Influencer Costs – Your Influencer Marketing Budget
There has been considerable publicity about the level of money some influencers/celebrities charge for their services. Top celebrity influencers can earn upwards of £200,000 per post. But it is important to remember that most influencer costs are nowhere near that large. You are more likely to pay a micro-influencer with Instagram 20,000 followers an amount between £40 and £400.
Huge differences in influencer costs reflect the cost of working with celebrities or high profile influencers. Many smaller brands find that influencers not only cost less but are often more suitable for amplifying their brand. If you sell decking timber to home handymen, for instance, you would benefit more from somebody like a DIY expert with a large genuine following promoting your boards than a celebrity that is not considered an expert in the field.
But influencer marketing is still a new industry. The appropriate costs to pay your influencers are heavily determined on an influencer-by-influencer basis and there are no solid pricing guidelines. The differences between celebrity influencers, macro-influencers and micro-influencers blur – even in the influencers’ own eyes. There has been so much publicity about the sums that celebrities earn, that some other influencers have developed a misunderstanding of the value they bring to brands. This means that you have to enter influencer price negotiations carefully and be prepared to negotiate a fair and realistic price, to obtain services of the most popular influencers.
As the industry grows, many influencers and celebrities are going to continue to demand outrageous fees that do not reflect their value. At PMYB, our influencer campaign management experts lock into price negotiations with influencers everyday and we have mastered the art of doing so. Also, due to our extensive analysis of hundreds of influencers, we have been able to distinguish exactly which influencers are worth brands spending large sums on.
And we’ve decided to share some of the knowledge to help save you time and money in the future.
How to Undertake Price Negotiations With a Potential Influencer
Anybody with little experience negotiating with influencers may find it challenging at first. After all, influencer marketing has only been fully thriving since 2015. Negotiating influencer prices can be particularly complexed when an influencer charges more than a specific campaign budget allows.
Things can also become frustrating if you’ve already invested in time carrying out your due-diligence research on the influencer to find that you really want to incorporate them into your campaign. In such a situation you don’t want to lose them and waste your time but you also can’t simply cave into whatever monetary demands they make, in fear of losing them.
It is important that you go into influencer price negotiations with a realistic mindset. You need to establish the highest amount you can afford to pay and ensure that you don’t go over that. Even if it means losing the opportunity to work with the influencer you want. As you know, getting your high ROI is very important.
On the other hand, you should always be thinking long-term. What effect will the influencer-brand association have on your ROI in the future? How many long-term customers could they convert with their involvement in the campaign?
One problem you may encounter is influencers overcharging. Publicity of high celebrity pricing rates has triggered inflation in the market. One way around this is to negotiate with influencers down.
There are two main approaches you can apply to negotiate down your influencer costs :
- Transactional negotiation – your negotiations focus on the short-term. You aim to go for the cheapest price possible now and haggle to achieve this.
- Relational negotiation – you carry out your negotiations with the longer-term in mind. This means that you focus your negotiations on gaining the best long-term deal for both parties, with trust being the most important factor.
A relational negotiation strategy is likely to result in a lower payment now, and a better ROI on your first campaign. The campaign may, however, turn into a one-off, if influencers feel disgruntled and undervalued. As a result, they are more likely to go with a competing brand in the future when one makes them a better offer.
Influencer Negotiation Strategies to Use/Not to Use
1. Make the First Offer if You Have the Opportunity
If you have the chance to make the first offer it becomes an anchor. This sets a general level for your negotiations which then tend to focus around this anchor. Studies show that the anchor level has a strong psychological pull. It is unlikely that an influencer will make an offer that is substantially higher than your anchor.
Galinsky and Mussweiler discovered this in their research at Harvard Business School. They found that making the first offer in an act of negotiation affords a clear bargaining advantage. The first offer must be reasonable, however, otherwise, you may put off the influencer completely. You do want to get a good price for your endorsement but you also need to offer a fair offer that won’t completely put off the influencer you are aiming to establish a partnership with.
If your potential influencer believes they are worth a great deal more than your anchor offer then there is unlikely to be a successful negotiation anyway, and you know that there will be little point continuing negotiations with this particular influencer. Your price range and theirs are so far off that you need to focus your attention on another cost-effective influencer.
However, it makes sense spending more if the influencer in question is a Chromo-Influencer®, who has a proven track record of success.
2. Turn Suggestions into Questions
If an influencer suggests a rate you believe is too high, you could counter with one of the following questions. They are likely to come back with a lower valuation. If they are out of budget mention:
- “Is this price negotiable? We have a limited budget.”
- “What is the best you can do, so we can agree on a fee today?”
3. NEVER Negotiate your Price Through Competitive Pricing!
When an influencer makes an offer to you, never say to them, “I can work with [name of another influencer] for a cheaper than this”. When you compare influencers with other influencers, most will immediately be offended.
They will not backpedal and suggest a lower rate. The reason for this is because they don’t want to be compared to others. Like every person in the world is unique, every influencer is unique. As a result, it ends up coming across as rude when you begin comparing X to Y. They add a lot of value to your brand, they know that and you need to show that you know that to them.
4. Propose a Deal
In reality, you may be able to get around price expectations by sweetening your offer with a non-cash component. If you can, provide them with free products in exchange for reviews. Also, of course, you could purchase more posts and lower the rate. e.g. £5,000 for one post or £9,000 for two posts. Alternatively, make an offer that involves a combination of cash, free products or something else. But something that sounds appealing to the influencer involved.
Factors Affecting How Much You Should Pay an Influencer
As you prepare to enter price negotiations with an influencer you should consider the following factors to see if the influencer costs are of a level your business is prepared to pay. In fact, you need to ensure that the influencers price is low enough to have a worthwhile effect on your company.
The highest performing influencers can increase your ROI massively in terms of short term and long term sales, attracting new target consumers, forming or reinforcing your brands image and of course, raising the awareness of your brand.
And the better an influencer performs against these criteria below, the higher the offer you should be prepared to make in your price negotiations:
1. Reach, Platform and Volumes of Genuine Engagement
Ultimately the worth of any potential influencer is dictated by just how much influence they exert. While the exact payment will very much depend on the particular niche or industry and the size of their audience, the people you choose to act as your “social ambassadors” should be those who have the ability to genuinely influence their audience. Just because an influencer had developed a large following, does not mean they have influence over a large portion of them.
In our experience, we’ve found that marketers at brands put too much emphasis on numbers. Although we understand hitting a large audience reach is essential, it’s also important to hit an audience that is likely to be influenced. That’s what sets up apart influencers and Chromo-Influencers®. Chromo-Influencers® offer reach with an action – Less effective influencers just provide reach. What influencers do you want your company to use?
High-calibre influencers generally operate on a number of popular social media platforms (or run a trend-setting blog) with large numbers of followers, who genuinely engage with them and their content on a frequent basis.
2. The Audience Quality of an Influencer
The perfect influencer will be somebody who appeals to and is respected by, your brand’s target market. Evidently, you should be only interested in working with influencers that can influence the behavior of your target demographic. To understand this, you need to get the demographic analytics of the influencer before collaborating with them. Any influencer that is legitimately influential won’t be afraid to send you these screenshots.
There is another consideration here. A quality audience is one which actively engages with the influencers they follow. Engagement is a two-way process. True engagement requires frequent active participation by both the influencers and his or her followers. For instance, Zoella (aka Zoe Sugg) is clearly influential with 16 – 25 year old female fashion lovers and she regularly engages with them in her YouTube videos.
3. The Expertise Level of the Influencer
The following point does not apply to some influencers, however, the level of authenticity can really contribute to influencer costs. For example, health and fitness influencers are likely to be more valuable if they are a qualified doctor, such as Dr. Hazel Wallace. It’s a very simple point but an often overlooked point.
Ask yourself the following questions: Does the influencer you are pursuing carry true authority in his or her niche? Does the influencer have any formal recognition for their knowledge or skill in that particular niche? Is there evidence that the audiences genuinely trust the opinions or recommendations of the influencers they follow.
4. The Quality of the Content the Influencer Shares
You will want to look at a potential influencer’s channel and judge whether he/she typically posts quality content. A celebrity may have gained their prestige due to factors outside of social media or blogging. Influencers, however, will generally have built up their prestige and fame due to the quality of the content they create and share.
Undoubtedly, it’s worth analysing previous content they have posted, the especially previous content of brands that they have promoted in similar influencer campaigns. You should examine how well their content has translated with the audiences and distribute the budget of your influencer costs accordingly.
5. How Well an Influencer Fits in With Your Brand
This is obviously a key factor when selecting an influencer. It’s such a simple point but this is something we wanted to highlight again because some influencer marketing beginners fail to do so, still.
Clearly, you will also favour an influencer who represents the same values as your brand.
6. Earned Media Value of an Influencer’s Posts
According to a RhythmOne report, advertisers who implemented Influencer Marketing in 2016 averaged $11.69 in Earned Media Value for every $1.00 they spent. For influencers to perform well you need to have some idea of what they are going to return you.
Although some influencer costs may come across as expensive, you have to remember that the most effective influencers can convert hundreds of consumers into long-term customers for you overnight. The value of influencer-brand association is a benefit that is really under-estimated in the industry.
Our Experience in Negotiating Influencer Costs
We have a network of over 9,500 influencers and our experiences have led us to develop many valuable industry skills, such as negotiating down influencer costs. PMYB specializes in carrying out influencer marketing campaigns for the biggest brands in the world. And brands love us for our unique methodological approach to identifying the highest performing, top 3% of influencers, Chromo-Influencers®.
To optimise your influencer marketing spend, reach out to our team today so they can educate you on how to effectively perform influencer campaigns.Enquire Now