Influencer Marketing - Part II

Let's continue building upon the previous article. We will continue with our understanding of influencer marketing by taking a deeper dive into contracting, managing, and measuring the influencer relationship.

The Contract and Cost of Influencers

Let’s begin with Maggie Malek about the considerations to take in negotiating a contract with influencers.

There are many things to take into consideration when you're negotiating with influencers. For example, is it a written piece of content on a blog, or is it a video? Are you asking that influencer for rights to that content so you can use it on your own brand website or in paid media?

Another key factor to consider is exclusivity. Many brands initially think they want exclusivity, but our argument is often that beauty influencers, for instance, talk about many beauty products—including your brand and others. That variety is what makes them authentic. So rather than demanding exclusivity, which increases costs, it might be more strategic to allow them to discuss other brands.

There are also considerations around the length of time you’ll have rights to the content and how long the influencer will keep it up. Many influencers leave their content up permanently, but some high-profile celebrities may take it down after six months if that’s what was agreed upon in the contract. They don’t want older sponsored posts to clutter their newsfeed.

All of these elements impact the cost of working with an influencer. Timing is another critical factor. Since the start of COVID, many brands have relied on influencers to create content for them because traditional creative agencies couldn’t conduct photoshoots. As a result, influencers began charging a last-minute premium for quick turnaround content. If a brand needs a photoshoot done within a week, it’s going to cost extra.

Our influencer contract includes fifteen different toggles, such as exclusivity and usage rights, which can be adjusted based on negotiation needs. Some influencers also approach brands with their own package, demonstrating past performance with specific brands and showing how much sales they were able to drive. In such cases, they may ask for additional clauses in their contract to reflect their value.

While you can contract an influencer for a single post, many brands are considering the benefits of multi-platform, long-term relationships with influencers.

• Multi-Platform: Consider where the influencer is appearing in both online and offline channels such as TV, radio, or podcasts. This approach might help a brand increase awareness and credibility.
• Long-term relationships: A long-term relationship helps an influencer get to know the nuances of a brand and its audience, and it helps the brand learn how best to use an influencer for maximum impact. It also builds credibility and impact of the message as the influencer becomes an expert on that brand and category, and followers don’t see the sponsored content as a quick money-making effort.

Another important aspect of influencer contracts to consider is how much you will pay the influencer. Here is Maggie explaining some of the nuances of these rates.

How we price out influencers typically starts with the number of followers they have, as well as the type of content we're asking them to create. For a micro-influencer campaign on Instagram, for example, just one post from influencers with up to ten thousand followers could cost anywhere from $250 to $500 per post.

Once you start working with influencers who have between 250,000 and 500,000 followers, the price increases significantly. At that level, an Instagram post could range from $6,000 to $10,000. Once an influencer surpasses 500,000 followers, pricing becomes more unpredictable. Some influencers with 750,000 followers might charge $1 million, while others may only ask for $60,000. It really depends on what the brand is willing to pay and the influencer's perceived value.

Additionally, video content is typically more expensive than written content. If you're hiring a blogger who only writes, their rates will be on the lower end of the spectrum. But if you're working with a YouTuber who has 250,000 followers, and you want them to create a ten-minute video, you could be looking at a price of around $30,000. This is because video production requires more time, editing, and often a videographer.

Revisions also play a significant role in pricing. If a brand wants to micromanage an influencer’s video and requests multiple edits after the content is created, the influencer will charge more. We've seen an influencer with 250,000 followers charge as much as $60,000 because the brand wanted continuous updates and revisions.

This is similar to how creative agencies operate. If a brand hires a creative agency to produce a Super Bowl commercial and requests a hundred edits, the agency will charge for additional services, including producers, scriptwriters, and multiple rounds of edits. This could bring the cost of the commercial to $500,000.

So while brands sometimes experience sticker shock with influencer pricing, influencer content remains cost-effective compared to hiring a traditional creative agency. The price range varies significantly depending on the type of post, the influencer’s reach, content format, and the number of revisions requested.

In addition to agreement on pricing, there are other aspects you will want to consider when contracting with an influencer, as Erica Ligenza explains.

So every brand contract is going to look different depending on the scope of work that the brand is looking for as well as any add-ons, like whitelisting, usage rights, exclusivity.

So first things first, the brand is going to tell you what their expected scope of work is. They're going to tell you what sort of deliverables they're looking for, which would be what kinds of content, how many pieces of content, and on what platforms within what timeline. So that's kind of step one.

Step two is figuring out, do they want any exclusivity, meaning do they expect that you are not working with any competitors for a specific period of time during the duration of your contract. That can vary, where it might be only two weeks before, two weeks after, or that might be six months or a year that you are not working with either a specific list of competitors or specific brands, or an entire category. Exclusivity can be pricey.

Whitelisting they might be looking for. Whitelisting gives the brand the option to pay on their end to boost your content to reach eyes that they have determined. So it looks much more authentic on a potential consumer's newsfeed if it's coming from you instead of coming as an advertisement from the brand. So their hope is that it catches more eyes and reaches more people in a more authentic feeling way.

Usage rights is another thing to add on to a contract, which gives the brand the option to repurpose your content on platforms of theirs or in paid media. So this eliminates their need to hire photographers or a production team or a videography team themselves because they are just taking what you have already created and putting it to use on their end.

As a starting off point in terms of pricing yourself, a very old rule of thumb was $0.01 per follower, or $100 for every ten thousand followers. Now this is a very outdated rule of thumb because it does not take into consideration the quality of your content, the demand that you might be in as a creator, the time of year, the timeline, any of those add-ons, the cost of creating if you have to purchase any props or hire an additional team yourself to help bring a specific piece of content to life.

I also always recommend, when you are communicating with a brand, it is a negotiation. So actual negotiation strategy and psychology will come into play as well. Once you have a rate, it's always good to actually give them a little bit above that, knowing that they probably will and almost always do try to negotiate you down a little bit from there.

So you want to get to a point that feels mutually beneficial, good for both parties, but also feels fair to you, your time, the cost of everything that's going into creating on your end, and that also, of course, fits the brand's budget and what they're hoping to spend for the campaign.

Let's summarize what we have learned about how brands partner with influencers.

First, it's important to understand what influencers offer you as a brand. Oftentimes, influencers can help you reach new and untapped audiences. They can also help bring authenticity to your product recommendation that might not be available otherwise. And of course, they also have the potential to help increase your sales.

How much you pay influencers depends on the competitive landscape. How much are similar businesses paying for their influencers? Are they celebrity influencers or micro-influencers? It is also useful to understand what you can offer influencers apart from money to help them build their social capital.

If you're a new brand with a limited budget, you might want to share free products that would allow influencers to engage with their followers through new and exciting offerings. You can also provide influencers with meaningful content opportunities that would help them gain credibility with their followers by partnering with you.

Balancing the needs of the brand and the influencers can be tricky. Influencers want to increase their credibility and their followers. Brands want to increase their sales. So how do you make sure that the content they promote is designed not to promote themselves but to promote your brand? And what is the level of control you have in that process of content creation and content dissemination? These are the questions you should consider as you seek to partner with influencers.

Once you have contracted with an influencer, then comes the work of managing that relationship.

Managing Influencer Marketing

Influencer marketing does not come without risks, as you’ve already learned. One big risk is that you are not in full control of how influencers behave on their social media accounts.

Let’s learn from Maggie about how MMI Agency manages potential crises that may emerge with influencers.

Every influencer has a past. What we try to do through the tools that we have and through social listening is we do a lot of research on our influencers before we hire them.

That's not to say that somebody won't Google or find something that was posted on Reddit ten years ago. And maybe that influencer has posted something extremely insensitive. We then have to coach the brand on, here's what you need to say about it. We ask the influencer to take down their content for that brand. But we just apologize.

And I think a lot of consumers really do understand that the brand can't control what an influencer did ten years ago. So we do our absolute best to make sure that we've cleaned up anything like that, and that's how we try to protect our brands.

But you definitely do have to have a crisis policy.

As with earned media, you have to be prepared to effectively manage the positive and negative possibilities for your brand when partnering with influencers.

To maintain the authenticity of influencers, you don't want to exert too much control over them. But ceding control comes with the risk of them publishing potentially sensitive posts or posts that you might not approve as a brand. If an influencer acts in a way that is inconsistent with your brand values or is legally or ethically questionable, the legitimacy of your brand can be called into question.

Some responses include breaking off their partnership or making public statements disavowing the actions. To echo the forest fire analogy from earlier, it is important to respond to any crisis quickly. Research has shown that when brands respond quickly to a scandal by severing ties with their influencer partner, they see more positive stock returns than those that responded slowly or not at all.

Beyond avoiding and responding to scandal, it is important to make sure your influencer partners work legally and ethically. This includes ensuring that your influencer discloses brand partnerships and that they do not act in a way that is dishonest or takes advantage of their followers.

Measuring Influencer Effectiveness

Once you’ve vetted and partnered with an influencer, you need to be able to measure whether the partnership has been successful. Here is David Huang again on how Perfect Diary monitors and measures its influencers or key opinion leaders (KOLs).

Dating back to 2017 and 2018, when we first started to work with those KOLs, we became aware that the data will play a more critical role in the future. So even dating back to 2018, we started to set up the model, and also the system, to monitor the KOL's performance day by day, one by one.

Dating back to 2018, there is maybe just ten thousand or something KOLs in the social media. We have the 100% coverage for that group of KOLs at that time. And then gradually we see that, OK, this number is growing really fast, so we need to set up a system to monitor the KOL's performance. And with time goes by, we work a specific group of them.

So right now, when we are trying to choose the right group of the KOLs to help us promote a very specific products, we will go back to the database to look at what kind of characteristics of the KOLs, and what kind of data record we are having right now. We're basically choosing the KOLs based on the database we created in the past two years. And it's one of the most valuable assets we have. And also, it's a part of the digital infrastructure I mentioned to you before.

Normally, we put a very specific link for specific KOLs, so that we can link the post with the sales of a very specific product. So normally, the consumers, they look at the post, they click the link, and then they go to the specific page and they make the purchase. So if we want to hide the link to make the post softer and a very specific timing, we will just have maybe a one KOL to promote a very specific product. And we can see the response of very specific product sales, so that we can build up that link.

The number of the KOLs we work with increase. We can have a industry average ROI. And that it's more based on the past experience and based on the data we collected. So that's why we think the data is very important for us to continue to improve the ROI.

Let’s say that Perfect Diary has partnered with an influencer and has a post scheduled to go up over the weekend with a link to one of its products. What are some things you might measure in the days following the post to determine how the partnership helped progress Perfect Diary’s goals at different points in the marketing funnel? Consider data that both you as a brand have access to and that an influencer has access to.

Let’s turn to Maggie to learn about how she thinks about measuring the effectiveness of influencers.

Measuring influencer and measuring PR has, I think, been a challenge, really, since the dawn of time. Awareness has value. Brand impact has value. It's often hard to equate exactly what that is.

So when we're measuring influencer, we are not just looking at what we call vanity metrics, like reach and engagement. We also asked brands to give us access to their website analytics. So what we did in 2017, for example, with SK-II is they're an international beauty brand, and we managed their influencer, their paid media, and their website.

We did a lot of studies with SK-II where we saw when influencers posted, the next day the traffic on the website would go way up. Because people are laying in their bed at night, and they're scrolling through Instagram, and they see their favorite celebrity talking about SK-II. They've never heard of it. So then the next day, they go to the website. They hang out on the website for a minute or two.

For us, a minute or two, if somebody spends that amount of time on the website, that's when they're likely to buy. So that's another measurement we added in, again. So if we think about influencer measurement, it's not just about reach and engagement. But we look at does search volume go up after an influencer posts.

We give each influencer custom links so we can see exactly how many clicks they drive. We also make sure that when we're doing an organic influencer campaign, we are often tying it to paid media. So yes, we've paid twenty-five influencers to talk about our brand. We see how those twenty-five influencers perform organically. Do three of them get a ton of organic engagement? Then we put paid media behind it to amplify it to even more people and drive more traffic.

So we measure influencer way more than just thinking about those top-line metrics. We're really trying to figure out ways to tie it to sales. In the past, MMI has done work with Native Deodorant. Native Deodorant was only sold online until probably mid-2019. When Native Deodorant launched in stores, they only launched in about ten markets to test and see how it would go.

So we bought media in all of those ten markets. But in several markets, we also placed influencer content as well. What we saw is, in the markets where you had paid media, you had influencer, you had PR, those markets actually sold out in-store much faster than the markets that only had paid media running.

So, again, influencer is one of those that can be challenging to measure. MMI tries to do a lot of different corollary tests and ties it to other pieces of data so that we can show brands that. Even if they don't understand the value at the beginning, over time they see how it drives more web traffic, how it drives more search volume.

Let’s summarize the ways that you can measure your influencer partnerships:

You can measure the effectiveness of your influencer partnerships and how they advance your goals at all points of the marketing funnel in many ways.

• You can measure how influencer marketing is impacting your awareness by measuring the reach of the media shared and by surveying brand perception.
• You can measure your engagement via metrics such as comments, website traffic, organic searches, or the time consumers spend on your site.
• You can measure your sales conversions through purchase data and affiliate links.

But not all influencer partnerships are profitable. It’s imperative to measure what is helping you advance your goals and what is not. That said, influencer marketing has a tremendous potential to reach untapped markets and customers, and to increase the favorability and credibility of your products.