Making Sense of the Math: A look at evolving influencer monetization models and climbing rates

As the influencer marketing industry has more than doubled since 2019, influencer rates are increasing too, and new ways of monetizing influence continue to make it a lucrative business. While the influencer marketing industry is not immune to inflation, we must ask ourselves what value are we getting in return for higher rates? If demand is driving influencer rates up, is the investment proportionally driving higher business impact?

Here are three ways to determine an appropriate investment in influencer marketing. Start with data. Do the math. Incentivize performance.

1. Always start with the data

Utilize audience data and historical performance insights to evaluate the potential impact of an influencer partnership, rather than starting from vanity metrics or media kits.

There is no universal model for calculating influencer rates, which means rates shared in media kits are often based on what an influencer thinks a brand will pay. We know what one brand constitutes as value may differ to another. Therefore, there is no one-size-fits-all to sponsored rates.

What is most valuable to you? Is it the influencer’s reach or their audience’s propensity to hear your message? Is it the influencer’s likeness or their connection to their audience?

Think about your objective and evaluate potential impact based on universal KPIs. If your objective is consideration, utilize engagement rate and view-thru-rate KPIs to evaluate which influencers will provide the most value. Is their engagement rate above or below average? Do their Reel video views surpass their follow count? If an influencer exceeds your benchmarks, they will provide more value, which warrants a higher rate than those who do not. Conversely, if an influencer’s performance metrics are below benchmark, consider that when determining what rate is appropriate.

2) Do the math.

There is no single measure of impact. To fully assess the tangible return on your influencer investment, you must look at the full funnel and consider your objectives.

That means in addition to performance metrics like reach rate, view-thru-rate and engagement rate, evaluate impact by incorporating cost-pers (cost per thousand impressions, cost per video view and cost per engagement). When you pair performance metrics like engagement rate with impact metrics like cost-per-engagement it helps contextualize the campaign performance and tell a story that maps back to the business objective. Cost-pers help stakeholders understand the impact of influence within the full marketing mix.

However, influencer cost-per metrics shouldn’t be evaluated alone or compared directly to paid advertising cost-pers. The influencer’s reach is more valuable based on their trust and credibility with followers, so create unique influencer benchmarks rather than forcing their analysis against advertising cost-pers.

Beyond measuring campaign impact, these metrics are also helpful in identifying optimizations and opportunities to adjust your influencer marketing approach to drive impact effectively and efficiently.

3) Incentivize performance.

Don’t rely on sponsored rates alone to compensate your influencer partners. Affiliate marketing is a great way for brands to track and ensure ROI, while also ensuring influencer compensation is aligned with the business impact the influencer drives, not just their deliverables. However, affiliate is not the only answer.

Just as influencer rates are not one-size-fits-all, neither are compensation models. Each campaign and influencer partnership deserves a unique value exchange.

Paid Amplification Pay Out: Make compensation for paid usage rights dependent on content performance and use. In lieu of paying upfront for paid usage, wait until the content is live to determine if it should be leveraged in paid or not based on organic performance and content quality. Only if the content is utilized in paid will the influencer be paid the incremental usage fee.

Earned Media Pay Out: Similar to above, in lieu of paying the influencer upfront for name and likeness use, negotiate an incremental dollar amount the influencer will receive based on the number of interviews completed to support earned media.

Product Collaboration: When working with a brand ambassador on a product collaboration, ensure the compensation model is hybrid and partially dependent on the collaboration’s success. A partial amount of the influencer’s payment can be determined based on sales or conversion.

KPI Affiliate Model: Don’t limit affiliate to e-commerce. Consider using an affiliate model to pay influencers based on a range of KPIs including, but not limited to, website visitors, lead generation or other measurable actions.

The influencer landscape will continue to evolve, and rates will likely continue to increase. While industry growth provides more opportunities for brands and influencers alike, it also requires brands to be more intentional with their investments. Ensure your investment generates impact with audience-first, data-driven strategy and intelligence. Always start with data. Do the math. Incentivize performance.