As a marketer, have you ever been given a price for a piece of influencer-created content that has made you nervous? Have you flinched at paying for a piece of content that hasn’t been created yet, or have you worried that your spend may not pan out like you hope? Determining a win-win influencer compensation structure is top of mind for any marketer engaging with influencers.
While pretty much all marketers and brands implement influencer marketing and value digital content creators, the piece of the puzzle that many marketers struggle with is partnering with the right content creators.
A blogger may be a great writer and have an engaged audience, but that doesn’t always mean that their audience will like your brand. Digital partnerships and earning that third-party recommendation are a lot of trial and error.
If you decided to try a few new digital marketing techniques, would you be more comfortable paying content creators who bring your brand actual sales or conversions? Or do you prefer to pay an influencer before knowing how their audience reacts and engages with their mention of your brand? If you prefer or are at least interested in paying content creators per sale, keep reading.
Performance-Based Theory
I strongly advocate that brands should absolutely pay influencers and content creators for their valuable content quality and brand endorsement. To simplify a complex issue, at the end of the day, there are 2 ways to pay: up front for an agreed-upon
- Upfront for an agreed-upon post
- Based on how many people/sales the influencer brings to your brand
The second option is what I’m referring to as compensating based on performance, and that’s what I’m going to dive into for this post.
Performance-based marketing is a simple enough concept. Marketers budget and pay their partners based on a specific action. More traditionally referred to as affiliate marketing, performance-based marketing strategies are designed around partnering with content creators who advocate for brands, and these partners leverage their own network and image to get traffic and sales to said brands. The most common performance metrics are:
- A click through and visit a landing page
- Buying a product or products (sales)
- Signing up for a newsletter or downloading a resource
Why Brands Like Calculating Influencer Compensation Based on Performance
Advancements in our digital environments have allowed marketers to track the dollars we spend. Marketing conundrums have surpassed a desperate desire to know what works, and questions now tend to be about how to amplify tactics that we know work.
With that in mind, it makes sense why many brands love the performance-based marketing model and method of compensating their marketing partners. Paying for action and actual conversions is more comfortable and economical for brands.
How do Marketers Track Performance to Determine Influencer Compensation?
There are a couple of ways that marketers use to track performance. This method can be implemented on a small scale in-house. If a brand has the budget, it’s a super scalable strategy when brands partner with affiliate marketing managers.
- Google’s URL Builder: Using this free tool, marketers can generate unique links to distribute to each influencer, and then the influencer can share their link on social, blogs, newsletters, etc. You can also set up a separate site to only generate sales through influencers. It is a good way to test different tactics without putting your main brand at risk. You can get domain names for cheap these days, so there will be no huge investment required.
- Codes: Some brands track based on a coupon or discount code distributed to each influencer.
- Affiliate marketing management: When brands have the budget and want to scale this technique strategically, I recommend using an affiliate marketing company. They are skilled in strategic partnerships and tracking, and can run this type of marketing for your brand. They’ll provide reporting that would otherwise be time-consuming or require a lot of extra tools to do in-house.
How is Performance Rewarded?
- Percent of sales: Whether your brand is using an agency or tracking in-house, percent of sales is the most common way that brands reward their partners based on performance. It’s simple and to the point. Both sides know what to expect right away, as a brand will offer a specific percentage. An affiliate agency will track this and send performers checks once a month, or if you’re doing this in-house, make sure that whoever manages this has experience with this tactic, as it needs to be tracked thoroughly and on an ongoing basis. Some content partners produce content that converts for months or even years.
- Payments for conversions: For the brand awareness goal, some companies will work with a partner and set up a compensation amount per conversion. So instead of tracking sales, a brand may track how much traffic, newsletter signups, resource downloads, etc. that a marketing partner is responsible for, and set up a monetary amount for each action.
Staying Mindful of FTC Guidelines
Most influencers are aware of how to follow FTC guidelines to maintain their reputation and obviously the reputation of your brand. However, at the end of the day, if these guidelines are not adhered to, the brand pays the price and is responsible.
I always recommend that brands remind bloggers, as part of their blogger outreach, to disclose the fact that they have a partnership with your brand. For my clients, I’ll double-check that my earned posts disclose a partnership. If they don’t, I send a friendly reminder to the blogger to go back and do it. Just a sentence or two at the top or bottom of the post will keep you safe.
