who is also a beauty influencer has around 53K subscribers on YouTube, and 39.6K followers on Instagram. Her numbers are considerably less when compared to Shannon Harris.
The general rule of thumb is that influencers who have more followers across different platforms tend to charge higher. This higher rate is simply because of the immense reach these influencers have on multiple platforms.
You should also check if your influencer is associated with traditional media such as radio or TV. Getting exposure from traditional media sources can really help your brand develop greater face value.
Images via YouTube
#4. Campaign Structure
The cost of influencer marketing may differ greatly based on the kind of campaign you wish to run.
For example, if you would like your influencer to create content for your brand, the charges will be higher. This is because influencers will have to put in a lot of time and effort to create content.
Perhaps you’d like them to do a photoshoot, and then share the images on social media? In such cases, you need to be prepared to pay them a higher amount. Because the photoshoot will take up a lot of their time and resources.
Alternatively, you can create personalized content for them to post on social media. This would significantly cut down costs, as you would be doing the majority of the work. However, many influencers do not like to use this strategy. Simply because it will make the sponsored content look less authentic.
The above image shows popular travel vlogger and blogger Kiersten a.k.a. “The Blonde Abroad” partnering with GoPro to promote the GoPro Fusion. We see that the caption added by Kiersten looks credible, authentic, and organic. This means a lot of work has gone into it and surely cost GoPro a significant sum of money.
How To Pay Your Influencers
You can choose to contact influencers directly, negotiate with them, and pay them accordingly.
#2. Via Agencies
You can also contact reputable marketing agencies who work with relevant influencers and pay them. All negotiations are to be done with the agencies.
#3. Via Platforms
These are comprised of influencers who have registered on particular software platforms. Some platforms are subscription-based while some charge a percentage of campaigns executed.
Grin is one such platform that aggregates a large number of influencers. We offer a variety of different subscription models for you to choose from.
#4. Via Multi-channel networks
These networks are comprised of a certain group of influencers and you can work only with the ones who belong there. They might charge media fees too, over and above the intermediary service fee.
When brands think of influencer marketing, the most common question that pops-up is “how much will it cost?” Sure, influencer marketing can be expensive. However, that’s only if you’re collaborating with celebrity influencers. A Bloglovin’ study found that only 25% of brands have a realistic understanding of the cost of influencer marketing.
If you are unsure of the actual cost of influencer marketing, read on. Here are the most common influencer marketing pricing models you should know.
One of the most common models of paying influencers is a pay-per-post pricing model. As per this model, influencers are paid a flat fee for every branded content they post on social media. The flat fee or the cost-per-piece of content posted varies depending on the type of influencer you’re working with.
The only drawback of this model is that there is no guarantee that it will provide the required engagement. If you are planning on working with top influencers, pay-per-post can be a good pricing model for your brand. You can use the Instagram Money Calculator to estimate how much to pay for a branded Instagram post.
Image via Influencer Marketing Hub
Pay-per-click is a payment model in which you pay your influencers every time someone clicks on a brand link. The pay-per-click model compensates influencers on the basis of how well their branded content performs. The program’s success is measured by the number of times users click on the brand’s link.
With the risk of clicks from bots increasing, brands using this model must be cautious. This will help ensure that their influencer provides authentic traffic via verified clicks from genuinely engaged followers.
Since this compensation model is based on audience reactions, influencers create content that is highly engaging to attract audiences. Brands using this payment model are sure to see returns on investment from their influencer marketing campaigns. Pay-per-clicks are often used in alliance with affiliate marketing.
WIth pay-per-acquisition, brands pay influencers when their efforts bring in new customers. “Customers” are anyone who purchase products or services, sign up for newsletters, or take some action that helps the brand.
With some platforms providing affiliate programs, influencers can earn commissions from sales generated from the affiliate links. However, in this model, brands run the risk of being featured alongside competitors.They have no control over where and how an influencer places their link.
With this pricing model, brands pay influencers for the number of engagements that their content generates. So, essentially you are paying your influencers for the likes, comments, shares, retweets or reactions they get. The only thing you need to make sure in this model is that you’re getting genuine engagement.
#5. Free Products
One of the most common ways in which many brands work with influencers is by gifting them free products. The idea is to make them feel valued and appreciated with such gestures. In return, you encourage them to share social media posts or a blog review about the product.
Some brands even organize exclusive events or unique experiences for their influencers. They might sponsor an entire trip to an exotic location and ask them to share their experiences.
How to Reduce Your Influencer Marketing Costs
We’ve talked a lot about influencer marketing costs, thus far, and how it is both an effective and economical strategy. But surely it can’t be that simple to reap those high ROIs?
Well, it isn’t.
Like any marketing method, influencer marketing takes just as much planning and proper execution to get right. But these few tips should help you keep your influencer marketing costs low and returns high.
#1. Have a Clear Goal in Mind
Before you launch any campaign, it’s important to set out with clear goals and well-defined KPIs. Doing so will help you manage your resources better, and have the maximum possible impact on users. Knowing what you want will make it easier to find the right influencers as well as choose the best strategy.
#2. Research Your Target Audience
You’ll find that all of these tips are related to one another in some way. For instance, one way to better manage your financial resources is to research your target audience thoroughly.
If you’re targeting one kind of customers, but you choose the wrong strategy to reach them, well that’s just money down the drain.
For instance, if your ideal audience uses Instagram more, but you choose to work with YouTube influencers instead. That’s not the most efficient use of your budget.
That’s why researching your audience is important to keep influencer marketing costs down.
#3. Find the Perfect Influencer
Everyone talks about how collaborating with the right influencers is the key to any successful influencer marketing campaign.
But what does that mean?
It means choosing an influencer whose audience aligns with your target audience.
For instance, as a plus-sized apparel brand, that means working with models or influencers that promote body positivity. Simply Be understands this which is why they partner with influencers like Gabi, here.
Image via Instagram
#4. Leverage Micro-Influencers
Another brilliant tactic to reduce your influencer marketing costs is to work with micro-influencers. They may not boast audiences as big as their more established counterparts. But they charge considerably less for a single post, and sport much higher engagement rates.
Brands like Glossier have built their business from the ground up by relying heavily on micro-influencers for marketing. They work with micro-influencers like Lily Yeung (with around 6,700 followers) to promote their products in user-generated posts like this one.
Image via Instagram
#5. Repurpose Influencer Content
It’s important to remember that the value of your influencer-generated content goes beyond just the single campaign.
You can bring a lot of your influencer marketing costs down by repurposing your old influencer content for other marketing channels.
The important thing to remember, here, is that you should seek out the approval of your influencer before repurposing their content. If they agree, you can repurpose the content for paid ads, to be used on your website, or other social media channels.
The actual cost of influencer marketing may vary a lot depending on various factors. This is because influencer marketing heavily relies on influential people who help to promote your brand and its products.
By considering the above-mentioned factors and pricing models, you can easily make smart decisions about how to compensate influencers. If you are able to find the right influencers, finding a mutually beneficial compensation plan shouldn’t be that difficult.
Do you have any questions about these factors or pricing models? Let us know in the comments section below.
Brian Mechem is CRO and Co-Founder of GRIN, the #1 software solution for direct-to-consumer brands who run influencer marketing programs. GRIN's software powers some of the best influencer programs in the world, providing insights on ROI and adding efficiency to the influencer marketing process.