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Social Influencer Marketing Moving to Performance Based Compensation

Using major social influencers such as ‘YouTube stars’ and others has been a popular alternative to traditional digital marketing over the past couple years.  Up until fairly recently, however, brands were stuck paying outrageous fees to some of the larger social influencers just based on their subscribers or followers.  YouTubers with millions of followers, for example, were commanding tens of thousands of dollars to produce once promotional video (that likely took them less than a day to make).

While this relationship worked out fairly well for everyone involved, it was really more of a guessing game regarding how much an influencer really should be paid.  That is finally starting to change.

Social Circle, for example, is an influencer marketing platform that has developed a new compensation formula that looks at engagement with a given video rather than just subscribers.  This has allowed them to look at many of the smaller social media stars, who may have a more active or niche focused following.

Joe Friel, a director at Social Circle said, “We measure all sorts of engagement metrics and apply proper value attributions to each type of engagement across different platforms.  This means that when we discuss prices with influencers, we can estimate the total level of engagement they will deliver and then combine this with the quoted price to work out a cost-per-engagement for that influencer.”

There are many factors involved.  For example, YouTube influencers tend to produce higher levels of interaction than someone on Instagram.  This may mean that an influencer on YouTube will be paid significantly higher than one on Instagram, even if they have similar numbers of subscribers.

Fanbytes is a company that pairs up clients and influencers has also moved to a cost-per-engagement model.  Using this method, they have been able to drive CPE rates as high as $1.22 per expected engagement.   This is significantly higher than the $.06-$.25 that is typical with paying strictly based on subscribers without factoring in engagement at all.

It should be no surprise that charging based on performance is going to push better ROI for brands.  It can also, however, help many social influencers.  Those who truly produce extremely engaging content for their viewers are going to be able to make more money, even if they have not built up a massive following.  This is good for newer influencers, and if they run their platforms well, it can be good for well-established ones too.

Pesach Lattin
Pesach Lattinhttp://www.adotat.com
Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pesach Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

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