The price of influence

How much are the services of an influencer worth? It’s a multibillion-dollar question that few seem to know the answer to. We all heard of the six-figure sums that influencers like Kylie Jenner and Cristiano Ronaldo can command per post, and we tend to assume that this has a direct correlation with the number of followers they have. In the past, the idea that someone who has 500,000 followers should charge five times the amount that someone who has 100,000 followers should charge, may have made sense, but times have changed. It's time for brands and creators to change too.

As the industry grows and influencer marketing becomes more widely adopted, questions about return on investment (ROI), influencer pricing and the value of influencer marketing for brands have emerged, making it seem that research and knowledge that drive best practices are lagging. You therefore end up with a market where outdated practices remain in use and brands do not reap the full benefits of investing in influencer marketing.

The idea that follower counts don’t matter is antiquated. The value marketers want from influencers is not related to how many followers they have, but rather a case of how much influence they can generate and how that can lead to sales. A recent Humanz report, How To Run Influencer Marketing Programs That Drive Sales, found that, on average, the ROI of influencer marketing is about four times, but that fewer than 50% of all influencer marketing campaigns result in positive ROI. Further, 20% of influencers/creators are responsible for 80% of sales for marketers, and fewer than 5% are responsible for more than 50%.

So if you are a creator who doesn’t have the follower count of Kim Kardashian but are still able to mobilise a committed and fervent audience, you can and should charge a higher fee. An example of this is someone like Andrew Schulz, who has spent years curating a highly engaged audience. Earlier in the year Schulz explained that he had spent his life savings buying his comedy special back from Netflix after a dispute about censorship. He released it independently and, according to him, recouped three times his investment within weeks. As someone with such an engaged audience, he could charge far more for content than his follower count would suggest in a more traditional system.

How to put this into practice

In a nutshell, the value of an influencer or content creator is the value of the sales they can generate plus the value of the content they can create on behalf of others and eventually the value of the views that they can generate organically for that content. There is also a distinct difference between content creators and influencers.

Influencers sell. They are best at leveraging their influence to drive sales. So they will typically take a commission on what they sell in addition to a fee for creating the content.

The value of a content creator is their ability to create relatable content, relevant to a specific community they are often part of themselves, which brands can use to enhance discovery,  advertising, how-tos or even customer care – for much less, at greater speed and at a greater scale than by engaging with traditional marketing and content service providers. For creators, the thing to keep in mind is the intrinsic value of the content they are creating for the brand. For both, the follower counts are less important than the actual content produced or their ability to wield influence.

As a rule of thumb, following these guidelines will help creators and brands get more out of their partnerships:

• Don’t focus on the follower count. Remember that ROI from influencer marketing is not correlated to the number of followers.
• Define how you will measure success jointly and upfront. Are you working with creators to get brand visibility on social media? Do you want to drive sales, and so forth?
• Think of the role creators can play with your customers beyond acquisition. Review your customers’ existing user journey and map out where content from creators can add value.
• Limit one-off transactional collaborations, and rather focus on intimate interactions to build a long-term network of genuine brand advocates. Start small and scale.
• Ensure influencers/creators feel motivated to work towards your brand’s success. Be transparent with them and add incentives.

Pierre Cassuto is the global chief marketing officer at Humanz.