In 2022, more companies are leveraging influencer marketing to generate content, increase brand awareness, increase audience engagement, drive traffic and convert followers to customers. 80% of marketers think influencer marketing works, and over 65% of marketers said they plan to continue increasing the portion of their budget they spend on influencer marketing.
It is quite clear that influencer marketing has established itself as one of the most effective and valuable marketing strategies. But how expensive is it? How much should your brand spend on influencer marketing?
To answer these questions, we've put together this article to share some guidelines to help you understand how much influencer marketing should cost.
What is influencer marketing and how can it work?
Influencer marketing is a new type of marketing. It's when a company partners with an influential person in their industry to shape consumer behavior. This individual, trusted by the company's target market, can often influence buyers to consider, engage, and use a company's product or service.
Today, there are two types of influencers:
- Micro-influencers: According to researchers, a micro-influencer has between 1000 and 100.000 followers on a specific platform. For example, a person with 50.000 followers on Snapchat would count as a micro-influencer. In most cases, companies partner with micro-influencers.
- Macro-influencers: A macro-influencer has over 100k followers. In most cases, influencers tend to include internet celebrities. Due to their massive following, influencers tend to charge high prices for their services, which is why small and medium businesses cling to micro-influencers.
No matter what type of influencer you choose to partner with, they can have an impact on your bottom line.
Influencer Marketing Cost
When it comes to how much influencer marketing should cost, it depends on the size of your business and the resources you have available. In our experience, a good rule of thumb is to allocate around 1 – 25% of your marketing budget to influencer marketing.
If you are a small startup with a limited budget, you should focus on implementing your influencer marketing campaigns in-house. Alternatively, if you are hoping to make a big splash in your industry with influencer marketing and have a budget of at least $5.000 per month, you could consider hiring an experienced influencer marketing agency for a do-it-yourself approach. for you.
So how much does it cost to run your campaign in-house versus hiring an influencer marketing agency? What are the pros and cons of each?
In 2022, more companies are leveraging influencer marketing to generate content, increase brand awareness, increase audience engagement, drive traffic and convert followers to customers.
Running campaigns in-house
If your brand is just getting started and you have a limited budget for influencer marketing, a good option for you is to run your influencer campaign in-house. An in-house campaign can cost as little as $0 if you planned and executed it yourself.
Sounds amazing, right? However, even if you don't have to spend money to run an influencer marketing campaign yourself, it will still include the cost of gifted products, shipping, and your time.
Sometimes when collaborating with influencers, they are willing to promote your products or create content for your brand in exchange for just your products. This is a common approach for B2C brands on a budget. A new skincare brand, for example, could gift skincare products to influencers in the hope that they will leave a product review. This approach allows brands on a budget to partner with influencers.
However, keep in mind that with gifted products there is usually no agreement or contract with the influencer so your brand doesn’t have much control over the influencer’s content. If you don't have an influencer contract, you probably also don't have the option to review content before it's published..
If you are in a position to invest a little more in influencer marketing, you can pay influencers to present your brand and products. Influencers who are experienced in promoting products or have a larger audience tend to charge more for a partnership. As there are contracts involved in paid partnerships with influencers, they are more likely to abide by the agreement. With a contract, you can also provide guidance on what type of content you would like the influencer to produce, and you can include the option to review their content before it goes live. As a result, you have higher quality content and a more successful campaign.
The biggest cost of influencer marketing is the investment time it takes to plan and manage a successful influencer marketing campaign. One of the most time-consuming parts is finding the right influencers who are a perfect fit for the brand. The process of researching and negotiating with potential influencers takes up a large amount of time. An effective influencer marketing campaign usually takes at least three months of effort to see results. So if you're thinking about taking care of your influencer marketing in-house, be ready to invest hours of your time each week depending on how many influencer partnerships you're juggling at once.
working with agencies
If you have a marketing budget for your business and would like to see substantial results from influencer marketing, hiring an experienced agency to design and execute your campaign is a good choice.
How much does it cost to hire an influencer marketing agency? While there is a wide range of prices for influencer agencies, we have a range of prices for your reference.
Running campaigns in-house
If you hire a full-time employee to run your influencer marketing campaign in-house, it can cost you around $3.000 to $8.000 per month, depending on your experience level. We'll use this as a reference to compare the prices of a few different types of influencer marketing agencies.
Influencer marketing agency categories
There are a few categories of influencer marketing agencies each with pros and cons. Influencer talent agencies maintain a proprietary list of influencers under management. They can pair you with proven influencers in their network increasing your chances of successfully partnering with influencers. The downside is that your list is limited compared to the millions of influencers out there. Look for these types of agencies to have a minimum commitment that starts around R$2.000 per month and scales up to 10-40% of your total budget for larger campaigns.
A second category of influencer marketing agencies is software-based. They sell you access to the influencer management software platform, and they can even help you manage your campaign on their platform for an additional fee. The best of these platforms have access to millions of influencers, but your team will still need to manage relationships with your influencers. Pricing depends on the size of your influencer network, platform features, and your maturity in the influencer space. Some platforms also take a percentage of their monthly budget to influencers which is similar to the influencer talent agencies we discussed above.
The third category of influencer marketing agency is the “made for you” model. This type of agency typically offers influencer marketing campaign service where you communicate your goals and they do the rest. These types of agencies will often have a network of proven influencers, as well as access the latest industry tools and software platforms ensuring that influencers are the best fit for your brand. They might be on the more expensive side, but they also provide the most value if you're looking to run influencer marketing, see amazing results, and earn your time back.
Working with agencies to make influencer marketing work
You're wondering if you could run influencer marketing in-house, why bother hiring an agency to do it?
Working with a trusted and experienced agency can help you take the guesswork out of influencer marketing. You will be able to work with a team of experts against hiring an in-house person. Influencer marketing agencies dedicate their time to strategizing and executing influencer marketing campaigns with years of experience. With your expertise, you don't have to worry about managing an in-house team or going through all the mistakes as you and your team learn influencer marketing from scratch. Agencies can help you stay on top of ever-changing influencer trends and social platform features that impact the effectiveness of various types of social content.
Also, having a trusted agency to manage your campaign is more efficient and cost-effective. Since agencies have already established influencer channels and connections, you won't need to waste time finding and scrutinizing influencers. Working with an influencer marketing agency also allows brands to save time communicating contracts, expectations, payments, and content comments with influencers. Instead, you can use your time to focus on tasks in your business that you know and enjoy.
Five factors that affect the cost of influencer marketing when it comes to results
In addition to the cost difference between in-house and agency services, there are many factors that can influence the cost of your influencer marketing campaign. In this section, we want to discuss the five most common factors that can affect the cost of influencer marketing.
1. Social Media Channels
The social media channels your campaign is deployed to affect the cost. For example, YouTube tends to be the most expensive social channel for influencer marketing, as long-standing videos take more effort to produce. Instagram, one of the most popular social media channels for influencer marketing, has a higher “market rate” than other channels such as Twitter. Also, the number of channels used for your influencer marketing campaign will also change the cost. For example, a campaign that is only implemented on Instagram would be cheaper than a campaign that is implemented across channels on Instagram, YouTube and TikTok.
2. Influencer Audience Size
Although the number of followers an influencer has not accurately determined the value of the influencer, it is still one of the factors used to quantify the “power of influence”. Therefore, the number of followers of an influencer can drastically affect the cost of the campaign. Typically, influencers with a larger following will cost more to hire.
Prices vary tremendously from case to case. To find out the exact cost of hiring an influencer, you can contact them and ask for a quote. There are also free online tools that allow you to simply enter an influencer's social handle and the calculator will tell you an estimated cost to the influencer. These tools are useful for getting your prices in the right stadium, but they're also just rough estimates.
3. Influencer marketing results in user engagement
Since the number of followers may not always represent the value of an influencer, brands use engagement as another important metric to determine the price of an influencer. Engagement measures how many people actually react to influencer content. A higher engagement rate often means a greater reach of the content's potential audience. So if you collaborate with influencers who can generate high engagement rates, the cost will be higher.
4. Product and Industry
Your product and industry can also affect the cost of your influencer marketing campaign. Some industries are more popular with influencers, such as the lifestyle niche. As “lifestyle” is a broader segment that has many influencers, the average price tends to be lower. On the other hand, if your brand is in a more specific niche, like consumer technology, where fewer influencers are available, you may need to pay a higher price to hire the big players in your niche.
5. Influencer marketing works through the type of campaign
Finally, the type of influencer marketing campaign you want to run can have an impact on cost. For example, running an exchange campaign consists of simply exchanging a product or service for a mention. While an affiliate campaign that provides influencers with unique promo codes and pays influencers with commission can lead to higher cost.
Some campaigns that require a larger scope of work could also cause a higher cost of coordinating and managing campaigns. Large-scale influencer marketing campaigns involving hundreds of influencers, for example, require the campaign manager to actively contact all of these influencers on an ongoing basis. These types of campaigns also require time to coordinate and develop long-term partnerships with influencers. Despite the setup and execution challenges, we have to point out that long-term partnerships with influencers can bring tremendous value to your brand. Long-term partnerships allow influencers to create consistent content around your brand, and this can help your brand gain ongoing exposure to your target audience. As a result, exposure builds brand affinity that can skyrocket your ROI.
Conclusion: So, does influencer marketing work?
Do you now have a better idea of how much you should invest in influencer marketing for your brand? Remember that there is no one-size-fits-all formula for determining influencer marketing costs. Each brand and campaign is unique.
Depending on social media channels, campaign types, industry and influencers with your contributors, the cost will vary. It's okay to start with a smaller budget and increase it over time when you're comfortable with the results. Working with a qualified marketing agency like Colors Agency it can also help you ensure you're making the best use of your budget and maximizing your ROI.
Do you need help designing and executing an effective influencer marketing campaign for your brand? Send us a message and we can help you review your goals.