In just three years, HiSmile, a teeth-whitening brand from Australia, grew a $20,000 investment into $40 million in annual income. To what do they owe their success? For the most part, their influencer marketing strategy.
With success stories like this, more and more companies are going all in on social media influencer campaigns. However, when it comes down to hiring individual influencers, many businesses still don’t know what they should be paying for collaborations.
How Content Creators Calculate Their Prices
When influencers have to set a price for creating a piece of content for your brand, they usually consider three metrics:
- How many followers they have: Usually, a greater social media reach generates more qualified leads;
- The quality of their content: This is directly related to the workload they have to lift to create it. For example, when creators produce high-quality content for which they go above and beyond, they’ll set a higher price; and
- Industry: The more influencers competing within the same industry, the easier it can be for businesses to find someone who fits their budget. Not surprisingly, the fashion, health, fitness, and beauty industries are extremely saturated markets, which results in lower costs. In contrast, there are comparatively few healthcare influencers, although demand in that industry skyrocketed during the pandemic. Collaboration prices in industries with a scarcity of influencers can climb much higher.
TikTok vs. Instagram
The two most popular social media platforms for influencer marketing are Instagram and TikTok, each of which attract 1 billion users worldwide. Currently, 67% of brands use Instagram for influencer marketing, according to a recent study by the Influencer Marketing Hub. Demand for content collaborations on TikTok is rising quickly though, with 45% of brands using that platform for their campaigns.
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Before allocating a budget to either or both platforms, take their fundamental differences into account.
TikTok is a platform geared toward engagement because its algorithm evaluates every piece of content across a set of factors. The algorithm aims at viral stardom by promoting content that users are actively seeking to engage with. In particular, TikTok micro-influencers gain on TikTok with 17.96% engagement, compared to 4.96% engagement for mega-influencers, due to the algorithm’s aim of generating the next viral sensation.
On TikTok, pricing is as volatile as any piece of content’s ability to go viral. In contrast, on Instagram, the average engagement rate across posts is stable and prices mostly depend on the number of followers.
A last major difference between Instagram and TikTok pricing is how influencers charge for each individual piece of content. On Instagram, most prices are calculated by assessing content quality and the workload a creator has to manage for a campaign.
TikTok influencers have adopted pricing models based on the views of their videos. This can mean that if your content is sub-par, it can become rapidly more pricey. At the same time, it makes pricing more fair. So, even though Instagram prices are easier to calculate because they are more standardized, you might end up with a better deal on TikTok if your content goes viral.
If you manage a brand and you’re looking for the right budget for your influencer marketing campaign, it’s important to understand how these prices come about. By comparing rates and analyzing the marketing potential of platforms, the number of followers and the generated content, you will be able to get the most out of your influencer marketing budget.
Clayton Rannard is the Co-founder of Collabstr, a marketplace where brands can find Instagram, TikTok and YouTube influencers. He is an entrepreneur and engineer experienced in creating software for the influencer industry. The Collabstr Influencer Pricing Calculator estimates the average rate an influencer might charge based on profile attributes and historical pricing, and allows brands to filter search results by industry, number of followers and preferred social media platform.
