Let's talk about influencer prices
Updated: Jul 3, 2020
Earlier today, I had a talk about influencer marketing for the Filinvest conglomerate. It was a quick discussion on why influencer marketing matters and the not-so-secret ways on how to make influencer marketing work for any kind of business. The attendees were mostly executives and managers from the companies under the Filinvest group, so imagine people from different verticals, a few of them are not even from the marketing departments of their respective companies.
Whenever I would speak about influencer marketing to a group of non-marketers, I would always get the question of how to price influencer marketing and how much is the fair amount that brands should appropriate for influencer collaborations?
Two years ago, I wrote this article on how much brands should pay influencers, mentioning that there is no direct and absolute measure of influence.
At present, I have yet to hear about an absolute "influence metric." For this reason, let me start by saying that since "influence" is still considerably relative, determining influencer prices will always have both objective (i.e., market-determined) and subjective (i.e., negotiation and relationship factors) aspects.
Standards of Influencer Pricing
By definition, pricing is an agreement between the buying party (in this case, the brands) and the selling party (the influencers). This is where the complexities arise. Of course, on the business side, there are factors like economics, budget appropriation, business model, and even the level of management commitment to influencer marketing efforts. On the side of the content creators/influencers, pricing is also affected by whether the influencer really likes the product or believes in the thrust of the campaign, the level of difficulty of the content requirements, the availability of alternative options for the influencer to consider, and maybe even reputation risks.
I have since preached that when we talk about influencer marketing, price is always about perceived value, not actual cost. Actual cost is the true cost of production (for products) or fair market value (for services). Perceived value is how much customers would be willing to pay for something, based on how much it's worth to them.
Some brands are truly committed to influencer marketing as they've seen it working for them, so they consistently appropriate budgets for influencer marketing efforts. Some brands are just too conservative to even give it a try, or they just want to prioritize other marketing strategies at the moment. Some influencers do content creation part-time or just something on the side, while some of them create content for a living and even have an entire team helping them. For both brands and influencers, perceived value and actual value may not always meet at a convergence point. Ergo, it will be very difficult and challenging to standardize influencer pricing.
BUT -- and there's a big but over here -- the influencer marketing industry here in the Philippines is still relatively young, so we have a long way to go. Maybe at this time, standardization of rates may be difficult to achieve, but who knows, with the development of more sophisticated measurement tools for digital efforts or even a shift in priorities of marketing spend, the frequency distribution curve of the industry may normalize and be in equilibrium somehow.
At this point, I think it's important to talk about buyer's markets and seller's markets.
Buyer's market vs. Seller's market
A buyer's market just means that there is plenty of supply, and hence buyers have the bargaining power to command prices down. A seller's market on the other hand means that supply is scarce, so sellers can keep prices high.
So, what are the implications of this?
As an influencer or content creator, ask yourself whether your niche is a buyer's market or a seller's market. Some of the verticals that are generally considered a buyer's market are fashion & beauty, food, travel, parenting, and lifestyle. Examples of verticals that are regarded as a seller's market are art, health, gadgets/tech, and luxury items.
If you create content within a vertical considered to be a buyer's market, always remember that there are plenty of similar content creators that buyers can choose from, so in general, your bargaining power in terms of pricing for brand collaborations is very low. On the other hand, if you're a content creator in a seller's market, you may be a little luckier in terms of negotiations.
Caveat: whether a niche is a buyer's market or a seller's market is not the end-all and be-all of the story. It also pays to ask yourself the question of how “valuable” are you, really? Some influencers are very unique and very easily separable from the rest of the "competition", so they can command prices even if they operate in a buyer's market.
The bottom line of this article is that what I wrote two years ago still holds true -- the influencer marketing industry is still fragmented and standardizing influencer pricing remains to be a challenge. I know there are tools in the internet that may give us ranges of prices, but my advice is to just use these figures as a "guide" for appropriating budgets.
While there are no industry standards yet, always remember that both businesses and influencers have their own internal standards as regards what is fair and what is overboard, and as I've said, it's always a matter of finding that convergence point where everybody wins. :)