How Pay Influencers: 7 Influencer Payment Methods + Platform

The Rise of the Influencer Economy

In the age before social media, influencers existed but in different guises—magazine columnists, radio hosts, TV personalities.

These figures had clout, but the rise of platforms like Facebook, Snapchat and later Instagram and TikTok, entirely revolutionized the scene.

Suddenly, everyday individuals, without traditional media's backing, began to amass vast audiences.

The key?

Relatability.

Unlike movie stars housed on pedestals, influencers built their empires on the power of being "just like you."

This newfound influence didn't go unnoticed.

Brands, recognizing the power of a trusted recommendation over traditional advertising, started allocating hefty sums for influencer partnerships.

Authentic endorsements from these digital personalities offered a higher ROI, reshaping the advertising landscape. And as this influencer economy grew, its impact spread beyond social feeds, influencing everything from fashion to finance.

It's clear: in today's digital age, trust is more than just currency; it's a revolution.

Factors Determining Influencer Payments

Brands give a lot of money to influencers to reach more people and get more engagement.

Like, a lot of money.

Some brands are willing to even overpay certain influencers to have them as their “exclusive” partner for their brand.

But, if you’re in the boat of wanting to mitigate overpaying influencers, or paying them a competitive rate for your brand, determining the right price for an influencer partnership can be tricky.

Let's delve into some of the primary factors I’ve seen influence payment structures:

Follower Count and Engagement Rate

Typically, the more followers an influencer has, the wider the reach.

However, raw follower count isn't the only metric. The level of engagement – likes, comments, shares – plays a pivotal role, as it indicates how interactive and responsive an audience is.

Research behind it: According to Insense, Influencer payments often vary based on the follower count and engagement rate. Brands often select influencers who have a lot of followers and get many responses to reach a larger audience. Many people use a pay-per-post method, which often depends on factors like follower count and platform.

Niche and Specialization

Influencers within certain niches command higher rates because of specialized audiences. For instance, a tech influencer might have a more targeted and lucrative audience than a general lifestyle influencer.

Research behind it: Research has shown that influencers with a specific niche and specialization are more valuable to brands. This is because they have a deep understanding of their audience and are able to create content that is highly relevant and engaging.

According to a study by CreatorIQ, brands will keep using nano- and micro-influencers for niche and regional campaigns. This is because typically these smaller creators have higher engagement rates with their audience.

Content Quality and Production Costs

High-quality content requires resources: time, equipment, editing, perhaps even a team. Influencers who always make good content might charge more to pay for their production and knowledge.

If you are a brand, these influencers are the ones you should work with. They care about their audience and will protect your brand reputation when promoting your products.

Research behind it: A study by BuzzSumo found that 65% of marketers believe that the quality of an influencer's content is the most important factor when determining their payments. Additionally, 45% of marketers said that they are willing to pay more for influencers who create high-quality videos.

Platform of Operation

Different platforms have varying audiences, engagement mechanisms, and algorithms. A YouTube influencer may charge differently than an Instagram influencer who posts photos and stories.

Multiple factors are behind this:

• Engagement rate on YouTube vs Instagram is wildly different
• The amount of time, resources needed to create video content on YouTube vs Instagram posts is significantly higher than posting a photo on Instagram, Facebook.

Research behind it: A study by Influencer Marketing Hub found that Instagram is the most popular platform for influencer marketing, followed by TikTok and YouTube. The study also found that Instagram influencers charge the highest rates, followed by YouTube influencers and TikTok influencers.

Exclusivity and Contract Length

Why is this an important factor?

If an influencer is tied to a brand exclusively, they might not be able to partner with competing brands. Influencers may earn less money if they have long contracts or exclusivity clauses.

They might charge more for these deals, but your brand should be willing to pay if you believe they’re a great fit for your brand reputation and growth.

This will go a long way in building your reputation and relationship with the influencer.

Research behind it: A study by HypeAuditor found that influencers who agree to work exclusively with a brand can charge up to 25% more than influencers who do not. Additionally, the study found that influencers who sign contracts for longer periods of time can charge up to 10% more than influencers who sign contracts for shorter periods of time.

Common Influencer Payment Models.

Hey, you've stumbled upon the third part of our comprehensive guide on influencer payments for 2023. In this section, we're diving into the world of common payment models. Buckle up!

Influencer marketing continues to thrive, leading brands and influencers to negotiate terms that best suit their objectives.

Understanding the payment models available is key to creating a successful partnership.

Here are the primary influencer payment models, each broken down by its importance:

1. Pay-Per-Post.

This is one of the most straightforward models. Brands pay influencers for each piece of content they produce. It's easy to understand and keeps transactions simple.

When I’ve reached out to countless number of influencers, I’ve seen this is one of their most preferred methods. Typically, like the below screenshot, influencers have pre-built rate sheets to provide brands ahead of time too.

2. Affiliate Marketing Commissions.

Instead of a fixed payment, influencers earn a commission for every sale or action (like sign-ups) driven through their referral. This model directly ties the influencer's compensation to performance.

When working with influencers on video based content (YouTube, TikTok), I’ve seen many influencers try to build affiliate commissions into their pay-per-post/video deal as well.

It’s because it’s more risky for the influencer to create a video and depend on traffic from the video to convert on your website.

3. Long-Term Ambassadorships.

Here, influencers are engaged in longer contractual relationships with the brand, serving as ambassadors. This fosters deep ties and allows for consistent branding.

4. Product Gifting.

Brands send free products to influencers in exchange for a review or mention. While there's no direct monetary payment, influencers benefit from the products they receive.

5. Revenue Share.

Similar to affiliate marketing, revenue share models give influencers a percentage of the total revenue generated, rather than just a commission per sale. It incentivizes influencers to drive not just sales, but also high-value sales.

6. Pay-Per-Click.

Brands pay influencers based on the number of clicks they drive to a specific website or landing page. It’s particularly relevant for campaigns aimed at increasing website traffic.

Tools and Platforms for Influencer Payment Management

When it comes to paying out influencers for their work, I’ve found there are typically two different paths you can take.

Work directly with your internal accounting team, leveraging current vendor payout policies (or using 3rd party payment providers).

Or

Work with an influencer management platform and/or agency to handle all of the payouts to your influencers.

There’s no right or wrong way going about accomplishing this, just the way that fits best for your organization.

Below we’re going to separate the two methods of payment, giving you a better understanding and more choices.

Let’s begin.

Payment Providers for Influencer Payouts

A payment provider for influencer payments is an online platform that helps brands and influencers with money transactions. These providers make it easier for influencers to get paid for their collaborations.

They have features for different currencies, bank transfers, invoices, and payment tracking. Payment providers in influencer marketing streamline financial interactions for timely and transparent payouts. They work for both one-time collaborations and ongoing partnerships.

Here are the most common to the least common payment providers for influencer payments:

1. PayPal
2. ACH Direct Deposits
3. Stripe
4. Wise (formerly TransferWise)
5. Payoneer

Influencer Management Platforms

An influencer management platform makes it easier for brands and influencers to handle payments. It's a digital tool that helps with financial interactions in influencer marketing.

In addition to processing payments, these platforms also include features like managing contracts, tracking campaigns, and analyzing performance.

Brands can use them to organize payments, calculate payouts, generate invoices, and ensure transparency in transactions.

Here are some of the top influencer management platforms you can use to pay influencers:

1. Upfluence
2. Afluencer
3. HypeAuditor
4. Grin
5. Influence4You
6. Influencity
7. Heepsy
8. Intellifluence
9. Izea

Want more? You can read our entire comparison of influencer platforms here.

Legal and Ethical Considerations

Now, we’re not going to dive into a lot within this section for 2 reasons:

1. I am not a lawyer, therefore, none of this is legal advice.
2. A lot of this will be dependent on your organization, legal structure, etc.

That said, I’d love to share just a few tips to consider when thinking about influencer payment contracts and things to protect your brand, while maintaining a strong relationship with your influencers.

1. Clear Terms: Precision is crucial. The contract should clearly state everything about the collaboration, like the work, payment, and what is expected. This clarity minimizes potential misunderstandings and sets clear expectations for both parties.
2. Disclosure Guidelines: Regulatory bodies in many regions mandate influencers to transparently disclose paid partnerships. Make sure your contract clearly states these disclosure requirements. This is important for following the law and building trust with your audience.
3. Usage Rights: Decide and document who retains the rights to content birthed from the collaboration. If you want to use the influencer's content after the campaign, it must be written in the contract.
4. Cancellation Clauses: Collaborations might not always unfold as envisioned. Include a clause in the contract that explains how the agreement can be ended and what happens financially.
5. Exclusivity: To prevent influencers from promoting rival brands simultaneously, consider an exclusivity clause. This clause should lucidly delineate the timeframe and specifics of the exclusivity agreement.

Wrapping Up: Navigating the Influencer Payment Landscape

Influencer marketing has grown a lot.

There are many ways to pay influencers and things to think about.

Navigating this landscape can feel overwhelming.

But, you have to understand compensation models and contractual agreements.

The benefits make the effort worthwhile: genuine support for the brand, stronger connection with the audience, and significant return on investment.

To find the right balance, make sure influencers are paid fairly and on time. Also, consider your brand's goals and budget. Open communication, research, and perhaps consultation with experts in the field can guide your way.

Let's focus on building real relationships in influencer marketing and improving your strategy for success!