Q&A: How Do Influencers Get Paid?

A social media influencer’s job is to consistently create high-quality content and actively engage with their audience.  Whether their job is a side gig to make extra cash or a full-time career, influencers are able to monetize their influence.  The extent to which influencers are compensated varies tremendously depending on the industry, the specific goals of the marketing campaign, and variables such as logistics (when and where they post content) and scale (how often they post content).

This Q & A session should help small business owners understand the considerations.

What are the variables that determine an influencer’s compensation?

  • The number of followers/fans the influencer has
  • The amount of their engagement

Engagement rate is a metric used to evaluate the average number of social media interactions per follower.  What counts as an interaction depends on the platform; it typically refers to likes, comments, and reactions.  It is calculated as the total number of interactions to an influencer’s content divided by their total number of followers, multiplied by 100%.  The engagement rate demonstrates how well content performs.  Businesses should decide to what extent they expect an influencer to actively engage with followers, for example with two-sided conversations and with commentary that invites reactions.

  • The fit of a particular ad placement/social media post with their following
    • Is the influencer a good match with your business/brand?
    • Does the influencer’s audience align your target customers?
  • The amount of effort entailed
    • Are they creating the content or just posting your content?
  • The location of the promotion
    • On their social media account only, or will you cross-promote?
  • The duration of the partnership
    • Depending on the agreed-upon length of a partnership and the volume of content, the rate per deliverable could decrease
  • Will usage rights be involved?
    • Standard usage rights authorize content to be used on social media only
    • Distribution beyond social channels requires further negotiation
    • Will there be an expectation of exclusivity, or will the influencer work with other businesses?

What types of influencer agreements are common?

There are different forms of agreements/arrangements.  The most common type is based on sponsored social media posts.  The influencer is compensated for promoting a business or its product or service in a post.  Terms of this agreement include:  the number of posts wanted; the type of posts wanted.  The most popular posts are reviews, informational, and simply featuring and tagging the business/product/service.

A “brand ambassador” arrangement is typically an extended contract for a specific period of time, instead of a one-off partnership.  The influencer acts as a representative of the business.  The business provides free products/services in exchange for promoting them on social media.  In addition to the exchange, businesses may elect to pay: a set fee for each piece of content created; or a percentage of or fixed amount for every conversion.

In an “affiliate marketing” arrangement, the business provides the influencer with a unique link or code to embed within their social media post that they will direct their followers to use.  The link/code will be used to track the influencer’s conversions, for which a commission is paid: as a percentage of or fixed amount.  One brand with a popular affiliate program pays a 5% commission for every conversion.

Which social media platforms are best for advertising?

The three powerhouses are currently Instagram, YouTube, and Facebook.  As the most entertaining channel, TikTok is quickly gaining ground.  Instagram has been the dominant and user-friendly “favorite” social media channel due to its ever-expanding functionality and user base.  YouTube is impactful as the largest video provider and the most likely channel to lead to a purchase.  Facebook has massive reach across all demographics and notably, those groups with the higher income levels.  The key considerations for businesses selecting a platform – or selecting an influencer based on the influencer’s preferred platform – are:

  • How well does the channel’s demographic audience match your target audience?
  • What is the channel’s preferred content format?

How are influencers paid?

Most often influencers are paid in one of the agreed-upon forms listed below in exchange for their posts.

  • Cash
  • Gifted products/services/experiences
  • Discounts/coupons
  • Publicity/exposure

Alternatively, businesses may send unsolicited products/incentives to influencers before making an agreement in the hope that they will post proactively.  Transactions can take place directly between the business and influencers, or simply and securely through an influencer marketing platform, such as REACH-Influencers.

How is an influencer’s price determined?

Influencers often set their own rates, but the rate can also be set by the business or an intermediary that helps to connects them.  REACH-Influencers provides a collection of campaigns for influencers to choose from with set pricing from the business. Regardless of how the price is set, it is important that all parties involved agree on the terms and what is expected of them.   The two most common methods of determining pricing is to calculate based on the influencer’s number of:

  • followers ($x per every 1,000 followers)
  • engagements, such as clicks, likes or comments ($x per every 1,000 engagements)

Specific averages are as follows:

  • Instagram: $10 per post for every 1,000 followers; $250-$750 per 1,000 engagements
  • YouTube: $20 per video per 1,000 subscribers; $50 to $100 for every 1,000 video views
  • Facebook: $25 per post per every 1,000 followers
  • TikTok: $5 – $25 per post per 1,000 followers

Is it true that some influencers work for no charge?

Yes, it is possible to be matched with an influencer who is the perfect nexus, someone with a strong following who loves your business or is just starting out and wants to prove themselves.  Many would be willing to promote it in exchange for products, discounts, or something else.  Of course, most influencers are going to do their best work when there a special incentive (exclusive or early access to new products) or financial compensation. And yes, it is possible to leverage an influencer’s work indirectly, by recycling existing content.  Your business could potentially re-post, re-tweet, or re-share content from your own social media.

Your business may ultimately benefit from a combination of strategies – and even a combination of influencers.  Just as their pay varies, so do influencers’ followings, savviness, and suitability with each of the channels.  Fortunately for small businesses, an extensive advertising budget is not necessary.  One reference point is the survey conducted by Bloglovin’.  It found that 60% of the 100 influencer campaigns surveyed had a budget of less than $10,000.

What other factors should your business consider?

  • What is the potential return on investment (ROI)?
    Businesses should consider what they hope to gain through their influencer campaign. Will the call-to-action that you provide to the influencer bring you the return that you want?
  • Once you know the ROI, how does that compare to other marketing efforts?
    According to a 2019 survey of marketers by Mediakix, 89% say ROI from influencer marketing is comparable to or better than other marketing channels.
  • What metrics can the influencer provide to prove their value? Influencers should be prepared to provide results from previous influencer marketing campaigns. This information is available through an influencer’s personal (blog) site and through social media site analytics that track:
    • How many views, likes, comments did their posts generate?
    • How many daily engaged followers do they have?
    • What are the demographics of their followers?

With so many formats in which a business can work with an influencer and with so many options for compensating them, influencer marketing could be the easiest – yet most valuable – marketing move your business can make.

REACH Influencers is the world’s first marketing platform to focus on connecting micro and nano influencers to businesses.  Follow us on social to learn more about how you can build your influencer marketing strategy.