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How to maximise your influencer marketing budget
Influencer marketing is a crucial component of most e-commerce and retail brand marketing in 2023 because it provides exceptional brand ROI when looking at the minimum spend, in comparison to most attention-based channels. We’ve entered an inflationary economic period where ad $’s increase, but conversions remain flat. So how do you maximise your spend? If you’re thinking of taking the route of influencers, the last thing you want to do is blow $’s on poor performing creative or talent. Too often we respond to briefs from media agencies focused on the wrong elements for their clients like “micro” or “macro” influencers, and how many followers they have. So what do you need to focus on? Average views per post, what the creator charges per post, what that calculates to as a CPM (Cost Per Mille), and therefore whether you’re getting value for money across the campaign. If you want to learn more about budgeting for your influencer marketing campaign, I’ll explain the principles for an immediate ROI-positive strategy that will save you a bucketload of time and money from the beginning.
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This article
- Efficient Influencer Budgeting: Where you could make mistakes
- Impactful Metrics for measuring influencers: Views & CPM
- Cost Per Mille Explained
- Calculating ROI and selecting your talent
- Setting your influencer budget
Four Common Mistakes when selecting influencers
Efficiency is going to be the aim of the game here. Too often we see campaigns that focus on all of the wrong elements, so consider this as your checklist for what not to focus on.
In our experience as an agency, 70% of marketers or founders new to the influencer marketing space focus on these elements that you’ll have read online, and have convinced you that one or more of these items are a silver bullet to success. Here’s our current working list:
Micro vs Macro Influencers - I’m not entirely sure where this obsession with categories came from for influencers (see below for an example), but more often than not these categorisations focus on the wrong element; followers. If a typical creator or person on social media can only reach a small % of their audience, then a focus on followers is the wrong element. Instead, it should be on views.
Focusing on Conversions - In the science of marketing field through the likes of Les Binet, Byron Sharp and the Ehrenberg-Bass Institute for Marketing Science, the data is pretty clear that there are only two levers that marketing can move - sales volume and brand awareness.
Too often, brands see influencer marketing as a sales (or conversion) channel, when it is really a brand channel. Why? We believe this is due to the early success when influencer marketing began as a channel and CPMs (cost to reach 1,000 people) were insanely cheap to what they are today.
The result is that if someone runs a campaign with a creator that has over 50,000 followers they believe it will blow them up overnight. This is the wrong mindset again, because what you are buying is views or impressions. Not clicks or conversions through a social ad.
You need to recognise that this is a long-term, brand awareness channel that will massively elevate your brand, but it will not act as a silver bullet for sales in the short term.
Incorrect delivery formats - I regularly see brands wanting paid media usage at a pittance for very large creators, and they often want it outright in perpetuity. This is amusing to me as a manager of digital talent when you consider what an A-List traditional celebrity with less reach would charge for a similar deliverable.
Paid media usage is simply the right to amplify the creators content to audiences you want to target via the social platforms Ad Manager. This gives further scale to the campaign.
In an age where talent are wising up, hiring managers and charging what they’re worth, brands and media agencies should distribute their paid media usage on UGC creative (I.e. paying a smaller creator for outright IP ownership) OR consder making the purchase of paid media usage optional, picking only the best talent in your campaign group that performed once you see their results.
Compensation models misaligned - Gifting v One off fee v Performance based v Affiliate, which one should you choose? Well I can say that any creator worth their salt that will actually be viable, is going to charge a one-off fee. Gifting is largely closing out in Australia with the ATO identifying that as addressable income. Performance doesn’t align with the medium nor what the creator can control typically (views) and affiliate is only going to work on high value order eCommerce.
Go with the one-off fee, it will fix your costs and ensure the influencers actually want to work with you. Again, pick one that is at a realistic or affordable rate on a CPM basis.
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How to evaluate influencers with views and CPM
Earlier we discussed how the wrong focus by most brands and media buyers has been followers.
Neuralle’s method is very straightforward, and it’s a focus on views and impressions only. Too many people are getting into this sub-industry of media and entertainment believing that they need to reinvent the wheel.
Let’s pull it back to what brands and media buyers buy, CPM (Cost Per Mille). You can spend a dollar today on Meta, TikTok, YouTube, Google, Billboards, TV, Papers and more, buying the following ad units:
- Views
- Impressions
- Clicks
- Conversions
- Downloads/Time
Every single one have a headline metric of CPM, with the creative often changing clicks/conversions.
1 & 2 are the only items you can really control with an influencer.
3, 4 & 5 are exceptionally hard to impact, and inconsistent across a campaign that covers 20-30 influencers.
If you rely on views or impressions, you can allocate a consistent method across all of the people you hit up for the campaign. This then allows you to pull data into spreadsheets or project management tools. This is where understanding CPM (Cost Per Mille) is important, because that is your base metric.
Cost Per Mille Explained
The definition of Cost Per Mille is “the cost an advertiser pays for one thousand views or impressions of an advertisement.” Essentially what you will pay to get 1000 views, impressions, clicks, etc.
Now, not all CPMs are made the same, and this is dependent on the platform. The way you as a media buyer or brand need to think about it is that you are buying attention. TikTok is going to have less attention than a YouTube video because the attention is less sticky and the nature of TikTok is very ephemeral, in that people are just constantly flicking through. The same can be said for Podcasts versus Instagram, TV versus radio, etc.
It all comes back to attention.
So what are fair CPMs per platform and creator? Well everyone’s different based on the engagement they will generate, the brand of the creator and their sophistication.
What we’ve found is that Influencer Marketing Hub is pulling good numbers for averages as well as whatever is ranking for “XYZ PLATFORM cpm” in Google.
Here’s what we’re working with internally as a marker (in USD):
- TikTok & Instagram - $10-20 depending on their niche
- YouTube - $15-30 (this one is very tricky as podcast channels can often blow this out)
- Podcasts - $40+ (working with one of the world’s largest podcast networks their minimum rate as of 2022 was $60AUD)
Alright, now that we have a measurement concept, time to move onto implementing this in the campaign.
Calculating ROI for influencer marketing and selecting your talent
We know from earlier what the average CPM is on a platform.
To evaluate performance we build on a simple spreadsheet you can find here.
We’ve broken down the example talent by:
- Name
- Platform
- Average Views per video (just take the last 30 days of posts, calculat them, and divide them amongst the total)
- Or Average Impressions per post for Instagram
- Their price per video
Our sheet has then auto-calculated their effective CPM. In the case of Sally ($7.49) and Harry ($5.71), Harry is just that little bit cheaper. We’ve also shown the cost per view, 0.6c per view is decent when it carries the authority of that influencers audience.
Looking at the two I would say that Harry is clearly the pick, but then you also have to incorporate other factors like that specific influencers brand versus Sally.
You can see how if you input 20-50 creators on a campaign, this gives you a much greater picture on who the optimal 5-6 influencers to select.
This is how we approach all of our campaigns. Naturally we’ve built a lot more IP that makes contact, contracts and bookings way faster than most. But this should at least guide newbies along the way to making these influencer marketing decisions for campaigns.
Check out this video from Ainsley Coote an Assistant Creative at Neuralle on how this is done in practice:
How to set your influencer marketing budget
Now we’re into the final and probably most important step. How much do you spend?
Well if we remember I said earlier that this domain was a brand activity, and we know that through the evidence in marketing research consistency over the amount of money you spend is more important.
So the answer would be, an amount you can afford to spend over a consistent period of time, 3-6 months at least.
If that’s $10,000, then that’s $1600 to spend on influencer per month, and that’s okay. You don’t need to go crazy in the beginning, build out a smart and consistent program internally or with an agency like Neuralle. Nail your processes for talent selection, contracting, content delivery and amplification before you increase the amount your spending. You will see results.
When clients start with us and dip in their toes to influencer marketing, they almost always start on a smaller budget, say $5-10k per month. Even some of the largest consumer and ecomm brands in Australia. Why? Because they realise that its important to make this channel work, or they listen to what we have to say - which is exactly that. Rather than churn and burn in a marketing channel that is a people focused business, they learn, iterate and scale as the results come through.
So my message; pick a number per month that you can consistently spend for at least 3-6 months.
Don’t become disheartened if the numbers aren’t there in the beginning, if you use our method, I’m certain you’ll have success.
If you don’t want the time or strategic hassle, then you know who to talk to:
Neuralle
In Summary
To maximise your influencer marketing budget, it's important to prioritise efficiency and not get caught up in factors like micro vs macro influencers. Focus on average views per post and CPM (Cost Per Mille), rather than conversions, as influencer marketing is a brand channel, not a sales channel.
Instead of varying compensation models, go with a one-off fee. You should pay attention to impactful metrics like views and CPM and consider these while selecting influencers.
For a measurable campaign, use a spreadsheet to track influencer performance.
Lastly, set a budget that you can consistently spend over a period of 3-6 months. Remember, influencer marketing is about long-term brand awareness, not overnight success.
For more assistance, you can reach out to Neuralle.
Jordan Michaelides
Managing Director
