How can you determine fair influencer compensation based on reach and engagement?

Deciding how much to pay an influencer is like figuring out a fair deal for both the influencer and the brand. First, see how much the influencer's followers interact with their posts by calculating the engagement rate. Look at what others in the same field charge for similar work and consider how good the influencer is at what they do. Think about the quality of their content and if it matches your brand. Also, check if their audience matches the people you want to reach. If you plan to work together a lot, it might be good to offer a fair amount so that everyone is happy. Talk openly about your budget and what you expect to find a fair deal that works for both sides.

Reach and engagement are important, but not the most business critical metrics. Reach is the amount of unique people who saw their content, engagement is any action taken by a user on that content. Neither of these should be your KEY performance indicator. It’s most important to vet a creator’s audience makeup first. If that reach and engagement isn’t from your target audience, you’ve wasted time and money.

Determining fair influencer compensation based on reach and engagement involves considering the influencer's audience size and the level of engagement they have with their followers. Factors such as the influencer's reach, engagement rate, and overall performance are crucial in determining fair compensation. Additionally, the complexity and scope of the content creation required for the campaign can also influence the compensation. It's important for brands to consider these factors when determining fair compensation for influencers.

When we say reach, we actually mean how many of the Influencer's audience will see the promotion. Of course, it is also important how much of this audience will actually engage and respond to the call to action, depending on the value they are looking for through Influencer content. However, the most important thing is what percentage of the Influencer audience is in the age group, but also in the area that the brand needs. We often see this in smaller markets with the same language. We then negotiate the price according to the percentage of the audience from a certain area, and accordingly reduce the price to the influencer. For example if we need an audience from the UK, why would we pay for 15% of influencer's audience from France?

Determine fair influencer compensation by evaluating reach, engagement metrics, and platform differences. Consider quality of content, industry benchmarks, and establish transparent negotiations. Calculate Cost per Engagement (CPE) to standardize compensation. Introduce tiered structures for long-term collaborations and offer performance bonuses tied to key performance indicators. A balanced, data-driven approach ensures equitable compensation reflecting the influencer's impact.

It’s important to understand that influencer compensation is defined in your contract before a campaign ever launches, therefore reach and engagement come later. At this stage it’s only *potential* reach based on the audience size. Remember to consider compensation based on the actual deliverables. For example, how many times will they publish for you? What is the quality of the creative? How many images or videos are they producing? Does your brand own the creative in perpetuity and can you use it in other marketing efforts? Does their audience align with your target consumer? Influencer content is a gift that keeps on giving to brands. There are layers of value to consider when deciding fair comp.

Not all platforms are created equal. A Tiktok influencer with a 1 Million following and viral content does not equal an Instagram influencer with the same following Vs a YouTube influencer. Remuneration for influencers needs to be tied with their platform, and the impact it creates for the business even though it may be a bit too early in the lifecycle to expect this change, however the natural progression for influencer marketing is variable fee based on performance. The greater the performance in terms of real sales, the better the remuneration. China, is one of the most advanced ecosystems for influencer marketing and it has successfully implemented a performance model through Taobao, Xiahongshu and Pinduoduo.

LinkedIn defines these rates perfectly in the prompt. Remember though that engagement rates can look artificially low or high based on the impressions any given piece of content receives. Before you tout a good engagement rate, be sure it’s statistically significant! Any campaign is only good as its goal, and engagement has been disproven in marketing research to drive conversion for over a decade. Instead, measure the traffic your influencers drive to your site or product and how many conversions that creator was able to drive. These metrics will impress and help you learn how to drive results like this in the future. Plus, you may want to develop a relationship with that creator since you’ve clearly driven value for their audience, too.

Ultimately any % of reach/engagement against following doesn’t matter. Look at the total reach & engagement. Get rate cards from influencers you have targeted. And compare, see which offer the best fit to your niche & the potential from each, if some are above what you are willing to pay. Negotiate, if some are less & overperform, reward them, long term relationships with influencers is key.

As a marketer, consider Influencers the way you would any other paid media channel. If you are targeting people in a particular country, does this creator have an audience there? If so, what percentage of their audience? If your goal is awareness and you are using reach as a proxy metric (rather than actual brand lift testing), you may want to choose creators who have higher potential reach to your consumer. You could expect to negotiate a higher rate with creators who have a proven track record of driving reach to that audience. However, that is only one factor to consider when determining fair compensation.

When we say reach, we actually mean how many of the Influencer's audience will see the promotion. Of course, it is also important how much of this audience will actually engage and respond to the call to action, depending on the value they are looking for through Influencer content. However, the most important thing is what percentage of the Influencer audience is in the age group, but also in the area that the brand needs. We often see this in smaller markets with the same language. We then negotiate the price according to the percentage of the audience from a certain area, and accordingly reduce the price to the influencer. For example if we need an audience from the UK, why would we pay for 15% of influencer's audience from France?

Negotiating with influencers demands transparency, respect, and realism. Clearly communicate campaign goals, expectations, and budget while expressing the value placed on reach and engagement rates. Listen to the influencer's perspective, understanding their vision, workload, and costs. Propose fair compensation, factoring in content quality, quantity, exclusivity, campaign duration, and mutual benefits. Consider additional incentives like free products, discounts, commissions, or long-term partnerships to strengthen trust and loyalty.

Keep an open mind when it comes to stats and find an influencer that actually fits into your niche and locale, not one that does all.

You should always think about how to further improve a successful collaboration with an Influencer. Offer them additional products, a percentage of sales, etc. Performance based campaigns are a win-win for Influencers and the brand because the results are measurable and allow us to filter successful collaborations more easily. At the end of the day - you don't live for the likes.

In my experience, influencer campaigns often out perform other, more shiny channels with higher budgets. Particularly if these folks are producing content that your brand will have usage rights to include it in other marketing efforts like your website, email or social media, pay them fairly. Their content is often more effective online than a cut down of a long form video and is often less expensive. Fair pay means paying what they ask. And if your brand can’t afford that, negotiate the terms of your agreement, not the price.