The influencer marketing industry is rapidly growing and always evolving. On-brand promotional content such as videos, photos, stories, social posts, blog posts, and more can be a powerful and effective marketing tool. The right Creator in the right place can attract audience segments based on factors such as age, location, personal preferences, or previous purchases.
In fact, the influencer marketing industry is expected to reach $16.4 billion in value in 2022, an increase of almost $3 billion over 2021 ($13.8 billion). Social media influencers can dramatically help businesses expand their brand awareness and market reach, and businesses are catching on.
However, although they see the value of influencer marketing and are ready to get on board, these businesses don’t always know what commission rates they should offer to Creators. After all, influencers are technically self-employed, and many of them spend a significant amount of time and resources on creating sponsored media. How can businesses compensate them fairly?
Influencer Commission Rates 101: How Much Should Influencers Earn?
Social media Creators are not a monolith, and influencers often differ dramatically from each other. Because of the complexity involved in determining a fair rate to offer influencers, businesses should have a comprehensive compensation plan in place before taking on Creators to promote their products or services.
Competitive commission rates are your organization’s foundation for strong, lasting, and effective partnerships with Creators. The higher your commission rate is, the more competitive you will seem, which means top-tier influencers will be more likely to want to start or continue working with you.
Fair commission rates will also encourage organic influencer linking behavior. Why? An attractive commission rate is the baseline for organic linking because Creators are more likely to link to brands that offer them the highest earning opportunities. A commission rate is an evergreen competitive factor that can also encourage influencers' linking behavior on a macro level. Additionally, consistent collaborations will help boost a program's performance through strategic, data-driven decisions.
When retailers combine competitive commission rates with frequent and valuable collaborations, they can experience significant growth and an increase in loyal customers.
Determining Competitive Influencer Commission Rates
Shopping apps like LTK allow brands to determine their commission rates before they begin working with influencers. The right commission rate can help your brand maximize its impact with Creators.
Unless you’re selling an expensive product, a commission rate of less than 12 percent is generally viewed as low. Creators who see rates in this range may feel that you don’t value their partnership highly enough, which could lead them to pass on promoting your brand. Reasonable commission rates fall between 13-15 percent, while high, competitive commission rates are typically 16-20 percent.
One way to calculate a fair influencer commission rate is to identify an ideal influencer platform partner, including follower count and overall rate of engagement, and determine what would be a competitive rate for these influential networks of creators. Other factors, such as access to a specific type of niche audience, may also impact this rate.
Choosing the Right Platform
It’s helpful to work with a platform that requires all brands to offer a singular commission rate to all network Creators who have been pre-vetted to ensure they meet specific branding standards.
In fact, research shows a strong correlation between positive program performance and competitive commission rates. Commission rates are an important consideration factor for Creators when creating links.
The right platform recognizes that every shared link creates an opportunity for expanded market share. When spend is lowered, Creators may change their linking habits to pivot away from the brand or seek out alternatives. Winning back that market share comes at a larger brand spend. That’s why it is imperative to maintain competitive commission rates.
Influencer-focused platforms like LTK may offer one standard rate for all creators due to the premium nature of their network. This gives Creators the opportunity to produce and publish content that earns them the advertised commission rate, which can range anywhere from 13-15 percent or higher, depending on your company’s size and vertical. Brands may also have the opportunity to purchase placements to promote their increased commission rate.
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