Before you can start an influencer marketing program, there’s one major thing you need to work through first: the cost.
If you don’t have the right budget, you may not be able to see the results you’d like.
However, getting buy-in from senior leadership on a budget doesn’t have to feel like an impossible task. Check out our tips on understanding the actual influencer marketing cost and how to determine your ideal influencer marketing budget to present it to your boss.
What expenses does an influencer marketing program have?
While the most obvious expenses for an influencer marketing program would be the creators’ rates and the price of product seeding, there are actually a few more costs you should consider before setting a budget.
Management time and resources
There are two main ways for a brand to build a successful influencer marketing program—with the help of a third-party agency or by paying employees to run it in-house. When you work with an agency, they will handle all the extra fees and place them in one neat invoice. However, this may not be within your budget if you have a small company.
If you want to run your program in-house, you’ll have to devote time to it. You may have someone who can take it on, or you might have to hire someone new, so consider how much their time will cost and factor that into the overall budget for influencer marketing.
Beyond that, if you want to use tools to streamline your efforts, you’ll have to secure even more money for your program.
Influencer rates in 2023
While there is no standard rate for influencers, you can use the following factors to determine a general price range to use when negotiating.
Creators with a lot of followers will help your brand reach a lot of new consumers. Therefore, the larger a person’s following is, the higher the costs will be.
This is easy to calculate by analyzing your influencers and their monthly view statistics—how many people do you expect to see the creator’s post?
Ideally, you want a creator who has a strong connection with their audience. After all, they will be the ones who will bring authenticity to your brand and help you move the needle. You can check a creator’s engagement rate to get an idea of their audience’s involvement with their content. The higher the engagement rate, the more the creator will likely charge.
In general, creators will charge more for videos than they will for photos, and beyond that, the length of the video will also affect the price. The longer the video, the more expensive the rate will be.
Product gifting costs
When working with creators, your brand needs to send products they can use in their content production. After all, it would be extremely difficult for them to film a video about your mascara if you don’t give it to them.
Factor in the cost of goods and shipping for each product you’re sending to your creators.
However, if you have a high-value product and a very small influencer marketing budget, consider loaning the item to creators for content production. In this case, though, the creator will likely charge more since they aren’t getting a free item.
Creator licensing ad spend
Creator licensing is the process of running branded ads from a creator’s social media accounts. These can be very effective, as they often seem more authentic than ads coming from the brand.
However, creators will charge more for this type of collaboration, and on top of that, you need to figure out how much money you’re going to pay to promote the content. And while you can do this manually, using a paid tool typically makes it easier for both you and your creators.
How to create an influencer marketing budget
1. Set a campaign timeframe.
How long will your campaign run for? Two weeks? A month? Half a year?
The longer your campaign lasts, the more expensive it will be, as you’ll need more content to fill the time.
If you’re just starting out, run a short campaign to keep budgets low and get an idea of what works and what doesn’t. You’ll be able to use these insights to streamline future campaigns.
2. Determine which products you’re gifting.
If you have a set product you’re sending out for your campaign, figure out how many creators you’ll work with, multiply that by the product price, and estimate shipping costs.
If you’re letting creators choose their products, consider setting a price limit for each person. Then, multiply that by the number of creators, and consider shipping costs. And if a few creators choose products that are cheaper than the max amount, you’ll be under budget.
3. Decide how you’ll pay influencers to promote your brand.
Are you paying per post, or will you work with creators solely on a commission basis? The first option will allow you to get a firm idea of your entire campaign budget after you negotiate your creators’ rates.
If you want to pay your creators through commission, this cost will be more variable. To get a better idea of what this overall price may be, look at your average cart amount from existing purchases on your site, and then consider what percentage of commission you will pay your creators. Try to estimate how many sales this creator will make, and be generous so you have a larger budget just in case.
4. Figure out how many posts you want.
This metric will really only matter if you’re paying your creators a flat fee per post. The more posts you want, the more the partnership will cost. Take some time to think about how much you’re willing to pay for each post, as well. This can help you decide who may be the right fit for your brand when you begin negotiating with different creators.
5. Scope out some creators.
Now that you know your general budget, it’s time for the fun part—finding creators! Simplify your search with a tool like GRIN’s Web Extension. Then, look at a few qualitative and quantitative measures as you research. Does their aesthetic match your brand? Do their followers match your target audience? Do they have a strong engagement rate?
Once you have a few candidates, reach out to them and introduce your brand and the partnership. If they’re interested and respond back, it’s time to start negotiating.
How to reduce your influencer marketing costs
When working with creators, it can be easy for the costs to rocket upwards, which can make small businesses feel like this marketing technique is out of reach.
However, at GRIN, we believe every company can see amazing gains from influencer marketing. Here are a few ways to lower the overall cost so you can get started.
Have a clear goal in mind.
Before you launch any campaign, it’s important to set out with clear goals and well-defined KPIs. Doing so will help you manage your resources better and adjust your strategy to have the maximum possible impact on users. Knowing what you want will make it easier to find the right influencers as well as choose the best tactics.
Research your target audience.
Careful planning in advance can reduce your overall costs and eliminate waste, especially when it comes to your target audience. If you’re targeting one kind of customer but choose the wrong strategy to reach them, well, that’s just money down the drain.
For instance, if your ideal audience primarily uses Instagram but you choose to work with YouTube creators instead, you probably won’t see the results you want.
Once you determine your target audience, ask yourself these questions:
- What social platforms do they like?
- What kind of content do they want to see?
- What creators do they follow?
Leverage nano and micro influencers.
Another brilliant tactic to reduce your influencer marketing costs is to work with smaller creators. They may not boast audiences as big as their more established counterparts, but they charge considerably less for a single post and typically have much higher engagement rates.
Brands like Glossier have built their business from the ground up by relying heavily on micro influencers for marketing. They work with nano influencers like Emily of @brows.beauty.skin (with around 3,800 followers) to promote their products in user-generated posts.
Repurpose influencer content.
It’s important to remember that the value of your influencer-generated content goes beyond just a single campaign.
Partner with other areas of your marketing department and pool your budget to pay creators to develop content. Be sure to negotiate for usage rights, which might add a small fee in addition to the typical post. Then, you can use these in your own social posts or ads, on your website, or in your emails.
It is often much cheaper to have creators produce high-quality content than to get production teams, photographers, and writers to do so.
How to get leadership buy-in for an influencer marketing budget
The last step—and probably the most challenging—is presenting your budget to your C-suite for approval.
One thing to keep in mind when creating a cost justification deck: C-suite members typically prefer data and numbers to emotions or feelings. Be sure to include estimates of expected returns so you can showcase why you need the budget in the first place.
Top questions to answer for C-suite buy-in for your influencer marketing budget
1. So what?
Before you answer anything else, tell your C-suite why you think the brand should adopt an influencer marketing program. Feel free to discuss leading brands that have gotten to where they are now with the help of content creators. Expert tip: Pull some stats from GRIN’s customer success stories to show how brands have excelled in the creator economy.
2. Why now?
Next, you have to answer why you want to begin an influencer marketing program now and not a year down the road. What is the benefit of starting right now?
Be prepared to talk about very recent trends. Find data points from 2022, not from a few years ago. P.S. You can find some great ones right here in our free ebooks.
3. What’s the ROI of influencer marketing?
The way your company views the value of an influencer marketing campaign will differ from others. Some like to focus on revenue as a form of ROI, while others will look at earned media value or the amount of repurposable content they received.
Check out some of the most common ways to measure ROI:
How many sales are you getting from each influencer’s content? Leveraging unique coupon codes or affiliate links helps businesses determine how much money each creator is bringing in.
Earned media value (EMV) and influencer media value (IMV) are two important metrics to track when determining the ROI of any creator campaign. For influencer marketing, the amount of social media engagement on content is a signal for increased brand visibility and positive sentiment.
The closest thing to a standardized earned media value formula is as follows:
EMV = (Impressions) * (Cost per 1,000, or CPM) * (Adjustment Factor).
One of the most valuable benefits of user-generated content is that it’s easy for the marketing team to see which content performs well and resonates with the target audience. A post that’s already had good engagement is a proven winner to be reused as a paid ad, a social post on your brand’s channel, or in an email.
You can determine a general ROI for UGC by calculating how much it would cost to produce the same thing in-house with the help of photographers, videographers, writers, etc.
Key takeaway: While it’s not the most fun part of influencer marketing, budget planning is essential.
When marketers take the time to do this right, they’re setting themselves up for success in the long run. Mark some time on your calendar to motivate yourself to sit down and really dive into the numbers. And if you need more guidance, check out GRIN’s library of free resources.