Maybe we should start this post by saying that while we’re going to talk about the shortcomings of (and methods of dealing with) the crude tool of pricing sponsored content using an influencer’s reach, we should also allow that it is the most appropriate starting place for any fixed rate pricing model. We’ve seen much worse: not so long ago it seemed like a lot of brands were still pricing or valuing deals based on the number of posts or influencers involved.
As a side bar, it’s also worth noting that while we love and will discuss performance based pricing in the future, it isn’t always available and even when it is, it isn’t always the appropriate approach for the brand or influencer.
So why price based on reach? Three reasons:
With organic influencer marketing, it is the most relevant metric that is knowable up front. One of the great attributes of influencer marketing is that it is opt-in marketing. Audiences are choosing to engage with your content in a way that is very different than with paid media, whether through a subscriber feed or even better, through search. The downside of organic views or impressions? They can be remarkably tricky to predict.
It is a common denominator metric with other media types. Most people in the space understand the estimated views point above. Most people don’t really understand this second point. It even took me a while to really understand it: I tend to “apologize” to clients for talking about reach and redirecting their attention to what I consider the first point of real value, views or impressions. But this is also a bit of a mistake: newspapers don’t apologize for their circulation, TV networks don’t apologize for their subscriber counts or show ratings (which is no guarantee that someone watched the commercial). Potential audience is a completely reasonable metric to talk about as brands compare media options.
Influencers themselves tend to set their rate cards based on reach and vertical. And while influencer pricing isn’t always rational, supply-demand dynamics (and lack of clarity around real value) make this pricing somewhat sticky around the reach metric.
So what’s the problem? The problem – and it’s a good one! – is that there are so many better metrics available to judge an influencer marketing campaign on. As noted, they might only be estimates at the beginning of the campaign but they can be estimated and layered in to get a better understanding of expected performance:
Views and Impressions
Especially on YouTube and TikTok, it’s easy to get a sense of historical viewership. At gen.video we look for a “playthough rate” (defined as views / reach) of around 10% on YouTube as one relevant benchmark to understand how engaged an influencer’s audience is. It’s not always a negative if it’s lower: a more established influencer may just have legacy subscribers who have rotated out (but not unsubscribed), but as long as the influencer is continuing to attract new viewers and views, it just needs to be understood and priced accordingly.
Another math based pro tip: when estimating future views, use the MEDIAN viewership of recent videos, not AVERAGE. Why? Videos that go viral will drive up averages in a way that skews the calculations.
Engagement aka Likes and Comments
The punchline of influencer marketing: agencies counting up likes and comments (“Here first!” “I [heart] you! Pls reply!”) and claiming victory. My problem with likes and comments mathematically is that I really can’t get a grasp of what the benchmark is or how to calculate it. Because impressions aren’t publicly available on Instagram, discovery platforms typically report engagement as “Likes and Comments / Follower Count.” This leads to really low fractional numbers that are both hard for the brain to understand (humans don’t do well with the scale of decimal points) and even harder to get excited about. There is a ton of value in comments but to my mind, it’s all about the sentiment and verbatims that can be pulled out to tell you who the audience is and how they are using the influencer’s content.
Clicks
I love this one!! Clicks are a downfunnel metric and show how we are driving consideration for a brand. And while I understand that click farms are rampant in paid media, (and there are potentially a lot of fake followers impacting reach) we don’t see a lot of evidence that there’s material click fraud in organic influencer marketing (including for the simple reason that there’s no economic benefit to it: which is a cautionary note for anyone considering performance deals based on clicks). Clicks are so fundamental to performance that we do talk to clients about expected clicks in a campaign. That said, the expectations are widely variable based on vertical. Consumer Tech campaigns on YouTube may have a 3% CTR benchmark while for a CPG campaign, 0.3% is a huge win.
Direct Sales
Clients love to ask about this and in certain industries – like Consumer Tech – it’s reasonable to anticipate direct sales impact. That said, there are so many complexities to sales success, including the timeframe over which sales will be realized, that it really has no place in a pricing conversation.
And so that’s why influencer marketing is priced based on reach and how to think about that reach when evaluating the appropriate scale for a campaign.