Behind the cost for brands to hire influencers—the complex math explained

Influencers have become increasingly valuable to brands, but putting a price tag on their worth is now just as complicated. Marketers are expected to spend $3.69 billion on influencer marketing in the U.S. in 2021, $1 billion more than they did last year. And by 2023, spending is expected to rise to $5 billion, according to a new report from eMarketer. Subscribe to Ad Age now for the latest industry news and analysis. Brand deals remain creators’ largest form of income, even as platforms like YouTube, TikTok, Instagram and Snapchat introduce new opportunities to pay creators. Like influencer marketing itself, the cost to tap creators has evolved beyond basing pricing on influencers' follower counts. Although influencer marketing has come a long way from its erratic early wild west days, navigating the now complex landscape can be difficult. Influencer campaigns are complicated by everything from the content type and key performance indicators a brand is trying to reach, to whether a brand wants exclusivity for a certain category. Oftentimes, follower count and post impressions are low on the growing list of priorities. Today's creator deals more closely resemble the world of programmatic media buying, where pricing is determined across several types of posts and platforms, says Mary Keane-Dawson, group CEO of influencer agency Takumi, which has created influencer campaigns for brands like Häagen-Dazs, Uber and Mercedes-Benz. Brands are no longer simply buying one in-feed post. "There is no longer a one-size fits all approach to influencer marketing," she says. Beyond followers First of all, brands that strike deals directly with influencers can expect different pricing than if they go through an influencer agency, which take out their own percentages—usually anywhere from 10% to 40%. Even among influencer agencies, brands can expect different pricing structures as well. Influencer agencies have taken it upon themselves to set competitive pricing guides with distinctive sets of criteria. “In the early days of influencer marketing, pricing was all over the map,” says Eric Dahan, CEO at influencer marketing agency Open Influence. “Brands were focusing on follower counts, and influencers were charging massive premiums to brands and, in some cases, even getting them. A big role we played was keeping influencers’ pricing in check. As an agency, we have helped standardize fair pricing for both brands and creators based on several factors.” Open Influence, which has worked on creator-heavy campaigns for brands like Amazon Prime, Bose and Barilla, weighs several factors beyond creator follower counts and impressions, like which platform is being utilized, if they are using video or static images, and usage and exclusivity rights. Photography influencers, for example, are far more expensive than fashion influencers. And if there's travel involved or event attendance required, that will also drive rates higher. Some of this may seem obvious: A creator with millions of followers posting a video to YouTube, which requires more production, will be much more expensive than a creator posting an image to Instagram with the same audience. And an influencer granting exclusive rights to content will always be more expensive than ones who grant partial rights or post one-off images or videos. It’s these types of benchmarks that make influencer campaigns even more structured and varied then digital or traditional ad campaigns. Influencer agencies have to manage many variables like talent aspect along with digital KPIs like CPMs (cost to reach 1,000 views) or CPVs (cost per view). “Creator pricing isn't black and white,” says Eric Jacks, chief strategy officer at Collab, which works with brands like Coca-Cola, Nike, Bud Light and Dunkin’ Donuts. At Collab, creator rates are based on a number of factors, with follower sizes oftentimes not even being the most important aspect. The general scope of the work—how many deliverables, across what platforms and the timing—come into play. With more platforms available than ever, more deliverables across multiple platforms over a short period of time can increase fees. Collab also looks at usage rights and brand ownership of the content, performance metrics where high engagement can make up for smaller followings, and the ability for a brand to run paid media to help boost creators’ content, which could also increase fees. Meanwhile, the broader a brand’s exclusivity needs, the higher creators’ fees will be. For instance, an exclusivity around “cars,” will mean a creator will not be able to work with other auto brands, and therefore, the rate will increase to make up for potential missed income. Some creators also have costs aligned with their content creation process, especially those producing high-quality video, and might accept other perks, such as free travel, lodging and goods to bring their rates down. Everything is negotiable In today’s market, creator rates at agencies are also likely to undergo several rounds of changes, unlike in the early days of influencer marketing where a set price was often determined at the onset. During a negotiation period, rates might change depending on timing driven by supply and demand, compressed timelines and whether or not influencers have representation, which many do now. Dahan says influencers with agents are less likely to offer discounts on their rates and are more likely to overcharge for non-standard activations such as exclusivity, event attendance and any extensions on usage rights. Gil Eyal, managing partner at Starfund, which invests in consumer startups and runs about 500 influencer activations every year, says that overall, influencer pricing has become very negotiable. Like with most deals, the higher the spend, the larger the discount. Typically, smaller brands might shell out as little as $5,000 to $10,000 when starting with influencer marketing, whereas bigger brands place millions in budgets and pay less per creator, he says. “You can often get better deals by reaching out to multiple influencers, buying a package, or asking them to throw in free posts on their smaller social networks in addition to the main ones,” says Eyal. Paying up With negotiating and price points depending on so many factors, the amount brands end up spending can range dramatically, especially across YouTube, Instagram and TikTok, the major platforms used for creators today. Eyal points to a simple formula as a jumping off point for pay based on follower count. On TikTok, Instagram and for a mention on YouTube, brands can look to pay creators between $1 to $5 per 1,000 followers. For a YouTube dedicated video, that could jump as high as $10 to $20 per 1,000 followers. A brand looking to spend at least $100,000 on influencers could secure better prices and get around 10 to 15 posts from a creator with 10 million followers, or anywhere from 50 to 100 posts from microinfluencers. Others say that much money wouldn’t extend that far. Takumi's Keane-Dawson says that with $100,000 a brand could get about two posts—one in-feed Instagram post and one Instagram Reel—with a macroinfluencer who has 2.5 million followers, or two posts with 20 microinfluencers who have 25,000 followers. Subscribe to Ad Age now for award-winning news and insight. Outside of Instagram, YouTube creators can cost the most due to the effort of production, with the most popular earning as much as $500,000 per deal and others falling between $5,000 to $15,000 range. On the opposite end of the spectrum are TikTok creators, who can be less expensive. TikTok’s most popular creators with 25 million or more followers can make as much as $100,000 to $250,000 per brand deal, while most creators fall into the $5,000 to $20,000 range, says one influencer executive. Bumps in the market Industry trends like the rise of microinfluencers, diversity and inclusion initiatives and new revenue streams from platforms, continue to affect creator pricing and availability. With the growing awareness around diversity and inclusion in the aftermath of the death of George Floyd, there's been a push to right-size pricing for BIPOC creators. But there's still plenty of work to be done to close the gap. “We are still seeing notable differences within pay for women, POC, disabled, and LGBTQ+ influencers and creators,” says Keane-Dawson. “What we hear from the influencers that we work with is that there is still a notable gap in pay and respect for creators' time and energy.” And as brands became more metrics-driven they are increasingly tapping microinfluencers, who might have smaller followings, but see larger engagement. “Microinfluencers who were previously struggling are now charging big premiums,” says Open Influence's Dahan. While creators rely on brand partnerships to make the majority of their money, that could start to change with the advent of new revenue streams like affiliate deals, revenue share agreements and plaforms' own pay programs. That could eventually lead to creators becoming “pickier with brand partnerships,” says Dahan.

Behind the cost for brands to hire influencers—the complex math explained

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