The most preferred influencer compensation method worldwide is product seeding or influencer product gifting, where brands give influencers free product samples to post about the product on their social media channels. According to various studies, more than 35% of influencer payment is done through this gifting method. Monetary payment comes close to product gifting as the second most prevalent compensation type, with over 30 percent of brands opting for this method to compensate the influencers for their services. While more than 20% of brands gave influencers discounts on their products as compensation, around 10% entered their influencers in a giveaway. This blog will discuss the top four influencer compensation arrangements in the influencer marketing industry.
Flat Fees Per Post
Brands usually pay influencers a flat fee for every post they put in front of their followers on social media platforms. And how is the compensation calculated? Although brands face many challenges while determining the influencers’ fair compensation, analyzing specific metrics like followers, engagement rate, reach, post effectiveness, and conversions give marketers a fair idea about the correct fees. iConnect’s AI-powered algorithm tool analyzes influencers’ profiles, engagement rates, audience profiles, and post frequency and suggests each influencer’s proper compensation. The platform also benchmarks influencer compensations against the industry standards, ensuring that brands don’t overpay or underpay the content creators.
Influencer product seeding or product gifting is a concept where a brand sends out free products to a carefully selected group of influencers to make them try the products and post about the item on their social media channels in front of their large following. In other words, the brands send out these free products to the influencers to generate word-of-mouth referrals and get genuine, relatable organic content that resonates well with the followers of the content creator. For many brands who are undertaking the influencer marketing journey, product seeding is often the first step towards the endeavor as it is cost-efficient and highly effective at the same time. Various reports show that product seeding is the most popular influencer payment method. But just like any other marketing strategy, it is crucial to chalk out the plan meticulously to see significant gains from your product-seeding campaigns. iConnect’s product seeding feature seamlessly allows brands to streamline their influencer gifting requirements.
Performance Linked Compensation
If the brand associates with a new influencer, they might look to sign deals that link the payment with the influencer’s performance rather than just agreeing to pay a flat fee. Many brands have also started to pursue this payment method with established content creators. Since both brands and influencers are finding ways for deeper collaborations and moving away from working on a one-off project, this new payment method will take center stage soon. Additionally, as engagement rates across social media platforms are declining, brand marketers are trying to ensure that the influencer delivers on all the metrics like engagement rate, reach, post frequency, and conversions agreed upon and make the payout accordingly. Therefore, for influencers, it is imperative to understand the expectations of the brands before going ahead with the agreement and then decide if the deliverables are achievable for them or not.
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Content Licensing Fees
Another way brands compensate influencers is by paying them a content licensing fee, over and above their social media post fee. This fee allows the brands to use the content created by influencers on their social media platforms and other marketing materials, allowing marketers to optimize paid media behind influencer content. The agreement can be done for a set period or through the entire duration of the campaign. Most brands are looking to license influencer content as it helps them to reach a newer and broader set of target audiences and content creators are happy to provide them the authority at an additional fee. It is a win-win situation for both brands and influencers; businesses can amplify the content to reach a broader customer base while increasing the influencers’ reach and helping them gain new followers with better compensation.
Apart from the compensation methods discussed above, there are other methods of influencer payments also that brands rely on, like paying performance bonuses to the content creators over and above the fixed rate and providing store credit and rebates to influencers to talk about the brands are also prevalent in the industry. Whatever method a brand chooses to compensate its influencers should be carefully thought out before proceeding with the campaign. Because each way comes with its own set of challenges and opportunities, the brands must determine which method works best for them.