In this chapter, I will focus on the business side of things. When it comes to influencer marketing, huge money is being made. In 2019, the global market was estimated at $5.5 billion. As social network traffic grows, this number will shift dramatically over the next 5 years. Market size estimates for 2024 exceed $22 billion globally.
Influencer Market growth is and will be caused primarily by the growing popularity of ad blocking software. Marketers are looking for more channels and marketing techniques to reach new customers.
However, it is already clear that Influencer Marketing holds huge potential-and not only for brands. Research conducted by The Influencer Marketing Hub (partnered with Viral Nation and NeoReach) shows that every dollar spent will result in a return that is more than 5 times in the medium term. It is also interesting to note that 13% of TOP brands can increase their ROI up to 20 times the original amount invested. It is clearly a very lucrative marketing strategy for brands, which of course also brings opportunities for influencers.
It is also necessary to say that about a quarter of the brands cannot generate the desired revenue. Influencer Marketing has its specifics, which we tried to cover in the previous chapters. This is no less important from a business perspective and will be discussed in this final chapter.
You will learn how influencer marketing business works and what you need to do for successful collaborations with brands. You'll learn what business models you can use, how collaborations work, as well as how to gain new ones.
Influencer marketing is not only a topic of the last few years, as it may seem. One of the first influencers, who did not differ much from today's definition, was Nancy Green, who portrayed Aunt Jemima. She smiled at customers from packages of pancake mix. This happened all the way back in 1890 and we could probably find even older examples.
However, this model and principle still appears, and we are familiar with it as consumers. With the growth of social networks, this type of marketing has evolved to a great extent and will continue to grow in the next few years and beyond.
This is because social networks allow each of us to build our own channel of communication and influence an audience. And this is the fundamental change compared to recent times versus 30 years ago.
Publishing a newspaper or broadcasting on television, even today, is very complicated and also extremely expensive. On the other hand, creating a profile on YouTube or Instagram takes just a few clicks and is available to (almost) anyone. Free of charge.
Since ancient times, the purpose of marketing has been to gain people's trust and deliver them some message, whether it's an opinion or call to action leading to the purchase of a product.
Being able to build a narrow channel with today's tools, and hence a relationship with specific people make it very valuable for brands to get into these channels. The main principle of influencer marketing is to build an intimate relationship with a community of people who share common interests and lend this influence for a fee.
Speaking of mainstream platforms such as Instagram, YouTube, Twitch, TikTok, etc., content can only be published here for free. That means free to publish for you as a creator and free to consume for followers. In other words, you can't offer premium content that users must pay for. We think every creator should be paid for his or her effort that goes into creating valuable content.
Basically, you have 3 ways to monetize your content.
There are several advantages to live streaming. Platforms give it priority over other content, which increases your reach. A common part of live streaming is the possibility for viewers to send small contributions to the creators. This is definitely one of the models that can bring you a reward for all the effort and time you put into creating your content.
If the creator creates valuable content, he or she deserves to be rewarded. Mainstream platforms do not allow content to be made available to paying users, so Patreon was created. It is a service that allows creators to publish content to paying users only. The price and other conditions are set by the creator himself. A very common model is that influencers create a part of the content, which is available free of charge on regular channels and another part is “hidden” on Patreon for paying users only.
Especially on YouTube, you can add ads to your videos. This option is available to you when you reach at least 1,000 subscribers and a minimum of 4,000 views in the last 12 months. The advantage of these ads is that they are very personalized for each viewer, so it's not so distracting. The reward for ad impressions varies across regions and industries, but it can be said that an expected average is $3 to $5 per 1,000 views.
Influencers earn money not only through commercial cooperation with brands (we will talk about this later on in this article). There are plenty of other ways to earn money and these will be discussed within the following lines.
Merch is a very popular way to influence monetization. Most often it is the sale of small items bearing the influencer's name or brand. It usually includes T-shirts, sweatshirts, snapbacks, diaries, mugs, bracelets and much more. The range of products varies and is usually chosen according to the focus of the influencer.
Of course, you can deal with the production and distribution of your own merch, but this is a relatively big task. Building an e-commerce selling merch products is basically a standalone business that can easily take your full attention. You can save time, hassle and money by using services that specialize in the production, sale and distribution of these kinds of products. Cotton Bureau and Teespring are among the best known and proven solutions.
It's not uncommon for custom merch to develop into its own brand. In this case, it is no longer just an influencer's logo on a sweatshirt or t-shirt, but often more fashionable items of clothing.
Selling digital products has the advantage of not requiring a physical sales channel. It makes the process much easier. The digital product is not physical and is distributed online.
There are a number of digital products…
The low unit price of each item makes these products easily available for virtually anyone. On a larger scale, selling digital products can also bring significant income to your pocket. But keep in mind that the value of the products should come first.
Lending influence to a brand is called Brand Collaboration in today's marketing dictionary. There are a wide range of ways in which influencers can interact with brands. We will try to capture the most common ones in this chapter. Let’s analyze them and look at their specifics.
The most common model of collaboration is the sponsored post. It can be a video, an Instagram photo or a mention in Stories. Usually this is a one-time collaboration in which brands make a one-time use of an influencer to deliver specific messages through his or her channel to his or her followers.
In general, there is nothing wrong with this, but there are many cases where a campaign of this type has failed. It often ends up with an embarrassing contribution that is taken out of context, so it does not fit into standard communication and often misses the target group, i.e. the follower base.
A sponsored post is usually the first time you encounter commercial cooperation. Often there are offers from unknown brands, offering questionable products. But usually the inexperience of the marketers on the side of the brand leads to “just trying this channel” and open cooperation with emerging influencers. They often have an extremely limited budget, using profiles with fewer followers, thinking that this will not be a top-notch campaign, but they are willing to discover how this channel actually works.
From the brand's point of view, a series of sponsored posts is a much more interesting form of cooperation. The primary difference from a single post is long-term communication and therefore, collaboration.
This approach offers a range of benefits. It is primarily a much more effective brand presentation. Consumers usually don't trust a brand when they see it once. Only long-term (but smart) communication helps companies build their brand.
The advantage, on the side of the influencer is not only more possibilities as to where they can place sponsored posts, but also long-term and more stable cooperation and thus, revenue.
"Recommend groost and we will reward you with $100 for each user that sets up a premium account with us."
This is a specific example of affiliate marketing that we use. In principle, it is a commission for bringing a new customer.
These are all campaigns in which influencers offer an advantage with a specific promo code or special link. This will ensure that the brand can see exactly how many customers the campaign has brought, and the amount of the reward depends on it.
So, it is important to note that the total number of followers is ultimately not important, because what is key to the advertiser is sales. And this can only be achieved with a relevant audience that trusts the influencer.
Another relatively popular form of cooperation is so-called press trips. Companies usually invite the influencer to the event where the company presents new products. Their goal is to ensure broad media coverage and reach their target audience through content that influencers create during or after an event.
From these campaigns, marketers on the organizers' side expect the influencer is going to create content for their channel and present it to his or her followers.
From a brand perspective, this is a costly form of cooperation, therefore expectations are higher. Usually there is pressure to receive a high reach as a result of the content produced by the influencer. In this case, the size of the audience is crucial, but keep in mind that false followers will not help you. As you can imagine, accumulating false followers is only likely to complicate the whole situation.
In the previous section, you were able to see what is important for brands. Now I would like to dive into what brands are expecting from cooperation with influencers. The primary metric for brands is ROI. Return on Investment. This is the ratio between the money invested and the money obtained from new customers.
However, this is not always a purely financial benefit, it always depends on the goals set by the companies within the given campaign. Each goal is a so-called measurable. Brands should be able to tell whether the investment in the campaign has yielded the desired result or not.
The most common goals are...
Increasing brand awareness is a common goal. We can say that it is a non-financial goal, although it has a significant impact on financial results. Overall, companies aim to strengthen their brand so that it is recognizable in the market.
This is usually a long-term cooperation, in which the influencer becomes a kind of brand ambassador. The aim of the marketer is to present the brand and present it to his or her audience on a long-term trajectory through the influencer's channels.
Increasing revenue is clearly one of the most common goals. This means the brand wants to use the influencer channel to acquire new customers. Their message contains CTA - Call to action, which leads to the purchase of a product. The offer is usually accompanied by a bonus, usually in the form of a promo code, which gives the final consumer a purchase discount, for example.
For a collaboration that is based on this goal, those people who make up the group of followers of the influencer are very important. It shows how relevant the audience is. In this case, it will also be clear whether the followers are false or not.
As we said earlier, one of the best ways to monetize your impact on social networks is to work with brands. In this section, we will look at how such collaborations arise and what you can do with them.
But first, it is important to say that a collaboration with a brand is a purely commercial and professional relationship between two entities. Just as 2 companies work together, so the influencer is basically a “company” in this relationship. It is therefore necessary to realize that prior to this step, it is important to work on self-presentation and your reputation in order to show companies that you are a serious partner that they can rely on.
When we start the topic of self-presentation, we must first take a look at what companies are looking for and what they expect. In order to have successful cooperation, it is more than appropriate to present yourself in the best possible light. Keep in mind that the cooperation between an influencer and a brand is purely a business relationship.
Brands are looking for credibility and authenticity. This is the number 1 assumption. On the other hand, you must keep the idea of business in mind and show brands that you are a serious partner to work with. Be sure that you have a strong online presence and presentation of your work, such as a LinkedIn profile or a personal website.
While pitching yourself to a brand be sure to present yourself in a clear and concise way. Brands need to understand what you can offer, so you shouldn’t make things too complicated. This shouldn't be missed in your pitch:
When it comes to presenting your online profiles, be transparent and clear. If you want to exceed expectations, talk about your engagement. This is a very important metric that tells you how often people usually interact with your content. It is the total number of likes, shares and comments divided by the number of followers multiplied by 100. The result is your percentage (%) and that is your engagement rate.
The higher the number is, the better. But keep in mind, that Engagement rates usually decrease with the increase of followers.
Check your Engagement Rate with a tool called Phlanx.
The easiest way to gain a collaboration is when the brand appeals to you directly with the offer. In this case, it is essentially a win for you and it is up to you whether you accept the terms offered or agree to modify them.
We should mention that it often happens that influencers are addressed by “weird” companies with unrealistic expectations, or they set unilaterally disadvantageous conditions. This situation may not be obvious at first glance, but if you are clear about what kind of collaboration you are looking for and what your conditions are, it will be much easier for you to identify great deals and avoid strange businesses.
Another place you can find one-time or often long-term cooperation with brands are Marketplaces, where the brands are looking for influencers for commercial cooperation.
You can also find some Facebook groups, where companies are seeking out collaboration. This is a great starting point, especially for beginner influencers. Sneak into the Instagram Influencers, Brands, & Professionals public group, where you can find new collaborations.
One of the ways you can work with brands as an influencer is by reaching out to them directly. Just find brands you like and ping them an email and pitch yourself.
Be sure that you don't send them your rates in the first email. And begging for free products is probably also not the best way to gain a collaboration. Be honest and don't put yourself down, even if you don't have hundreds of followers, that’s not all that matters.
This is the very end of our digital marketing guide for influencers. We hope you gained some useful knowledge and will be able to use it to grow and monetise your influence! 👋