Wake Up Marketers - Influencer Pricing Strategy is All wrong!

  • Sep 21, 2015

  • by Divyanshu Sharma

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Wake Up Marketers - Influencer Pricing Strategy is All wrong!

The biggest elephant in the room when it comes to influencers campaign is the pricing mechanism

As with all new emerging mediums, measurement is a painful issue for brands & agencies. So, while we were having a discussion on an influencer marketing strategy for a client of ours, we were confused about pricing influencer marketing campaign.

Influencer marketing is gaining all new prominence with CTR’s through paid ads constantly on the decline, sponsored posts becoming more expensive, & not driving results, SEO moving more towards content. Add to this, the Google Ad Blocker is making Google spend ineffective. And the Youtube pre-rolls? When was the last time you saw it post the 5 sec cap? Even we can’t recall.

Seismic shift

We are amidst a seismic shift in the world of marketing & advertising. Engaging with your audiences was once considered disruptive. TVC’s disrupted your favorite shows, banner & video ads popped out of nowhere during your online reading sessions, & scrolling down your newsfeed was always punctuated by a few sponsored posts.

Influencer marketing has changed all of that. Influencer marketing has enabled brands & agencies to be ‘move away’ from disrupting what people are doing and become part of what people are interested in.

However, the biggest elephant in the room when it comes to social influencers is the pricing mechanism. For such a nascent form of advertising, which breaks grounds & presents huge opportunities, it’s ‘shoot in the dark’ when it comes to costs & pricing. Many people go by ‘reach’ of an influencer. Let us make it clear: Reach is ALWAYS inflated. Conventionally advertising has always been measured by reach (i.e. how many people saw an ad). Many of the brands/agencies are so used to reach a metric that they fall off their seats when we say, that’s not how influencer marketing is measured.

What is the problem with using ‘Reach’ only as a factor to determine price?

The problem with reach as an metric in the fact that in influencer marketing it equates to number of subscribers or followers a an influencer has, and not the impact they create.Let’s say your influencer has 500k followers, of which only 1% ‘engage’ with him/her. What’s the use? You know you are overpaying, but agencies choose to ignore them.

Is there a better alternative to this method of pricing?

Any alternative would be better if:

  1. It looked at effectiveness and not just reach, because what a marketer is paying for is the impact of the influencer on his target audience
  2. Ability to amplify and not just one time impressions

Customer engagement - this is the metric which captures both the factors mentioned above. An influencer is different from a TV ad - he not only informs and educates, but can enter into a conversation. This is captured by Engagement.

The ability of brand to leverage the relationship between influencers & their followers to send a personal message is the USP of an influencer marketing campaign. By optimising campaigns for engagement, the amount of people actually engaging with the campaign as opposed to the ‘reach’, is an incentive in itself for agencies & brands to create compelling content that gets people ticking. It’s a win-win for everybody.

But why pricing by engagement?

  • The benefits with this pricing strategy is two fold as we told you earlier
  • Incentives agencies to create a better content
  • Enables brand to have the best possible ROI

The most important aspect of this pricing model is its flexibility across social media platforms like twitter (RT’s, Fav), Snapchat ( Views, Screenshots), Vine (Loop, revines)etc. This model enables agencies to provide value to brands in scalable way. For ex, the agency or brand could set realistic targets for campaigns in terms of engagement.

However, the mechanics of such a pricing model will require further validation. For instance, certain levels of engagement will require to be priced more than others levels of engagement in the same medium. This piece is a an attempt to make influencer marketing more accountable. By measuring the true ‘value’ of an influencer campaign we can elevate the influencer marketing and make it a mainstay in advertising campaigns

Would you like to work with us? Get in touch.

About author

Divyanshu Sharma
  • Divyanshu Sharma

As a Digital Strategist with Envigo, Divyanshu trained and developed a team of online marketing analysts, copywriters, etc. for defining and implementing brand communication strategies. Divyanshu co-founded the Urban Talkies, a digital media production agency, which creates and markets videos which help brands grow their digital presence and reach.

View posts by Divyanshu Sharma

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