Table of Contents
- What are Influencer Payments?
- Influencer Marketing in 2023
- A Timeline of Influencer Payments
- The Most Popular Ways to Pay an Influencer
- Payouts by Influencer Type
- How to Make Influencer Payments by Social Media Platform
- Automating Influencer Payments
- Metrics to Use When Pricing Influencer Payments
- What Factors Affect Influencer Pricing?
- Influencer vs Affiliate Marketing
- Influencer Payments FAQ
- The Future of Influencer Payments
Traditional marketing is gone and a virtual ecosystem of channels has replaced it. Brands struggle to compete online, as every published campaign adds to the deafening noise of competition. A flooded market has made consumers highly skeptical of self-promotion and inauthentic advertising. This has led to the demand for a different type of strategy known as influencer marketing.
Since 2019, the global sector for influencer marketing has more than doubled. Today, the market is valued at $16.4 billion. It’s a lucrative path for a company of any size.
Much like word-of-mouth or referrals, influencers have a deeply personal impact on consumers. Unlike affiliate marketing, influencers connect with other people (not companies). They are characterized by a dedicated and loyal social media following that your business can essentially “borrow.” Influencers are perceived as experts in a specific niche and their recommendations are highly regarded.
Companies have begun investing a significant amount of resources into executing successful influencer marketing campaigns. However, it’s a competitive market and top influencers are looking for companies that minimize the onboarding experience and optimize payments.
When it comes to compensating influencers, there is a multitude of payout structures, payment methods, and pricing tiers to consider. Since there isn’t a standard way to measure performance, determining the right influencer, where to promote, and how to pay them can get complex.
In this guide, we’ll take a deep dive into influencer payments and cover everything you need to know to get started with an influencer marketing strategy today.
What are Influencer Payments?
Influencer payments involve any form of compensation awarded to a freelance marketer with a niche social media audience, for content creation and/or promotion. Expect to pay anywhere from $10 to $1000 per post depending on the size of the influencer audience, the social media platform, and the type of marketing campaign. TikTok will run you on the higher end for cost, while Twitter is a more affordable option.
Influencer Marketing in 2023
Influencers have the power to affect the purchasing decisions of people you want to reach. That’s a powerful marketing strategy, so it’s no surprise that the industry has been doubling each year. It grew from $1.7 billion in 2016 to $9.7 billion in 2020. In 2021, it reached $13.8 billion, indicating steady growth.
The numbers show that influencer marketing is an effective channel worth the costs. All the stats point to an incredible return on investment, with most marketers planning to increase spending exponentially in the coming years.
According to a recent study, there are an estimated 3.2 million to 37.8 million social media influencers in the world, representing millions of unique content creators who need more than a one-size-fits-all payment structure.
If you still need some convincing about the efficacy of an influencer post, consider these stats:
- 61% of consumers trust influencer recommendations over a brand’s social media account.
- 48% of marketers find that the ROI is better with influencer marketing than with other channels.
- 80% of consumers complete a purchase after seeing an influencer recommendation on social media.
- 71% of respondents agree that influencer marketing leads to higher customer quality.
- 70% of consumers say they follow more than 10 influencers.
At this point, many organizations have realized the pivotal role influencers play in modern marketing. Now, the challenge comes from fostering long-term relationships and retaining partners in the creator economy.
A Timeline of Influencer Payments
To understand the expectations of today’s freelancers, and accurately forecast future influencer payments, let’s take a quick look at how we got here.
MySpace launched the career of the first influencers. They pushed products through videos on their main page and were compensated with gifts, cash, or invites to events. Ticket comps and free swag became the commonplace payment method for this new marketing strategy.
Influencers began to wisen up and started asking for compensation on a per-post basis. As the pay-per-post model was in full swing, the first freelancer marketplace was developed for bloggers to create branded content.
At this point, sponsored posts are introduced and begin to take off. Now, some influencers are asking to be paid simply for “checking in” to a business or location.
A lot of advertising revenue was being diverted to sponsored posts and it was not long before the Associated Press and Forbes jumped on board. Companies also began sending products to influencers just to see them unboxed in front of an audience.
Regulations are developed to ensure advertising rules are followed. In the United States, the regulatory firm is called the Federal Trade Commission (FTC) and in the UK, the department is called the Advertising Standards Authority (ASA).
There is a ruling that requires brands to appear more authentic online and create more transparency in advertisements. You must have clear labeling for sponsored posts, ads, and gifted items, including:
At this point, some brands switched up their payment method to get around regulations. They did this by offering rebating rewards and store credit for their partners to get around. However, as influencers become savvier, money speaks louder than anything else.
In the current market, the pay-per-post model dominates. The most common metric to measure influencer marketing success is engagement. Since the pressure is on to prove a return on investment, influencers are increasingly paid a fixed rate with a performance bonus.
In some cases, performance-only payments are also appropriate. This deters fraud. It also offsets issues from influencers who have paid followers or low-quality engagement; which can lead to lower impact and a reduced ROI.
The Most Popular Ways to Pay an Influencer
Like any other freelancer, influencers are open to a variety of payment types and revenue streams. The majority of influencer payments involve some form of sponsored content, where the business pays the influencer or gives them free products. The influencer may also enter into a partnership with the brand, in which case, commission payments are more appropriate.
Here are some of the most common payment methods for influencers:
1. Gift or Rewards
The most inexpensive way to pay an influencer is through gifting. Even top-level influencers still seek out gift-only collaborations depending on the brand.
In most cases, influencers are gifted a product, which they then try out in front of their audience. This draws in people who want to see someone they trust, try something before they buy it. It also helps the influencer build their portfolio and leads to long-term partnerships.
2. Comped Tickets and Trips
Inviting influencers on a trip or to an event has reciprocal benefits and is a win-win for both parties. Offering a free stay to a select few has long been a draw used by companies to boost sales. The only thing that has changed is the sheer opportunity for promotion.
Influencers will be bringing their phones and cameras on trips, which makes creating and distributing content easy. If the event or trip is big enough, they typically do not expect any other form of compensation.
This form of payment also creates a higher level of authority. Influencers seen going on lavish trips or walking the red carpet in awards ceremonies inspire their audience to want to visit the same places or purchase the items worn.
3. Rebates and Store Credit
It’s never a good idea to ask for a lot of work, while offering little payment in return. The influencer will feel devalued and is likely to not work with you again. This is especially the case for larger brands that clearly have the money to pay people.
Store credits and rebates work similarly to gifting and tend to target the same types of influencers (think smaller like nano and micro influencers). However, unlike gifting, where influencers must announce the ad, rebates and store credit requires no such disclosure. It’s a workaround for regulations.
Many well-paid influencers will likely scoff at the offer for store credit. However, there might be an exception if the product offered is of high value or addresses a personal need.
4. Content Licensing
User-generated content (USG) is one of the most powerful forms of marketing out there. People are much more likely to buy when they see other people wearing and using your product. USG can include anything from selfies to finely-tuned videos and long-form content. According to a recent survey, 87% of brands take advantage of the authenticity of UGC, while 72% say it helps with engagement.
This is where content licensing comes in. When you want to quickly build up your content repository with genuine articles, compensating influencers with a content licensing fee or royalty payments is the best way to go. This can be done using an influencer marketing platform or it can be integrated as a payment model in your partnership contract.
When you agree to a license fee, there will also be a discussion on exactly where the content can be used. This typically includes your website and social channels (unless explicitly stated otherwise). There will also be a stipulation on the length of time the content can be used. This can either be a set period or in perpetuity.
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5. Sponsored and Pay-per-post
This is the most common form of payment for modern influencers. This payment method is an a la carte version in which you pay for each piece of content. Thus, there is a wide price range that depends on a variety of factors, like:
- Follower count
- Audience engagement
- Type of content
- Expertise of the influencer
- Content quality
- Brand product value or brand size
- Length of partnership (short term/long term)
The biggest celebrities can command the highest amounts per post, with Kylie Jenner (196m+ followers) and Christiano Ronaldo (238m+ followers) asking for $1 million per sponsored post. However, you can also reach out to nano and micro influencers who may only charge $10-$100 per post.
6. Performance-based Payments
Just as it sounds, these are payouts that are defined by some type of measurement. Meant to incentivize, performance-based partnerships are popular with both influencers and marketers alike. That’s because they’re easy to execute and highly trackable. This means a lot of value can be assigned to this type of content, and your top influencers will really shine.
Whether these partnerships are for a specific campaign, to increase sales, or sell certain products, the payment is clear and flexible. For example, this payment method works great for influencers with a large follower base, or a micro influencer with an elevated rate of engagement.
In a performance-based model, influencers either post on their feed, stories, or reels, recommending a product or brand, and are only paid when a user converts or triggers a success event.
What are some calls to action that can trigger a performance-based payment? Check these out:
- Purchase – Buys a product or signs up for a service
- Booking – Books a hotel or flight
- Subscription – Signs up for a program or monthly subscription
- Download – Enters details to download gated content
- Account creation – Registers for a given service, account, or joins a community
- Newsletter – Signs up to receive email newsletters
The ultimate goal is to collect user data and convert the interaction into a sale.
7. Fixed Rate and Bonus
This is the best of both worlds when it comes to pay-per-post and performance-based payments. This method sees a higher return on investment and gives the influencer a fixed-pay cushion to cover their upfront work.
In this model, everyone wins. The brand pays the influencer a base rate for the post, but also sets targets and goals that they must reach to receive a bonus payment. In this way, the freelancer is rewarded for every sale that they make.
This gives the contractor two types of incentives. The fixed-rate demonstrates that you value their work. The second is that the more sales the influencer makes, the more lucrative the partnership becomes. A bonus system can be constructed in a number of ways, including (but not limited to):
- Order value
- Specific sales
- Contact forms
If you’re looking to drive sales and engagement at scale with an influencer payment system that rewards genuine efforts, this may be the best route for your business.
Payouts by Influencer Type
Influencers need the appropriate contracts and compensation, which will depend on a variety of factors like followers, channel affinity, performance, ROI, and more. At the same time, marketers need to take a more customized approach to each individual partnership. In order to understand influencer payments, you should first know how influencers are categorized:
- Nano influencers -1000 – 10,000 followers
- Micro influencers – 10,000 – 50,000 followers
- Mid-tier influencers – 50,000 – 500,000 followers
- Macro influencers – 500,000 – 1,000,000 followers
- Mega influencers – 1,000,000+ followers
Nano and micro influencers are everyday people with a decent following and influence. These people are often overlooked and underused in the influencer marketing space, but they have a high value for reaching niche audiences. Most do not expect a payment per post and settle on a performance-based payment structure.
Macro influencers have driven their following a little higher and gained popularity through the social media channels themselves. Some may charge per post, but others can be open to different payment types.
Mega influencers are usually celebrities and “cewebrities” (celebrities with their start on the web). They are famous beyond social media (sports, TV, movies) and always charge by the post.
Other Influencer Types
Influencers can also be categorized by the types of things they post or the channels they use. This can involve:
These people can have any amount of followers and typically represent true earned media. They have a strong affinity for your brand and have authentically good things to say about it. These influencers are natural brand advocates and require zero training. They’re some of the most affordable as well, since they’ve already promoted your brand for free.
These people generally come from an artistic background and their content is high-definition, innovative, and attention-grabbing. The content can be successfully deployed by a brand across owned and paid channels. Influencers like this more often than not ask for payment by post.
These are standard social influencers that have a following based on who they are, what they’ve worked on, and who they know. They’re basically popular for the sake of being popular. Visual informants can create positive brand sentiment and strongly influence buying decisions just by associating with a product.
These are influencers who present a social presence like a reality show, filming what they ate for breakfast, what their favorite products are, and who their friends are. These people accept all different types of payments and can be used for a variety of campaigns. Consider them “always on.”
How to Make Influencer Payments by Social Media Platform
When it comes to calculating average influencer rates, it really depends on the number of followers and site you want to use. Here are some common payments categorized by popular social media platforms:
TikTok is quickly becoming the most influential social media platform on the market. Typical benchmarks on pay-per-cost posts are:
- Nano influencers $800 per post
- Micro influencers $1,500 per post
- Mid-tier influencers $3,000 per post
- Macro influencers $5,000 per post
- Mega influencers $7,000+ per post
Instagram is the next best cost-effective channel for influencers. Here are the average prices based on followers:
- Nano influencers $10-$100 per post
- Micro influencers $100-$500 per post
- Mid-tier influencers $500-$5,000 per post
- Macro influencers $5,000-$10,000 per post
- Mega influencers $10,000+ per post
A standard rate for Instagram is $1,000 per 100,000 followers.
The cost per post on YouTube is generally $20 a video, per 1,000 subscribers. For every 100,000 followers, expect to pay a base rate of $2,000.
The average charge for influencer posts on Facebook is $25 per post, per 1,000 followers. That’s $250 for every 10,000 followers.
Influencers on Snapchat charge $10 per post, per 1,000 followers.
Influencer rates for Twitter average $2 per post, for every 1,000 followers. This channel typically has the lowest influencer marketing fees and is one of the most affordable.
If you want to drive traffic via blogs, influencers charge around $60 per post, per 1,000 unique visitors.
Automating Influencer Payments
Marketers cite the rising cost of influencers as one of their top challenges today. As the market continues to expand at record rates, brands need to start thinking about how to diversify their influencer partner portfolios. This means looking to nano and micro influencers who have very specific audiences and are more affordable.
However, many companies don’t have the ability to customize a large number of payments and incentives to satisfy a growing portfolio. This is where automating influencer payments comes in. Fintech is your friend and you should start looking for some smart payment tools before you hire a bunch of people.
Advanced automation has been a game changer for the influencer payments industry. There’s no need to spend hours onboarding influencers, processing invoices, and managing payments.
A cost-effective payments solution like Tipalti can help a business scale by automating mass influencer payments (on a global level), handling influencer onboarding, and managing tax compliance. You should be able to pay hundreds of influencers seamlessly; with the click of a button.
In addition to tracking and data analytics, brands can also leverage robust SaaS (software-as-a-service) platforms. These work to manage the entire lifecycle of an influencer partnership. Tipalti partners with Omnia Media to reduce partner onboarding, compliance, and payment workload by 95%.
A brand has a full, 360-degree view of the customer journey from the first click to conversion. This enables marketers to gain a clearer picture on the true influence of these partnerships based on ROI.
Creators are now in the driver’s seat
Do you have a mass payment solution to keep everyone happy?
Affiliate Software Programs
Another way to capture the important performance data of influencer campaigns is through affiliate software. Affiliate marketing platforms measure the efforts of all parties involved and assigns a true value to your influencer campaigns.
The user-friendly software helps to monitor and credit referrals based on a variety of metrics like page views, clicks, and impressions. The system will also confirm transactions and purchases, leaving one less step to worry about. The entire purpose of the technology is the track the various aspects of a specific action online.
Affiliate software will monitor the recommendation, referral, and endorsement an influencer makes for your product/services through a third party. The technology behind the tracking involves:
- Browser detection
- Marketer’s affiliate referral
- User-client IP detection
- Advertiser’s completed transaction
Metrics to Use When Pricing Influencer Payments
Although we’ve discussed factors that can affect influencer pricing and how payments are made, it’s also critical to consider the exact metrics that will determine your financial outcomes. Here is a list of top influencer metrics to include when creating a financial model:
Demographics play a role in establishing campaign metrics no matter what type of marketing you’re trying to accomplish. For example, what if your store only ships within the United States? You certainly don’t want to hire an influencer with a large audience outside of the country. Consider how much of their following is in the same location as your target audience.
Amount of Sponsored Posts
How many sponsored posts is an influencer committing to each week/month? These types of content will get lower engagement. Therefore, the more an influencer floods their audience with sponsored posts, the less likely you want to add your brand to the mix.
Follower Quantity and Quality
Is your influencer rapidly gaining followers? That’s a good opportunity to send them an ad. However, if the audience is fake or bought, you’re back at square one.
Bots and fake engagement do nothing for every party involved. Influencers may be able to scam you in the short term, but you’ll probably never work with them again.
Four telltale signs you’re dealing with bots include:
- Inconsistent engagement rates
- Sporadic follower growth
- Low-quality engagement
- Repetitive or vague comments
Return on Investment
Like any type of marketing strategy, return on investment is a critical metric for measuring success. This is one of the best ways to tell if you’re paying your influencers properly. To calculate what your return is, simply use this formula:
(Total gain – cost of investment) ÷ cost of investment
For example, if you invest $1,000 in your influencer marketing campaign and get back $8,000, your ROI is 700%. Not bad.
Influencer Rate Sheets
One of the easiest ways to determine an influencer rate is to simply ask for their rate sheet. Since you haven’t hired them yet, it’s difficult to judge based on ROI. Influencer rate sheets will give you a good idea of their experience, how they compare to the competition, and their expectations in the relationship.
The best thing a business can do to ensure the efficacy of an influencer program is to take the time to research and analyze the factors that come into play. This will help you choose the payment structure that fits best. Since influencer marketing is no longer a plug-and-play channel, there isn’t one specific way to pay people.
What Factors Affect Influencer Pricing?
There are several factors that affect influencer pricing beyond audience size and engagement rate. Here are a few of them:
Many influencers are represented by managers and agencies, who usually charge additional fees.
If you want to own the rights to any content the influencer produces, this will also affect the rates.
A one-time post, like a contest or promotion, is going to cost a lot less than a long-term endorsement. To help determine your budget, build a risk model that outlines the best-case scenario.
If you want the influencer to sign an exclusivity clause, that’s going to cost you. Their bread and butter is working with multiple clients, so this will all be factored into negotiating the contract and budget.
If you’re asking an influencer to create content for more than one channel, it’s likely to cost you for every avenue explored. However, combining efforts maximizes your reach by engaging multiple audiences.
If you need to put a rush on an advertising campaign, that’s likely to be an extra charge. That’s because influencers have multiple clients at the same time and they’ll need to put another project on the back burner to service yours.
Influencer vs Affiliate Marketing
Oftentimes brands confuse influencer and affiliate marketing, which are actually quite similar. An affiliate works with a company to sell products/services in exchange for a commission. They rely on building partnerships with established companies, publishers, and blogs. They are primarily geared toward new-customer acquisition and top-line revenue growth.
Influencer marketing, on the other hand, deals with influential people and tends to focus more on brand awareness. Influencers strive for long-term KPIs and are paid in a multitude of ways. including gifts, sponsored posts, and partnerships. They are usually more effective at building trust and credibility for brands over affiliates.
Common types of affiliate payments include:
- Pay-per-click (PPC)
- Two-tier affiliate programs
Digital marketing doesn’t have to choose one over the other. Influencer and affiliate marketing can be used in conjunction to optimize results. Figure out what your top campaign goals are and then choose the strategy that works best. You can use these techniques at the same time, or run one after the other. The key is to experiment and measure results, then rinse and repeat.
Influencer Payments FAQ
How do I determine an influencer campaign budget?
Figure out how you plan to pay, whether it’s a fixed rate, hourly, gift, licensing, or a combination. You can also request rate sheets from your influencers to better plan a budget.
How do I measure an influencer campaign?
Associate the entire planning process with a quantitative model. Even if you’re making assumptions, it’s good to have a baseline to benchmark against. Start collecting data immediately. An automated solution is a great way to calculate metrics without creating extra work.
What type of influencer should I choose?
Look for an influencer that has the niche audience you are looking for, and experience with the type of campaign you want to run. For example, you don’t want to hire a Facebook influencer for a TikTok or video-based campaign. Instead, hire someone who has experience with videos.
What are the best ways to pay an influencer?
There is no one-size-fits-all. Smaller influencers are more likely to accept gifts and comps over cash. The more followers an influencer has, the more they will expect monetary compensation.
The Future of Influencer Payments
Ultimately, influencers are people sharing their passion with other people. This is what makes it such a successful marketing venture. They produce more authentic content than brands have been putting out for years. Influencers resonate with people who follow them religiously, sometimes tracking their every move.
If you want to retain top talent, you need to fully understand how to pay influencers and what they are expecting. There are so many factors we have discussed that go into pricing an influencer correctly. When in doubt, it never hurts to simply ask. Just make sure to do your own research first, including reading reviews. Due diligence goes a long way.
To get the most out of your influencer programs, brands need to expand their view on influencer payments and the technologies needed to help them partner at scale. While paying influencers by follower count used to be common, better solutions have enabled marketers to think outside of the box.
Influencer marketing is now moving further down the line toward a solid partnership, with a full lifecycle and strategic approach. This involves customized contracts, multiple payment opportunities, and automated personalization across every segment of the influencer market. By viewing the influencer world from a systematic mindset, brands can nurture these partnerships and optimize influencer programs for years to come.
This is what makes paying influencers on time so vital to maintaining a solid working relationship. Every second gained puts you lightyears ahead of the competition. Read more about it here in our new ebook: Why Payments Are Critical to Creators and Influencers.