What are you paying for? The irrational state of influencer pricing
Pricing is an area of influencer marketing filled with misconceptions, unfairness and obscurity.
Accurately pricing an influencer collaboration is a mess without any clear guidance or reason behind the prices offered. What are you really paying for? This is a question you’ll often find yourself unable to answer given how the landscape currently is, but one whose answer should be obvious from the start.
Now, there are many challenges that plague influencer pricing and contribute to the lack of clarity that exists today.
What are these challenges?
The current method of pricing influencer collaborations is outrageous and inequitable. Data we gathered from rate cards and market research has shown a 50-50 split between those undercharging and overcharging.Here’s a look at a pretty famous influencer in the GCC. Her rate card may give the impression of a high price but it actually aligns with the performance she provides. (we will come back later in this article on how to quantify the price to pay in a quick manner)
If we were to take another influencer of similar number of followers and prices, but lower performance, we can come to a different conclusion, one where the influencer is overcharging for her content.
Typically, once you find the influencers you want to work with, you approach them and ask for their rate card, but why are these prices offered? The prices influencers charge are often based on a previous experience they’ve had with a brand which they use as a benchmark and later increase as they grow their number of followers. Alternatively, they ask around and price according to other’s pricing or if they’re with an agency, they price similarly to the influencers within the agency according to the number of followers. This is the way pricing happens today, without any transparency or proper references. Not to mention that the rate card often fails to take into consideration economics that have become a standard across different digital marketing channels. It’s set irrespective of the industry they’re operating in and the supply and demand, and the value of the audience isn’t determined by anything concrete. Another major issue is that brands don’t measure against the outcomes. If your objective is to raise awareness then you should know how much to invest to be able to generate the right Cost per Reach or Cost per View. Basically, you often find yourself paying without the guarantee of performance.
Overall, the focus on monetary exchange fostered by this approach turns the partnership material, limited to the transaction at hand when it’s important to go beyond the exchange of cash, but that's a topic for another blog post.
Let's take a look at how to fix this
Influencer marketing pricing should be a scientific process calculated based on the following factors: Audience: the value of the audience is key as it depends on social factors such as the industry and location targeted and the demand on this specific audience’s attention, and we should look at the cost of advertising on social platforms to get a more accurate quantification.
Activity: the scope of work influences the price with event attendance leading to a cost increase due to the time it takes. Content: the cost of production, including time, material and ideation should be factored into the price.
Image: Each influencer has nurtured a certain image and this image costs money to use. The cost of the image varies depending on how well-known the influencer is in the specific market. If you were to apply this formula to every influencer, you’d be able to tell who’s undercharging and who’s overcharging. Let’s go back to our influencers. Influencer A has a predominantly Saudi audience and her predicted performance is great, meaning she could easily ask for $10,000 for views and engagement she gets in the country her audience resides in, according to the suggested audience price.In a nutshell, the suggested audience price for an influencer is simply the price you would pay the social platforms should you be running an Ad and getting the views and engagements this influencer generates. This methodology ensures that influencer pricing should match the advertising economics of social media.
"This methodology ensures that influencer pricing should match the advertising economics of social media."
Influencer A should charge slightly more, around $12,000, when taking the other factors as well, such as activity, content, and image discussed above. Influencer B on the other hand has similar followers, but an audience with a lot less value than the former.
Could you imagine the latter having the same rate card as the former? Yes, this is the chaotic status quo of pricing in influencer marketing nowadays.By keeping in mind these key factors, you will be able to properly assess each influencer. Even better, by adopting an influencer marketing platform, you will be able to quickly compute the fair price to pay that will surely provide the needed performance.