Some social media influencers charge thousands of dollars for a single Instagram post in an influencer marketing campaign (Kendall Jenner was allegedly paid $250k for her Fyre Fest post), but there are so many influencers and creators who create content in exchange for free product.
Concurrently, there are marketers who want an Instagram story, three social media posts, and six months of vertical exclusivity in exchange for free product. And while there are many factors to consider surrounding influencer compensation – the value of the product, influencer demand, and content usage rights notwithstanding – there is a massive need for alignment on appropriate influencer compensation rates if trust and healthy relationships are going to be maintained on both sides of the partnership.
Below we take a look at the top 5 most asked questions surrounding influencer compensation and outline how your brand can develop a compensation strategy based on influencer personas.
1. What Types of Compensation Can Brands Offer Influencers?
Cash: Cash is typically the most desired form of payment by influencers. Just because you are incentivizing influencers with cash doesn’t mean that you need to allocate your entire influencer marketing budget towards incentives.
Gift cards worth less than $10 drive a 1.73x higher activation rate than gift cards worth $10 or more. Although this initially seems counterintuitive, the success of offering a lower value gift card most likely derives from its ‘attainability’ factor: the lower monetary value of an offer, the more likely a customer will feel like an easy win. However, it’s important to keep in mind that, for some influencers who do this for a living (i.e., some micros, but primarily macro- and mega-influencers), a $10 Amazon gift card isn’t going to work. For micro-influencers and above, we recommend using our calculated benchmarks detailed in this blog post.
Branded Rewards: One way to incentivize passionate influencers to share is with a unique reward. Unlike a generic cash reward, users will receive free branded product in exchange for producing an organic post to share with their social media followers. This likely means they are genuinely interested in your brand, making their posts more genuine. Branded rewards, including gift cards, swag and product samples cannot only be high-perceived value rewards, but also function to re-engage your influencers in your customer journey. For instance, gift cards can be used towards a future purchase, swag can elevate the offline impact of your influencers, and product samples are your next ratings and reviews in the queue. You’re creating new touch points while also adding value at every stage.
VIP Experiences: Buying is an emotional decision. Experiential incentives and rewards have the power to engage the sense and generate positive emotions in the ways that objects do not. They become memories that your influencers consciously and unconsciously associate with your brand, increasing brand affinity, sentiment, and customer value over time. In fact, objects have the opposite effect – once attained, desire diminishes exponentially as focus shifts to acquiring the next thing. Experiences also align your brand with today’s cultural norms. Wealth, affluence, and the definition of a well-lived life is not measured by what consumers have, but what consumers have done.
Exclusive Access: In a similar vein of experiences – consumers today want access, not objects. The proof is in some of the most profitable companies today: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” What they all have in common, is that they provide consumers access. The battle for consumer engagement will be decided by who can provide the easiest/fastest/best/strongest access. By rewarding influencers with direct lines of access to your brand, products, or desired experiences, you create an intrinsic cycle of motivation to remain influential and reinforce their brand loyalty.
Promo Codes: One of the questions frequently asked is, once someone is proven to be influential for your brand – how do you know that they will stay influential? What you don’t want to happen is for your influencers to spam all of their followers and lose their impact. One way to guard against that is to provide always-on promo codes and perks on the condition that your influencers continue to deliver value to your brand. Similar to many employee advocacy and brand ambassador programs, as long as they remain influential, they’ll retain access to the reward.
Product Gifts: Because of the costs associated, value driven and the added control afforded, product gifting and sampling should be used strategically. Depending on your brand and vertical, product samples can come at a higher cost than promo codes and other branded rewards, often due to fulfillment alone. When activating influencers to create content, gifting or sampling programs offer you control over the exact product and posting guidelines you want influencers to follow – while still allowing for creative freedom. It’s also an opportunity to recognize and reward high-quality content creators in your influencer program.
2. How Can Brands Deliver Compensation to Influencers?
Pre-payment incentives: When a brand chooses to incentivize influencers with product, a pre-campaign incentive is required – this is what allows an influencer to create the content (i.e., the product). The most common pre-campaign incentives are sending eGift cards for product purchase, sending promo codes for product purchase and free shipping, or actually shipping the product to the influencer.
Post-payment incentives: Brands also have the opportunity to reward influencers after they create content. For instance, if a brand required an influencer post two Instagram Stories and one static post, they would then deliver the incentive to the influencer after all content requirements have been completed. The most common post-incentives typically include gift cards or cash.
Performance-based incentives: One way brands can reward influencers after the influencer has created content is with a performance-based incentive. In other words, a brand can reward influencers when they drive a conversion vs. being rewarded just for sharing or producing engagements. This is particularly common when executing an affiliate program.
Surprise and Delight: A surprise & delight model works particularly well if a brand has smaller incentives and rewards budgets, or passionate influencers who don’t necessarily require a robust incentive and rewards strategy to motivate them to post about your brand. It demonstrates that you not only value your customers, but provides that customer with an exclusive experience that elevates their positive feelings towards your brand while creating major fomo.
3. What Should the Value of Compensation Be for Each Influencer Persona?
Every brand, product, and influencer is different, so often research can validate the brand’s assumption on market rates. For instance, prior to influencer campaign activation, marketers can survey a small, relevant group of target influencers to better understand what types of incentives and compensation are most likely to encourage the desired campaign outcomes.
These factors help ensure proper balance between motivation for the influencer and return on investment for the marketer. But that still leaves marketers little context for how arbitrary influencer rates compare to the rest of the influencer marketing industry. We also encourage marketers to employ a number of tactics that better enable them to design an influencer incentive framework that drives desired results based on influencer marketing benchmarks derived from historical influencer compensation data and performance.
The following are suggested levels of compensation based on current influencer marketing industry trends. It is important to note that the higher the compensation, the more likely an influencer is to work with you. Just as you are recruiting an influencer to be a match for your brand the influencer must also make sure your brand is an appropriate fit for their audience and channels. Non-monetary incentives, such as working with a company who has brand recognition as well as the chance of being reposted on a brand’s social channel, may also play a factor.
Macro-Influencers: These incentives will need to be negotiated based on a variety of factors including, but not limited to: average impressions per post, average engagement rate, comment sentiment, audience demographics, exclusivity, image rights, and costs associated with content creation. Most influencers will share a media kit with the marketer breaking down their analytics and audience demographics as well as a rate sheet with initial price points. Keep in mind that influencers are used to negotiating, especially with a brand that aligns with their values, so use any listed pricing as a starting point. Working with influencers in long-term relationships also a great way to negotiate a lower cash incentive. In general, an average industry-wide CPM of $8.50 is a good benchmark when considering the average impressions an influencer’s post receives. However, there are always exceptions to this rule.
Micro-Influencers: Considering the average industry-wide CPM of $8.50 as a good benchmark, for micro-influencers, you can also include the cost of the product within this CPM calculation. Gift cards with a specific value allow influencers to selectively opt-in if they are interested and minimizes time for negotiation. Gift cards also incentivize influencers to complete the partnership if they only get paid after they complete the campaign requirements. Cash is preferred among influencers, so consider compensating with cash before upping the actual dollar amount. Note: Some of these incentives may need to be negotiated based on a variety of factors including, but not limited to: average impressions per post, average engagement rate, comment sentiment, audience demographics, exclusivity, image rights and costs associated with content creation.
Advocates, Referrers and Loyalists: For advocates, brands can incentivize with a small gift card ($10 – $25) for the completion of a review or a survey. For referrers, brands can incentivize with a promo code to use in-store or online for sharing a link, following a page or inviting a friend. For loyalists, who are truly just fans of your brand, typically no incentive is required.
4. What Are the Rules Around Disclosures for Different Compensation Types?
Any time there is a financial, employment, personal, or family relationship with a brand, a disclosure about the commercial relationship between the influencer and brand is required per the Federal Trade Commission (FTC). Financial relationships are not limited to just money. Disclosures are required if receiving anything of value to mention a product (i.e., receiving free or discounted products, VIP experiences, gift cards, promo codes, exclusive access, etc.).
Disclosures must be hard to miss in clear and simple language. Depending on the social network and content type, the actual disclosure may be formatted differently, but the language used should remain the same. Each disclosure should receive a mention (written or hashtag) of the word “ad,” “sponsored,” or “paid” and should have the sponsoring brand tagged. It is important that this disclosure is within the first two lines of the post – the closer to the beginning, the better.
For a complete guide to disclosures, check out our Incentivized & Sponsored Content Disclosures playbook.
5. What Are the Rules Around Product Gifting?
In addition to needing the appropriate disclosures, brands on Instagram are no longer allowed to gift alcohol or tobacco to influencers in exchange for posts or videos about the products that encourage their followers to buy on Facebook or Instagram.
While Facebook and Instagram users can still post content related to alcohol, tobacco, and vape products, there cannot be any intent to sell or exchange products of that sort. As well, brands that post content related to the sale or transfer of alcohol and tobacco products must restrict that content to users who are 18 and older.
For alcohol/tobacco brands, we recommend that influencer marketing be an awareness strategy. Due to FTC regulations, influencers can mention the brand and brand attributes, but they cannot explicitly tell their followers to buy. Regarding gifting, we recommend marketers incentivize with cash for approved and vetted influencers to purchase the product (vs. product gifting).
The dynamics of influencer marketing, especially at scale, can be complicated – but influencer compensation doesn’t have to be. As an influencer marketing platform, we encourage marketers to take a data-driven approach to influencer compensation by leveraging a mix of influencer marketing benchmarks and contributing cost factors to determine accurate influencer budgets. To learn more about how Mavrck can help take the effort and time out of influencer compensation and fulfillment, read our latest update to bulk influencer incentives fulfillment and book a demo here.