What are the risks of paying influencers in advance?

What are the risks of paying influencers in advance

Thanks to the popular social media channels such as Instagram, influencer marketing is a very popular marketing method to generate extra sales. But what exactly is the difference between influencer marketing and affiliate marketing? Are there risks of paying influencers in advance? In this blog we will tell you more about it.

  • Difference between affiliate and influencer marketing
  • Type of Influencers
  • Terms Influencers
  • Scalability
  • Content
  • Conclusion

Differences between affiliate and influencer marketing

Affiliate marketing and influencer marketing are basically the same, because both models promote a product from a third party. This can be a company that wants to realize more sales with affiliates or influencers in addition to the current marketing activities. Increasing brand awareness is also a popular reason for using influencer marketing. It is easy to reach a very large audience through a number of influencers, so an influencer with, for example, 120k followers can mean a lot here.

However, the differences are in the way affiliates or influencers generate income. Affiliate marketing is based on a results-oriented model (Pay Per Click or Pay Per Sale), which is a nice model for companies to work with since there are no to limited risks. Due to the popularity and large number of followers, influencers often charge a fixed rate per post. You have already spent money for a post in advance without having seen any results. The costs can vary from €100 to as much as €10,000 per post. Depending on the influencer, an additional commission per sale of approximately 5% is also requested.

Type of influencers

Influencer marketing has become a broad term in the market, when is someone called an influencer and how much influence does this person actually have? There is often spoken about 4 types of influencers, namely the Nano, Micro, Macro and Mega influencer. This term actually only indicates how many followers these influencers have. Although there is no official standard for this, the following rule is often used:

  • Nano Influencer: 1K – 10K followers
  • Micro Influencer: 10K – 100K followers
  • Macro Influencer: 100K – 1M followers
  • Mega Influencer: 1M+ followers

Terms influencers

As mentioned before, many influencers work with a fixed rate per post, the more followers the influencer has, the larger the charged prices are in general. One of the reasons is that large (Macro/Mega) influencers are often approached by companies for a collaboration, so it is easier for them to agree on a fixed amount as a condition for a collaboration.

More goes out than in

One of the biggest risks is that the turnover realized by the promotion is still unknown in advance, so it may well be the case that the ROI (Return Of Investment) of the campaign is ultimately negative. This means that more costs have been incurred than turnover has been realized. In collaborations with starting or smaller influencers, it still happens regularly that work is done on a Pay Per Sale basis, this group of influencers do not yet have the fame and experience of the bigger guys and therefore have to grow towards this.

shooting blind

A second risk of influencers has to do with the target group of followers and the product or service you offer. Having a lot of followers is one thing, but getting someone interested in a product or service is another. Many Macro/Mega influencers have a very wide range of followers who want to follow the content but are not willing to make a purchase. It can therefore certainly happen that the results with a popular influencer do not work because the product simply does not resonate with the followers. Collaborating with small (Niche) influencers can provide much better results because the followers basically have much more bond with the influencer and their experience.

Credibility

So always make sure in advance that you first think carefully about the product you want to offer that also suits the influencer and their target group. If an influencer like Bas Smit or Monica Geuze promotes a great SaaS (Software As A Service) solution that can help your company grow, this will not come across as credible. It is too clear that this is a paid promotion.

Scalability

One of the great things about affiliate marketing is that it is so scalable and diverse. For example, you can have up to 300 active affiliates who each promote your company in their own way. After all, you only pay for results, so in theory this can scale infinitely. This affiliate can consist of Blog articles, customers, strategic partners or elsewhere.

With influencer marketing you are more limited to scale because this significantly increases the costs upfront. For example, it is not wise to work with 20 influencers at the same time, in addition to the enormous costs upfront you want to build a close collaboration to get the results as high as possible. That simply takes too much time if you work with multiple influencers at the same time.

In addition to the numbers, a collaboration with influencers is in many cases about a single or number of posts. This means that the promotion is a one-off and not for a longer period. If influencer marketing is a long-term strategy, it is therefore important to clearly map out the costs in advance. Another option is of course to coordinate a collaboration with the influencer for a longer period of time.

Content needed

Collaborations with influencers sound great, and they certainly can be! Often there is more to it than just the conditions of the influencer himself. For example, it is possible that a video has to be made as a promotion. As a company, in this case you are often responsible for having the correct information and possibly a camera crew ready to record the video. In some cases, influencers also ask for a physical product so that they can use it to promote their own. Be careful that you handle this carefully, in some cases the option to get a product in exchange for promotion is abused.

Conclusion

Basically, influencer marketing is a very nice and interesting method to generate more sales or extra brand awareness. However, it is important that you as a company check in advance whether Influencers are the right people to promote your product or service.

Pay attention to the following points:

  • Costs in advance (Possibly + commission)
  • One time post
  • Audience of followers
    • Match with my product
    • Credibility of promotion
  • What content/materials do I make available