How Marketers are Calculating Influencer Compensation Based on Performance

How Marketers are Calculating Influencer Compensation Based on Performance

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 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.

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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 sales keep reading.

Performance Based Theory

I strongly advocate that brands should absolutely pay influencers and content creations 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

  1. Upfront for an agreed-upon post
  2. 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 Brand’s 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 economic 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.

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 ways that brands reward their partners based on performance. It’s simple and to the point. Both and 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 brand awareness goals some companies will work with a partner and set up a compensation amount per conversion. So instead of tracking to 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 bloggers 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 it. Just a sentence or two at the top or bottom of the post will keep you safe.

Do you agree with the performance based marketer type of influencer compensation? Tell us why or why not in the comments and cheers to an epic marketing discussion!

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Photo by Anastase Maragos on Unsplash

Using bloggers to promote your brand and products? How are you compensating influencers? You may want to check out paying them based on how they perform.

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Kristen Matthews
Kristen Matthews is an expert in Content Marketing and loves to collaborate with brands on their content marketing strategies. If you just want to chat with her or if you want to explore freelance content marketing opportunities with her she can be reached at [email protected]
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3 Comments

  1. I agree completely. There are so many so called influencers with fake follower counts and not very engaged audiences that to pay them for a post is risky at best. I beleive that if they review the content or prodcut that your asking them to post about and believe that their real followers will like it then they shoudl be eager to work on commission.

  2. Would you recommend that an influencer agree to only be compensated for product reviews with upfront per post fee?
    only keeping reviewed merchandise & 8% commission on promo code generated sales?
    It feels a little 1 sided, especially when there’s a 4 pic, 1 video post expectation per product…. which is basically turning an influencer page to a sales page….
    Not sure where to find standards for pay for mid level influencers.

  3. Kristen, great post and i am 100% in agreement – i think influencer marketing should be much more performance based and less based on an agreed amount.

    I think that influencers should be probably be paid a fixed amount per month as i am not a big fan of the per post method since hopefully they will be doing other things for you like responding to tweets, mentioning your name at conferences etc erc which is totally intangible and not possible to track. But then they should also paid a success fee based on whatever you are trying to achieve (conversions, signups etc).

    In a lot of respects they are being compensated like sales people (base+ commission)! If an influencer is good at what they do and prepared to back themselves then this way should give the influencer a much greater income than just a fixed fee only arrangement. It means that both the brand and the influencer has ‘skin in the game’ and is far more appealing to a business owner !

    Cheers

    Chris

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