Finding the right approach to influencer pricing is still a hassle for many businesses. For many, it is cumbersome to find a balance between the influencer’s offering and the company’s marketing budget. Factors like content production, reach, and testimonial effect need to be considered and impact each pricing negotiation in different ways.
In our May 2020 webinar, our experts Mona Hellenkemper, VP of Marketing, and Robert Levenhagen, CEO of InfluencerDB, pointed out how influencer pricing emerges and which factors you need to consider before jumping into the pricing negation with influencers or their management.
Why is influencer pricing important?
A contract might fail because the brand and the influencer cannot agree on compensation. The cheaper a single deal is, the more deals are possible for the brand which leads to a competitive advantage. But, paying a higher amount for a valuable collaboration partner is worth it and can be more effective than collaborating with several influencers at the same time.
How does a price emerge?
A price is an agreement between the seller and the buyer and one of the parties has the power to determine the price. In the influencer industry, it is mostly the influencer who has the power to determine a price. This is only possible if an influencer is unique and offers individual content that supports the brand. If these factors are given, influencers are usually aware of their luxurious position and are able to demand higher compensation.
What value do influencers offer?
To be able to find fair pricing for both sides, you need to be aware of the value that influencers offer. This value can be divided into three buckets: Content production, reach/distribution and the testimonial effect. Depending on your goal, one or more buckets might be relevant for your influencer pricing.
If an influencer is famous because he/she produces high-quality content, this can be worth a lot for your brand. It means that they built a community based on their content, so the content needs to be interesting and valuable. These influencers grew with the platform and are experts when it comes to interesting content their community is waiting for.
Moreover, they know the native tone of the platform and can adjust the content intuitively. These creators play with the platform and often knows it better than brands do.
If an influencers has high reach that reach is more valuable than the reach traditional advertising forms like banner ads generate. Why is that? Because the influencers’ audience is way more targeted. Still, there is a risk that the collaboration can have negative impacts on your brand if the collaboration is not authentic.
Many brands, especially more established ones, collaborate with celebrities for an international appearance. The goal here is not to sell as many products as possible but to gain visibility and attention. These testimonials charge a lot and provide reach which is less targeted for most of the brands. Besides, they do not offer expertise in content production most of the time.
Soft & Hard Factors that impact Influencer Pricing
The following factors might impact your influencer pricing in varying severity.
The influencer and their values should match your brand in order for the audience to feel attracted by your campaign
If the influencer’s content does not match your product, your campaign will not appear authentic. See an example below: Does it really make sense to promote hair shampoo in a desert in the middle of a street?
The quality of the content needs to fit your brand aesthetic. Do you need high-quality, professional content or does rather authentic, unstaged content work better for your brand?
Quality of Recommendations
Instead of only tagging your brand in a photo or in the caption, users will be a lot more attracted to your brand and interested in the products if an influencer puts work into an intense description that shows how the influencer uses the product in their personal life.
We recommend always request the influencer’s insights to get an impression of how many people actually see the influencer’s post and interact with it. Nevertheless, keep in mind that a screenshot can easily be manipulated! Ideally, use a technology that allows you to access the influencer’s performance via an API connect.
Target Group Accuracy
Check the influencer’s audience and check whether the demographics match to your desired audience.
Review the influencer’s content and analyze his/her previous sponsored content. How often does the influencer share sponsored content? Does the influencer collaborate with one of your competitors?
For a deep dive into soft and hard factors, industry CPMs, and more advice on how to find a fair and budget-friendly influencer pricing, watch our on-demand webinar on YouTube!