Our two cents about campaign budgets.
Knowing what to spend on an influencer marketing campaign can be very challenging because there are so many different ways to measure success / assets gained.
Not only can influencer marketing help you achieve brand recognition and drive sales (among others), but it can also provide you with a depth of high quality content to use for your own channels.
You should be thinking of campaigns as achieving two things:
1 – marketing goals (awareness, sales, etc)
2 – content for your own business uses (images, videos, blogs)
Most campaigns achieve both of the above, but sometimes campaigns are run solely for one or the other.
Your first decision is to decide which of these you want to achieve, or perhaps both.
The information below will help you decide what your budget should be based on each type of campaign.
Content Creation Budgeting
Content comes in the form of images & videos, but the most common is images.
Content creation is a big part of influencers work, especially with the changing times we are facing post-COVID, with brands not being able to organize traditional photo shoots with dozens of people.
Sending creators products for them to shoot, or inviting them to experience something in real life (hotels, cuisine, adventure to name a few) are all great examples of ways brands are using creators to obtain content.
Content creation is most commonly built into a traditional influencer campaign, since it is the most economical in terms of the spend on products and the resources used to manage the campaign.
– 3 month campaign → deliverables = 1 post per month + 10 extra images sent to brands
These images come at a reduced cost in comparison to the posting component of the contract.
You may pay $350 for one post but $25 per image for extra content for ex.
These images come in handy in today’s content centric world.
You can use them:
– in email campaigns
– on your own social media accounts
– on your website
– on printed marketing materials, anywhere you need really, so long as you have full access rights. If a particular influencer doesn’t agree to full rights, you will need to negotiate with them as to what those images can be used for.
Other campaigns are content only, meaning no creator is asked to post to their account. This is great for new brands getting ready to launch or new product lines. Generally brands hire creators of smaller followings for this purpose, even as small as 1k, because it’s the quality of the content that matters (read: great styling, photography & editing), not the following count.
These campaigns work really well because they can be a huge cost savings when compared to organizing a photoshoot yourself.
Cost breakdowns of a photoshoot:
– Hiring a photographer (day rate could be $500-1K+)
– Hiring 5 models (min $1000/day)
– Renting a venue (min $250/day)
Compare this to hiring a few micro-influencers to send you 25 images each, which may cost you $300 per influencer.
Aside from the costs being lower, you also benefit from having diverse content instead of all of the photos looking the same, which can be very monotonous and lacking inspiration for your customers especially if you are using them for your social feed mostly.
Traditional Influencer Campaign Budgeting
Traditional influencer campaigns are those that are largely focused on having the creator share your brand with their audience.
The deliverables can include posts, stories, videos & blogs.
Knowing what you should pay boils down to a mix of:
1) your budget
2) your goals
3) standard industry averages for the deliverables you are looking for
Depending on where your business is, you can take one of the approaches below to assess what your budget is.
The data driven approach
To be scientific about it requires some data about your business, specifically your conversion rate based on whichever lead magnet you use.
For example, let’s say you are a clothing brand:
– For every 1000 impressions (views) of influencer content, 5 people click through to your website (0.5% CTR)
– 5 in every 100 website visits turn into a paying customer (5% conversion rate)
– your average customer spends $100
– if you want to see sales of $10,000, you need 100 customers
– in order to do this, based on the above rates, you need 400,000 impressions which leads to 2000 web visitors and 100 paying customers
– this means the value of each impression is $0.025
– you can then easily determine how many impressions you need based on the volume of sales you want to generate
You need to figure out what you can pay in order to gain those visitors based on your overhead and product costs, among other things.
Can you spend $1? $0.50?
That is something you need to analyze so that you are left with the profit margin you want to see.
You can then reverse engineer your campaign budget.
If you want to see sales of $10,000:
– you know that you need to achieve 400,000 impressions
– yielding 2000 web visitors
– and if you are willing to spend $1 per
– your campaign spend can be $2000
The same calculation can be done for any success metric you are hoping to achieve (also known as a key performance indicator, or KPI)
– ie. social followers
– downloads of a free guide
– webinar registrations
– click throughs to your website
– general impressions
– and more
Whatever method introduces customers to your brand also houses the information for how many conversions to paid customers occur and it is here that you will find out which method is the most effective and how much you can spend on your influencer campaign (or any marketing campaign for that matter).
If you’ve already run influencer campaigns that you’ve found successful, a great way to figure out what you paid per asset (post, image, video) is to simply take the total amount spent and divide by the assets you received in combination of influencer posted content and non-posted content supplied to you as well as KPI’s you were tracking.
The best guess approach
What if you are a new business or don’t have any of the above information yet?
Sometimes trial and error is the most accessible approach with influencer marketing, especially if you don’t have certain data.
The best part is that you can easily test with a handful of influencers and with a limited budget, so you gain data for the next round of decisions.
So, where to begin? Start by thinking about your own internal budget and how much you can allocate comfortably to marketing. According to recent studies, it’s common for brands to spend 25% of their digital ad budget on influencer marketing.
A general rule of thumb is that influencers charge around $200 per 10,000 followers for an Instagram Post, and $150 for an Instagram Story. These rates can fluctuate up or down based on a myriad of factors but that’s a good average.
Once you know how much you are comfortable spending in total, you can do a numbers based calculation based on industry standard assumptions:
Step 1 – Choose an influencer you’d like to work with or at least have in mind a following size you are hoping for.
For this example we will use someone with 50k followers.
Step 2 – Estimate the number of conversions that will occur (conversion to whichever success metric you are looking for – sales, sign ups, downloads, etc).
You can use the influencers reach numbers found on their momfluence profile to project the number of people that will see your content.
Once you know this, you need to multiply their reach by the % of people you think will convert. Use a conservative 1% value for the conversion rate until you have worked with the influencer and have evidence to increase it.
So for our ex., 50k followers, average reach of 5k (as found on their profile), 1% conversion = 50 conversions.
Now that you know you can get 50 people to do your desired outcome, you need to put a value on that customer.
Two key calculations are important for this step:
Lifetime value (LTV) – what the average person spends over their time as your customer
Cost of acquisition (CAC) – how much you spend in order to gain a new customer
To take this example further, let’s say you are hoping they subscribe to your monthly pilates classes.
The monthly price is $29/month, the profit margin on that is 80%, and the average customer is a subscriber for 6 months, meaning the average lifetime value (LTV) is $29×6= $174x.80 = $139.20.
A good CAC ratio is 1:3, meaning you should aim to spend $1 on attaining a customer for every $3 you profit.
In our above pilates subscription example, $139.20/3 = $46.40, meaning you can spend up to $46.40 on each customer acquisition. Of course, the lower this amount spent the better, but it provides a guidepost.
To finish off the estimate, if you have calculated that 50 people will become subscribers, meaning you can spend up to $2320 on this influencer campaign.
Knowing this information you can start to think about what your goals are and how to best use influencers, in terms of their follower size, to achieve your goals. (See our blog for more on goals).
We always encourage brands to book a consultation with us at the beginning of your influencer marketing journey so we can help guide you with the best strategy for your objectives and budget. It’s our favourite thing to do so please feel free to reach out anytime, even if you are a seasoned pro.