Our intern, Tim Wu, compiled a series of tips from the We Are Boosters community. We're calling the series "Ask the Boosters." The first topic he dove into is an important one for marketers and business owners to consider: breaking down the key factors to consider when developing a budget for an influencer marketing program.
As a relatively new line item on a marketer's budget, influencer marketing budgets span a wide range. Most brands are still fairly conservative when it comes to influencer spend, allocating only a fraction of what they put towards digital, TV, etc. However, over the past couple of years (largely as a result of the pandemic) we've seen some majorly shift portions of their budget in this direction. According to BigCommerce.com, “The most common influencer budget is $1,000 – $10,000/year, followed by $100,000 – $500,000/year,” according to . However, these numbers are not a formula, and there are many components to narrowing down the exact amount that will suffice for your needs. Each campaign is nuanced, and there are many factors to keep in mind.
Consultant Stephanie Stabulis recommends considering 3 factors before setting a budget: goals, the amount of work you're asking for from the influencers, and your current level of brand awareness.
Your goals. For me, goals always dictate how the client splits the budget and how much we invest to get a specific amount of reach & impressions. For example, if I'm going to spend $5000 on influencers and I don't have a lot of brand recognition from my audience, I may elect to spend 75% on influencers and 25% on ads. So, when it comes to the goal of impressions and reach in brand awareness, spending some on influencers and some on ads will generate better CPMs than spending 100% on influencers.
Fairness. Influencers need to be compensated for the work that they are doing - don't expect to "cheat" influencers from fair pay for their work. At minimum, you should be paying around $300-500 regardless of the influencer size you work with. If you are not ready to put out this kind of money, you aren't ready for influencer marketing.
How "New" You Are - If you don't have a lot of brand awareness generated, you may have to invest more in influencer marketing campaigns to start seeing the needle really move. Keep in mind that your inputs must align with your expectations for results. Most importantly, talk to someone trustworthy and experienced about what you can expect at different budget levels - don't try to wing it yourself!
If gifting product is part of your strategy, don't forget to account for that as part of your budget as well, according to consultant Anais Cowley. While that can be part of the payment strategy, she encourages a blend of cash and product for best results .
Chances of conversion with just free product is slim. The goal is for a low entry point, but with a better return. When I work with bigger businesses, I tell them, aside from the free product, allocate cash as well to ensure better quality content, yielding a better return. It’s also important to remember that this is something that takes time to build. There won’t always be a grand return, but it is a work in progress.
We Are Boosters founder, Meredith Jacobson, believes that one of the biggest considerations a brand needs to make is whether they are willing to allocate time or money towards an influencer activation. Brands that have a limited media budget might find it most efficient to allocate internal resources towards managing campaigns and those with more flexibility might find efficiencies in hiring experienced agencies to handle campaigns from A to Z. The most conservative way to start partnering with influencers is to allocate a video production budget towards an initial campaign ($5K-$150K depending on the size of the brand). From there, start to establish benchmarks on your spend and optimize towards your goals.
When it comes to establishing budgets for influencers, consultant Lauren Gabel suggests identifying entry and max offers for each, with the total of the max offers adding up to the budget's total. Here are a few tips she provided:
Brands: don't spend your budget all at once. Hold some money back for emergencies because things arise and don’t go to plan. Having a contingency is really helpful and it makes you feel less stressed.