Influencer Payments: A Quick Guide to Negotiations

In general, it is imperative that brands always communicate clearly and respond quickly once the first contact has been established. Of course, this is based on reciprocity, but good and persistent communication suggests loyalty and the will for a successful cooperation.

Outsourcing communication, from direct messages on Instagram, for example, also gives you a good overview, because scattered communication is counterproductive and often a mere waste of time. Thus, it helps to establish a single, preferred method of communication up front. Splash has become particularly popular for project planning, which is why more than half of Fortune 500 companies use the application today. After all, you ideally want to establish long-term partnerships, so misunderstandings are logically not very conducive to this.

Of course, adequate payment is essential for successful cooperation. Adequate means not too high, but also not too low. Free gifts can be a good start for a cooperation, as long as you plan to work with small to medium-sized influencers. Large profiles or macro-influencers are unlikely to be more responsive to product samples.

Either way, both parties need to be aware of their value in order to have a fair and professional negotiation. Some factors influence how you can set your influencer marketing budget. These include the typology of KOLs you want to work with, the size of the audience, engagement rates, and more generally, the influencers’ content and connection to your brand. The following insights are based on the Kolsquare study “How much do you remunerate influencers in 2022?” which you can also easily download for free here.

At First Glance: the Reach

From a purely mathematical point of view, it makes sense to look at the reach of the respective influencers and use the reach as metrics for negotiations. Although the transitions between categories are fluid, the industry distinguishes between nano (zero to ten thousand followers), micro (ten to 100,000 followers), macro (more than 100,000 followers) and top influencers (more than 500,000 followers). If profiles have more than three million followers, they can be called celebrities without a doubt.

If you want to read more about the benefits of nano-influencers, the Kolsquare blog is the place to be!

However, just like in real life, influencer marketing is about more than just popularity. High follower counts can be deceiving and profiles try to make more business with fake followers they bought. The Kolsquare Credibility Score helps you identify fake influencers. At the same time, engagement is also a promise for your campaign’s success.

Look Again: The Engagement Rate

The engagement rate shows the level of virality and interaction an influencer has with their community. The following table shows the latest engagement rate figures by influencer typology and each social media platform. For this, Kolsquare analyzed shares, likes and comments from more than 350,000 accounts in May 2020.

From our study “Influencer Marketing Budgets in 2022“

Ways and methods to pay influencers

Of course, the payment method depends entirely on your own preferences, both those of your brand and those of the influencers. In addition, country-specific preferences need to be considered. Usually, you can choose between the secure financial services PayPal, Venmo, Google Wallet, TransferWise or Google Pay.

However, you should always have an agreement in writing before you start the cooperation. You can expect that influencers may ask for an upfront payment and not start creating content until both parties have signed a contract. This is perfectly legitimate and it shows integrity and transparency if you insist on it from your side as well.

But how is the price to be paid calculated? There are different ways to do this, and it’s best to try them out for yourself and then determine which one suits your needs and those of your brand best.

Performance-based pay

This method is probably the most scalable as it is based on performance and consequently easy to track. Influencers are entitled to a percentage of sales. Now this can happen, for example, through a specific link that influencers can share with their followers. If you are interested in an affiliate program, read “How to run an e-commerce affiliate campaign with influencers in 5 easy steps!”. We explain in detail what affiliate marketing is, how it works in the classic sense and how you can use it for your influencer campaigns.

Fixed price and performance bonus

This method now is also self-explanatory. In the course of the campaign meetings, you negotiate an appropriate fixed price. A basic fee gives creative people a little breathing room and just be creative. The performance bonus then motivates influencers and can be great as a vote of confidence. This model is especially fitting if your brand is also interested in long-term collaboration.

However, marketers should be aware that if influencers achieve high results, the buzz from the basic fee and sales performance may be higher than with other methods.

Product-based partnerships

We’ve already touched on free gifts. This is how product-based partnerships can work well. Especially smaller brands, startups or NGOs should consider this option.

Read everything you need to know about Free Gifting on the Kolsquare blog!

Did you know that Kolsquare offers special pricing and thus lower rates to startups and NGOs? We want to actively shape the industry and therefore help amazing projects or support organizations to communicate their message to target audiences.

We would like to mention the Pay-Per-Post option only briefly for the sake of completeness. It is treacherous, as you need to choose the best influencer for your brand to avoid paying too high a price. Ultimately, you should be clear if you want to pursue a long-term partnership and perhaps even make influencers your brand ambassadors. You can offer them a commission rate and also entice them with VIP benefits such as access to events, trips or exclusive products.