What Is the Cost of Influencer Marketing?

A few decades ago, the concept of influencer marketing was nonexistent. The closest thing we had to influencers before the mid-2000s was movie stars and musical artists, and getting their endorsements wasn’t cheap. That all changed when social media blew up. Now, popular content creators are getting the attention of millions of adoring fans worldwide — just by being themselves and producing easy-to-digest content on social media! There’s something inherently down-to-earth about people you see on popular platforms like Instagram, YouTube, and TikTok. They feel like people you could know in real life, resulting in diehard connections that last.

With the rise of new social media stars came a brand-new way to market a business or product. Influencer marketing is a surprisingly effective way to expand your company’s reach. It taps into an audience of people who are too savvy for inauthentic advertising techniques. Influencers connect with people more profoundly than traditional celebrities, making a partnership incredibly valuable.

If you’re thinking about working with an influencer, there are many behind-the-scenes details to iron out. The most important is payment. Influencers are a hot commodity in the business world, and companies shell out a lot of dough to work with them.

So how much do you pay an influencer?

How Do They Set Their Rates?

The most important thing to remember is that an influencer’s product is themselves. You’re paying an individual to create content, use their personality to shed light on your business, and make a recommendation to the audience they hold dear. Content creators take that job seriously, as they should. They aren’t going to give social media clout to your company for free. That’s their business, and you should approach partnerships with that in mind.

From a tax standpoint, influencers are independent contractors. They aren’t employees of your business, and they often set rates for themselves. Some creators will work with agencies and other management bodies, but they primarily run their operations like a company of one employee!

Influencers can come up with any rate they want, but you’ll find that a few industry-wide factors usually come into play. Three of the biggest are platform, follower count, and engagement rate.

The type of platform the social media star uses is an essential factor to consider. Not all sites are the same, and influencers usually excel in some areas while having smaller audiences elsewhere. For example, a creator might prioritize photography, resulting in millions of followers on Instagram. Meanwhile, their YouTube following may only be a fraction of what they have on the photo-sharing site.

There’s also the time involved with creating content on specific platforms. Making a branded YouTube video can take days or weeks. However, a simple post on Facebook might only take a few minutes!

Follower count is another significant factor, and it has everything to do with reach. Of course, a higher follower count means the branded content will be in front of more people. That will cost you.

Typically, influencers fall into one of the five following categories:

  • Nano-Influencer: 1,000 to 10,000 followers
  • Micro-Influencer: 10,000 to 50,000 followers
  • Mid-Tier Influencer: 50,000 to 500,000 followers
  • Macro-Influencer: 500,000 to 1 million followers
  • Mega-Influencer: Over a million followers

Finally, rounding out the primary rate factor is engagement. Engagement refers to how much followers interact with the influencer’s content. Higher follower numbers don’t always guarantee success. If people aren’t actively consuming and interacting with the content, you might as well be screaming into the void. For this reason, companies often consider engagement rates more than follower counts to attain a higher influencer marketing ROI.

Those are the three main considerations when setting an influencer rate. However, there are others.

Content creators typically think about details like:

  • Niche
  • Demand
  • Content rights
  • Exclusivity contracts
  • Length of campaigns
  • Network and agency fees
  • Link-in-bio agreements
  • Delivery timeline

Different Types of Partnerships

There are many types of partnerships you can engage in. What’s suitable for your company will depend on your goals. (More on that soon.)

Not all content creators do every type of agreement. Typically, influencers will have a press kit that includes which partnerships are available and the asking rate for each. Let’s look at some of the most common forms that influencer marketing can take.

Shout-Outs and Mentions

Here is one of the cheaper marketing options. Suitable for companies on a budget, these agreements are quick and straightforward. As the name implies, the creator will give you a shout-out. They might promote your brand in their regular content or mention you in the caption. Either way, it gets your company’s name out there.

Sponsored posts are straightforward, too. Essentially, you pay for the influencer to create a post that directly mentions your product. In most cases, the content focuses solely on your company’s offerings.

Follower Giveaways

Giveaways can do wonders to create a short-term boost of interest. These campaigns involve sending products to the influencer. They then make a contest or random drawing to give said products to lucky followers. Giveaways can result in a spike in brand engagement, building more awareness and generating leads.

Gifted Freebies

Who doesn’t like free stuff? Sending gifts was one of the earliest forms of influencer marketing. The idea is that you ship products to the content creator in exchange for shout-outs and kind words. For nano- and micro-influencers, the freebies alone can be enough to encourage a mention. However, influencers with millions of followers will also require a fee.

Affiliate Marketing

Affiliate marketing refers to paying an influencer to promote your product. But instead of a simple flat fee, you pay a commission for every sale they generate. Usually, the commission comes after a buyer uses a unique promo code. Not all influencers are keen on affiliate marketing because of the commission-based payment structure, but it’s still a powerful way to get exposure.

Ambassadorships

Becoming a brand ambassador is like becoming the face of your product. It’s a long-term marketing strategy that could lead to a potentially lucrative partnership on both sides. With an ambassadorship, the influencer consistently creates content that promotes your brand. Their job is to hype your business up and continue to generate buzz throughout the length of the contract.

Full Platform Takeovers

If you want to create a ton of buzz, you can pay to take over a platform for a few hours or an entire day. With this partnership, the influencer will post sponsored content for a specific duration of time. Usually, that content will include many posts and frequent calls to action, diverting followers to your website or social media profiles.

Defining Your Goals

Before you do anything, it pays to sit down and go over your goals for this collaboration. Influencer marketing is versatile, and it can achieve many different outcomes. But how you use this particular marketing tactic will depend on what you want to accomplish. Consider the best-case scenario and think about what you want from this partnership. With that information, you can hone your strategy and find the right influencer to help you get there.

Let’s say, for example, that you have a targeted goal of increasing sales. Maybe you’re launching a new product and want to hit the ground running. Or you might have a sales event coming up and want to increase revenue. A sales-focused goal could benefit from more straightforward collaborations with a direct call to action.

Meanwhile, a goal to improve brand awareness might warrant a more holistic, long-term approach. You want to get your company’s name out as often as possible. So creating long-term partnerships, paying for shout-outs from multiple influencers, and doing affiliate programs may be the way to go.

There’s also the common goal of increasing your own social media follower count. In that case, you would need to change your tactics to redirect an influencer’s followers your way.

There are many approaches to influencer marketing, and the first step is to define your goals and figure out what you want.

Metrics to Consider

Getting in on the wealth of opportunity that influencers present seems easy enough. But like any other marketing channels, these collaborations must provide a good investment return. The ultimate goal is to boost your bottom line, right? Pay attention to these metrics to ensure that you’re getting the most bang for your marketing buck while paying influencers a reasonable rate — and that you have the best chance of getting a positive financial outcome.

Demographics

It’s always a good idea to look into a creator’s demographics. It’s easy to think that all exposure is valuable exposure. But what’s the point if more than half of the influencer’s followers are in a market you don’t serve?

Bot Traffic

Unfortunately, bots are a reality that content creators have to deal with regularly. Bots pad follower counts, but they don’t offer real engagement. There are no figures to determine what percentage of followers are bots, but you can look for obvious signs of high bot traffic. These include seemingly random growth spurts, inconsistent engagements, and irrelevant comments.

Influencer marketing can reach people better than traditional ads. But even with that unique connection, many followers aren’t keen on interacting with sponsored posts. Don’t just look at overall engagement rates. Do your research to ensure that engagement on sponsored posts is at an acceptable level.

Follower Growth

Influencers in the midst of substantial growth are worth a lot more than someone who already has a ton of followers. It’s the idea of going viral. Many content creators produce something that grabs significant attention, leading to staggeringly high engagement numbers. That engagement will lead to immense growth. But your collaborations can have the most impact during that period of viral social media stardom.

How to Find a Creator for Your Business

So, you know how to define your goals and what factors go into setting influencer marketing rates. What now?

Understanding the money behind this marketing technique is only half the battle. You also have to choose the right influencers to partner with. The right person can make or break your campaign. If you’re even remotely tuned into social media, you know that all it takes is one piece of drama to make a creator’s reputation plummet. It’s a balancing act, and there’s tons of inherent risk.

The trick is to take the time to choose the perfect social media star. It should be a person who represents your company to a T and reaches an audience who would benefit from using your product or service.

There are many ways to find creators. You can connect with influencers directly if you’re already familiar with the scene. Find someone you think fits the bill and visit their profile page. Most influencers have business contact emails that direct you to managers or agents.

Another option is to go to popular agencies and creator networks. These companies usually have a roster of influencers for you to work with. Their sole purpose is to monetize social media channels, so they work with brands directly. They can help you find the right person for your needs and budget.

Finally, you can turn to an influencer marketing platform. These sites are similar to agencies, but they often have thousands of profiles and powerful search tools to look through. Marketing platforms can give you quick access to media kits, making it easy to find rates and options that work with your campaign needs.

How to Pay Your Influencer

Don’t forget to think about how you’ll pay your influencers! The key to a successful long-term relationship with content creators is to pay them on time and on their terms.

That’s where Dots' influencer marketing payouts solution comes in.

Dots is an easy-to-use no-code and API  solution that dramatically simplifies how you send payments to influencers. Whether you’re paying agencies or sending money to creators directly, Dots takes the headache out of the entire process. Work with several influencers and pay them all with one easy system.

Our API sends trackable payments with fully customizable white-label emails. Keep an eye on payouts to ensure your collaborators get their rightfully earned pay. It doesn't matter where they are in the world. Dots can manage international payments while taking care of everything from tax documentation to KYB compliance.

The best part is that you have all the flexibility to pay influencers how they want. From same-day bank transfers to digital services like Venmo and PayPal, Dots does it all. Get rid of the headache of sending influencer payments, and take care of your collaborators as promised. With Dots, you don't have to worry about any back-end logistics. Set the API to autopilot, and you can sit back to watch the fruits of your influencer marketing labor pay off.

Get Started With Dots Today

Don't let the potential of influencer marketing slip through your fingers. Social media is king, and its biggest stars can help your business grow more than you ever thought possible. Partnerships can lead to more tons of exposure, more sales, and skyrocketing revenue. It's up to you to take advantage of it!

When you're ready to dive into influencer marketing, turn to Dots. We'll help you pay everyone quickly and efficiently. Schedule your demonstration today to see the Dots API in action!