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How to negotiate influencer rates so that everybody wins

Picture this. It’s Monday morning, and you log into Sprout. You immediately notice your brand has been mentioned thousands of times. Your heart races as you look for what caused the spike. There it is. A post from an influencer who felt wronged by your brand is going viral, and their fandom isn’t holding back.

You gasp for breath as you wake up in a cold sweat—it was just a dream (more like a nightmare). But it’s an all too real possibility if your brand’s influencer relationships go south. Like if you wait more than 90 days to issue payment. Or someone on your team sends a misguided offer to an influencer that gets screenshotted out of context. Getting it wrong can tank a partnership, turn into a viral reputation crisis and put influencers in extremely unfair positions.

How can you refine your influencer marketing negotiation skills to prevent a crisis like this? At Sprout Social’s Under the Brand-fluence digital event, Brianna Doe, Managing Partner at Verbatim, put it like this: “Always think long term. The way you negotiate with influencers can really strengthen (or harm) your brand.”

In this guide, we explain how to negotiate influencer rates with tact so you can build positive relationships that benefit your brand and influencers alike.

The current state of influencer rates

Before we dig into the tactical elements of influencer negotiations, let’s review industry compensation standards. According to The 2024 Influencer Marketing Report, almost half of all influencers charge between $250-$1,000 per post.

A majority (71%) offer discounts when partnering with brands on multiple posts, while another 25% would consider it in the future—suggesting that long-term relationships are as valuable to influencers as they are to brands.

A bar graph that demonstrates most influencer posts cost $251-$1,000

Even though there are industry averages, it isn’t really possible to standardize rates because of the many elements that impact influencer compensation. As Doe explained, “I’ve seen influencers charge up to $3,500 for a post. It depends on many different factors. For example, influencers who create video content typically have higher fees than those who create text posts.”

Doe also pointed out the different common types of compensation:

  • Flat rate: An influencer charges a flat rate that includes the creation of a one-off post (example: $1,000).
  • Flat rate plus commission: An influencer charges a portion of their total compensation as a flat rate and the rest as commission from direct sales (example: $850 + 15%).
  • Flat rate plus CPM: An influencer charges a portion of their total compensation as a flat rate and the rest as a dollar amount per every thousand impressions (example: $850 + $10 CPM). Brands often cap impressions so that, in the event a post goes viral, they won’t spend their entire budget.
  • Retainers: An influencer charges a recurring fee, and over a certain time period they create a specific number of posts and serve as an advisor/consultant on audience research and product development (example: $3,000/month).

Just as every ad spot won’t cost the same, not every influencer post will cost the same. But there’s space (and a need) for greater transparency. We, as social marketers, should establish foundations for rate minimums, payment timelines and communication expectations so that influencer marketing can become more equitable. That’s the first step to achieving longevity in influencer-brand relationships and the influencer marketing industry as a whole.

How to prepare for influencer rate negotiations

Here are the tactical best practices you should follow to enter negotiations with confidence and respect, and walk away knowing you forged deals that benefit both parties.

Know your goals

Having your goals locked-in is step one.

A common influencer marketing mistake is trying to fulfill every goal across your customer journey, leading to lackluster results and disjointed messaging. For example, an influencer post or campaign will likely not create awareness, drive purchases, build community and retain customers. Set realistic campaign outputs by only targeting up to two goals at a time and determining which metrics matter most.

Having your goals in place will help you find the right influencers and prioritize the most urgent business needs. It will also make it easier to consider how well an influencer’s audience size and overall presence fit the needs of your brand.

Do your research

Before you reach out to potential partners, research compensation benchmarks for influencers with different size followings and engagement rates. If possible, it’d be helpful to uncover what other brands in your industry typically pay for different types of posts.

Start your research by reading data reports like Sprout’s 2024 Influencer Marketing Report, and using tools like Tagger, Sprout Social’s influencer marketing platform, to surface these numbers instantly. Doe recommends supplementing this data with influencer interviews. She says, “Speak to different influencers with varying audience sizes. You can use this information to build realistic budgets.”

Understand your budget and flexibility

Once you have your goals set and compensation benchmarks on-hand, you’re able to set a realistic budget. You should also be aware of your brand’s budget constraints. Having a clear idea about what you can afford will help you steer negotiations in a productive direction. Being upfront and honest about your ceiling might even persuade influencers to give you a bundled content discount or be more flexible.

It’s also essential to have conversations with your leaders about when and why you’d consider going over budget to work with a particular influencer.

As a real-life example, a social marketer recently told me about a time when an in-demand influencer charged $3,000 more than her brand could afford. She was honest with the influencer about budget limitations, and the influencer offered her a deal on bundled posts instead. Even though they went over-budget, the brand was able to demonstrate a significant ROI to leadership.

To ensure equity and inclusion, marketers do have a responsibility to be transparent with the influencers you work with (i.e., where your rates come from) and to be consistent (e.g., if two influencers have the same engagement rates/audience sizes, they should receive comparable compensation).

Determine what kind of partnership you’re after

While there’s currently a push for more brands to establish long-term influencer partnerships, it doesn’t make sense in all cases. Especially for brands new to influencer marketing. Sometimes it’s better to experiment with a specific influencer before signing up for a long-term partnership. If that’s your approach, be forthcoming about it in your initial outreach.

On the other hand, for brands that have the budget and bandwidth, long-term partnerships (i.e., keeping influencers on a retainer or working on multiple posts together simultaneously) maximize results.

A post from creator Tabitha Brown announcing her vegan food and kitchen collection in 2023

A recent post from creator Tabitha Brown about her ongoing Target partnership and co-branded products

Established partnerships help you surface feedback influencers hear directly from audiences about your brand and products. According to The 2024 Influencer Marketing Report, 62% of all consumers who make daily or weekly purchases based on influencers’ recommendations are likely to share product feedback directly with influencers. The influencers you partner with have an even more direct view into your customers’ sentiment and feedback—insights that can help your brand pivot in real-time and grow long-term.

A data call-out card that reads 62% of all consumers who make daily or weekly purchases based on influencer recommendations are likely to share product feedback directly with influencers

Regardless of the type of partnership you’re after, be upfront about what you want in your conversations and negotiations with influencers.

Clarify content ownership expectations

You need to explicitly clarify how you expect to use an influencer’s content during negotiations. Are they posting it on their channels (e.g., Instagram Story vs. post)? Are you sharing it on the brands’? Will you put paid behind it? When will performance-based compensation be paid? What channels does it apply to?

Not defining these specifics upfront could create tension moving forward. Influencers have called out brands who use their content in ways they didn’t expressly agree to. When in doubt, over-communicate about ownership expectations and get your agreement in writing.

Brand safety and compliance stipulations

When writing briefs, you should give the influencers you work with creative freedom, as they understand their audiences best. But, they still need to comply with industry regulations and other specific stipulations related to your brand and space. No matter the industry, there are always specific guardrails you should write into your negotiations to make sure influencers are aware from the beginning.

Not doing so can result in more time editing and revising, which can lead to strained relationships and less authentic creative output.

Navigating difference influencer rate negotiation scenarios

Even when you follow the best practices above and enter influencer negotiations well-prepared, you should still expect counter-offers and unexpected roadblocks. Here are the exact steps you can take to mediate different influencer rate negotiation scenarios.

When an influencer proposes rates above your budget

It’s important to communicate clearly and early about budget constraints while also showcasing how much you value the influencer’s worth and contribution. If an influencer still proposes a rate above your budget, you can propose alternative compensation models, such as performance-based incentives, and see if they’d be open to providing bundled rates. You can also suggest a smaller scope of work that aligns with their budget, focusing on fewer, high-impact posts or a shorter campaign duration. If those proposed compromises don’t work, in special circumstances, you could make the case for expanding your budget to leadership.

If someone you really want to work with counter-offers with an unexpectedly high rate, it’s important to discuss and understand the justification behind the numbers, such as the influencer’s reach, engagement rate‌ and previous campaign success. Even if they present impressive past performance data, offering lump-sum compensation will probably not be feasible for your brand or justifiable to your leadership team. In some cases, it might be most appropriate to respectfully decline working together, while leaving the door open for future collaboration.

When an influencer proposes rates below your budget

If influencers propose a rate far beneath your budget, to be inclusive and equitable, you should tell them what you think their content is actually worth based on their following size and engagement rate. Don’t take advantage of them. To go above and beyond as a brand partner, let influencers know when they ask for too little and offer them more.

While under-paying an influencer saves money in the short-term, it could cost you brand affinity in the future. Being transparent will ultimately make you a brand partner that influencers (and their network of peers) want to work with in the future.

When your budget is limited (e.g., as a nonprofit or startup)

Even when your budget is small, you can still propose value exchanges such as offering exclusive products or experiences. You can also negotiate smaller, more targeted campaigns that align with your financial constraints but still leverage the influencer’s reach and credibility. You don’t need to overspend to reach your campaign goals. But you do need to be upfront about what’s possible for your brand, and understand if influencers are unable to be flexible.

Skillfully negotiating influencer rates is worth the investment

Negotiating influencer rates isn’t just about the numbers—it’s about safeguarding your brand’s reputation and fostering sustainable partnerships. You should practice transparent negotiations that prioritize long-term value over short-term gains.

By setting clear goals, conducting thorough research on industry benchmarks and understanding your budget constraints, you can navigate negotiations with confidence and integrity. Remember, the true currency of successful influencer partnerships lies in mutual respect and equitable practices, ensuring that both brands and influencers come out on top.

Looking for more on how you can approach influencer marketing with a clear strategy in place? This influencer toolkit will set you up with the resources you need to begin, budget for and build a strategy optimized for ROI.

The post How to negotiate influencer rates so that everybody wins appeared first on Sprout Social.

July 10, 2024

Original Source https://sproutsocial.com/insights/how-to-negotiate-influencer-rates/

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