Improve ROI From Influencer Marketing By Expanding Your Payment Model

David Yovanno is the CEO of impact.com, a partnership management platform helping businesses grow through partnerships.

As influencer marketing evolves, marketers struggle to commission creators for one-off, time-based campaigns. Forward-thinking brands understand that longer-term partnerships lead to better performance and a more strategic relationship between the brand and creator. Yet, many brands haven’t bought into the return on investment (ROI) potential of an industry with a global market value that reached $16.4 billion in 2022.

Marketers should consider creators as part of their overall partnerships strategy. A customized payment model is an overlooked but critical component for success. Many marketers need clarification about influencer fee structures or what activities drive revenue. In fact, 30% of marketers don’t measure ROI from influencer campaigns. This confusion often leads to outdated solutions, such as only working with influencers with 100k-plus followers or negotiating the same pay-per-post rate with all creators.

With an estimated 67% of marketing teams planning to allocate more budget toward influencer marketing in 2023, treating these creators as partners is vital. Influencers are an extension of your marketing team, as they create content, drive brand awareness and influence and directly drive sales.

As partners, influencers expect the relationship to be mutually beneficial. Understanding their needs and expectations is crucial to a successful relationship and can be the difference between a mediocre or a game-changing ROI.

This means offering attractive payment options and allowing room for contract negotiation. After all, brand campaigns are only one way influencers get paid. The "creator economy" has evolved into creators launching their own brands by sourcing products themselves. They’re also selling access to content and livestreams. These experts know their value—and now brands understand it, too.

At impact.com, we’ve been working with and supporting creators and influencers for decades. Here are my top influencer compensation tips to help you see better returns from your influencer marketing program:

Prioritize mutual value

Influencers and creators introduce brands to new audiences and target demographics, regions and market segments. To get the best influencers on board, align your goals and create lasting value for both parties. Next, it’s time to negotiate. Today's influencers expect compensation based on their content, audience and authority. Influencers also want clear, explicit and consensual agreements to build long-term partnerships with your brand.

Considering how to compensate these important partners can take time and effort. Some brands may have unrealistic expectations early in the partnership, or they may need help understanding how to attribute credit for the top-of-funnel actions creators may drive.

Creators want to work with brands that offer predictable and authentic partnership opportunities. When authenticity and a genuine love for the brand come through in the content, it resonates with audiences.

Compensate influencers in more than one way

While some brands may gift their products to influencers to inspire a compelling review, doing research first is critical. Ask yourself:

• Is your product right for that influencer?

• Is your product right for the influencer’s audience?

• Are you clear in your ask about what you want in return?

This method works best for small to midlevel businesses or businesses looking to test the waters or save some budget. Gifting is often better suited to nano-influencers (<10k followers) and micro-influencers (10k-75k followers).

Smaller companies with minimal marketing budgets can see higher returns on ad spend with gifting; however, more sophisticated influencers may ignore offers for non-cash payments. They may accept high-value products like comped travel, events, big-ticket store credit or rebate partnerships.

User-generated content (UGC) purchased with licensing fees is a great way to build up your library. Content license agreements allow you to license content in exchange for monetary compensation. Your brand can request exclusive rights for use on specific campaigns or social channels/publications, and influencers can negotiate terms that grant you access for particular periods or campaigns.

Nearly half of consumers report liking when brands reuse or reshare UGC from influencers, so using this content in a brand-sponsored ad or an email campaign is a strong strategy. This agreement often works best for brands looking to build an extensive library of content showcasing products or services authentically.

Larger businesses with a significant influencer budget will likely see a more substantial ROI with pay-per-post. Compensating per post builds more robust partnerships with experienced influencers. This works well for mid-influencers (75k-250k followers) and macro-influencers (250k-1m followers).

Performance-based partnerships reward influencers for high-quality content that drive users’ actions, such as clicks, leads or sales. This is ideal for high-engagement, growing influencers open to direct response activations. These partnerships work for designated campaigns or products to boost sales. They may also function as a separate payment structure for influencer partner segments better suited for performance-based compensation.

The payment model of the future

While there’s rarely a scenario where everyone wins, the fixed-rate + performance bonus payment model comes close. This plan benefits influencers and marketers equally by combining the best pay-per-post and performance-based payments.

In a "post plus" model, brands pay influencers a fixed and guaranteed income and offer commissions on sales or bonus payments if influencers reach set sales targets and other defined goals, for example. The fixed rate demonstrates that the brand values the influencer's production work as well as the awareness value of their audience, and the increased sales create a more lucrative partnership. Influencers are happy, and brands win big.

Fixed rate + performance bonus payments often see a higher ROI. They're also ideal for bridging the gap between commission-only and macro- or mega-influencers.

Get in on a multichannel opportunity

The partnership economy will only grow from here, so brands need the right tools behind their influencer marketing strategy to play in this space.

Businesses of all sizes and marketing budgets can harness powerful end-to-end influencer marketing platforms that manage influencer campaigns throughout their life cycle. Technology and automation allow for customized contracts and payouts and enable the tracking of performance beyond the final click.

Influencer marketing will change quickly and often, so get comfortable with the pivot. Measure how your strategy works, redirect as needed and go all in on this massive opportunity to transform your business.