Educate May 2017

Why We Must Pay Social Media Influencers

Written By: Kristina Libby

Brooke Burnett is an influencer in Dallas. She has created the top-ranked fashion blog, One Small Blonde, and routinely gets paid to write about products, attend events and share content on social media. She, like many influencers, has also developed her expertise into a micro-agency where she helps brands develop and grow their online businesses. Brooke has created a lifestyle squarely in the center of the gig economy and is a role model for a growing number of fashion influencers in the central region of the country. Brooke’s model, the model adopted by many influencers, has been working — but not flawlessly. As with any industry, there is room for adaptation, new thinking and new models.

In a recent study undertaken in multiple US cities, we interviewed influencers to determine how influence works, what’s broken in the model of influencer-brand relationships known as influencer marketing and how brands can work to fix the model. The results of the research, combined with broader industry reach, shed light onto new ways beyond that of Brooke and others for businesses to work together. At a high level, the research revealed that influencers should be thought of as entrepreneurs. These influencer-preneurs require a higher level of brand trust and a differentiated marketing approach. Brands who use influencers may also want to rethink influencers to focus on micro — and mid-tier influencers. It all starts, though, with the idea that an influencer is a business person.

Social Media Platforms are Businesses
Gone is the age of the influencer as a hobbyist. In the early aughts and even the early teens, brands could routinely approach influencers who would help them promote their products for free or in exchange for products only. However, as the rise of affiliate marketing and pay-to-play engagement rose, influencers learned that influencer marketing could be a fast path to new money-making opportunities. This growth and success created a field of new influencers searching to become the next big thing. However, paid engagements also came with a responsibility to deliver results for the brands that hired them.

Over 90 percent of respondents said that their social media platforms are or are close to becoming their full-time businesses. If they are not yet employed full-time through their blog or other channels, they hope to be within the next few years and they plan to make these businesses long-term and sustainable. When asked how long he envisions running his platforms, Brandon Baker, the founder of food blog, Brandon Does Dallas, replied, “Until I can’t eat anymore.”

Being a Social Media Influencer Isn’t Cheap — or Easy
These influencers are putting hundreds of hours a month into creating and curating the information that’s appearing online. Those interviewed noted that they spend anywhere from 20 to 80 hours per week curating content, connecting with other influencers, writing articles, taking photographs and posting online. Correlated with the expenditure in time is the expense of starting a blog. One influencer noted, “Starting your website alone, at the quality needed to matter today, is hundreds to thousands of dollars. My website cost over $20,000 in the most recent update.”

Thus, influencers are expecting to be paid for the time and energy they put into helping brands market their products. Influencers predominantly embrace the concept that they, like magazines, are an advertising gateway to their cultivated communities. Like with any advertising channel, they know that they are a pathway to help brands increase revenue and they work to ensure that the spend results in a positive return. Brands should expect that influencer marketing spend will net a return near six times but up to 10 or 11 times for consumer packaged goods (CPG) and other retail brands. While not a focus of this study, recent studies have argued that for every dollar spent, influencer marketing results on average in a $6.85 return for the business.

Get the Best ROI by Paying for Skills and Expertise Therefore, companies should begin to think of influencers not as hobbyists or journalists but as businesses that drive qualified leads and, importantly, sales. Businesses get paid for the work that they do — although the amount varies based on quality, experience, and effectiveness of skill set and expertise. Influencers, when viewed as businesses, are no different. It’s not their follower counts that matter. It’s their skill sets and their ability to deliver the highest ROI for the investment.

Brands that want maximum ROI should consider that there is a correlation between amount paid and value received. An influencer, who wished to remain anonymous, noted, “I think everyone works harder when they feel fairly paid. Wouldn’t you?”

The amount to pay and standards for rates are obscure, with influencers noting wide swings in what brands offer them financially and in-kind for sponsored content. In fact, the obscurity of payment and the limited knowledge base of many on what to pay is among the many data gaps this research hopes to address. Understanding payment for ROI will be a critical factor in guiding the industry forward.

Influencer as Agencies
When considering payment, a brand may want to follow a new payment model brought up by Ben Uyeda, an influencer in New York City. He suggested that brands consider what would be spent on an advertising agency, video production house, creative firm, content marketing agency, etc., and determine a rate between one-fifth and one-half of that price for similar work being done by the influencer. The reduction in pay is not based on skill but on quality. Influencers likely will not shoot a video at professional quality, but they will be shooting creative videos that target specific audience segments.

They bring creativity, audience, subject expertise and execution for the cost. As Ben noted, “When you think about it that way, it’s a bargain.” This model is not the right fit for every influencer or every brand. In fact, it’s a model best considered by influencers like Ben or Brooke, who have been growing their audiences over the past decade, and by top name brands that have funds to spend and are already contributing a significant amount to other agencies. For smaller influencers and smaller companies, the model will be different, payments will be less and costs will be aligned to your marketing budgets.

For other models and more ways to think about influencer marketing and our recent research, visit us at 2017/01/30/Top-5-Insights-For-Social- Media-Marketing-In-Dallas-or-How-Do-I-Best-Do-Influencer-Marketing-in-Dallas 

KRISTINA LIBBY is a professor at the University of Florida, co-founder of SoCu, and owner of Social Works, a boutique marketing agency. Previously, Libby led consumer PR at Microsoft and prior to that ran a social media agency in NYC where she worked with clients like National Geographic, Phillips and more. She has been published in Entrepreneur Magazine, PR News and others and has appeared in publications as diverse as Cosmopolitan, the LA Times, Entrepreneur, More, Family Circle and many more. In 2016, Libby published her first book “You Don’t Need Social Media, Unless You Are Doing It Right.” She serves on the board of Dallas Startup Week and is active in a variety of programs that promote diverse and engaged workplaces.

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