00:30
Lisa Perry Kovacs:

Influencer marketing is such a key strategy for brands it needs no introduction. But as the supply of influencers increases so rapidly across social media, so does the demand. And you know what that means marketing movers, the price of influencers goes up and up. How can we be sure to get the most bang for our buck and design profitable influencer programs. Here to help we have VividFront’s Director of eCommerce, McKenzie Clark. Thanks for being here, McKenzie.

01:07
McKenzie Clark:
Thanks for having me.

01:08
Lisa Perry Kovacs:

So you have been working with influencers pretty much since they came onto the scene around 2016 to 2018. And you helped grow an ecommerce direct to consumer brand from zero to $10 million a year run rate in just two years with an outstanding influencer marketing strategy. You pretty much wrote the book on influencer and affiliate marketing for our agency, VividFront. So I'm so excited to pick your brain today on how all this works today in 2022, and how to make influencer marketing profitable for brands. So let's get right into it. First, how can a brand measure the success of their influencer program?

01:54
McKenzie Clark:
Yeah, some brands are just naturally going to make more sense for influencer marketing. Ecommerce brands make a lot more sense. That's the most common use case. It's a little bit easier to talk about a product versus a service. So a lot of ecommerce brands are going to work with influencers. Profitability really comes down to just matching your audience with influencers and content creators that are already in the space. So you have to first determine your target audience and are they actively using social media and are they already actively following content creators? What are those content creators talking about in your space? Are they talking about a very identical product to yours, similar products, that kind of thing? If you can find the right influencers for your product, it has the most possibility of being profitable. The best way to actually determine success when it comes down to the numbers is really coupon code redemptions.

02:52
McKenzie Clark:
So, again, this works really well for ecommerce. Everyone has seen it multiple times with an influencer post where they'll share a product and they'll say, hey, use my code to save 10%, so my code could be ten McKenzie for 10% off your next order. And the reason that brands do this is because I like to think of it as a triple win situation. It's a win for everyone involved because the influencer gets to give an incentive to their followers to save money. The shopper likes to save money. Everyone does. So they get to save that 10% and use it for when they want to check out. And if you're a loyal follower, you want to give back to the influencer that you follow. And then the third one is for the brand to be able to track exactly how much revenue came from that unique coupon code.

03:41
McKenzie Clark:

So if you didn't have any coupon codes or you gave the same code to all of your influencers, you wouldn't be able to break it down by person. But if you're giving everyone a unique code, you can really see how your influencers are performing.

03:53
Lisa Perry Kovacs:
That makes sense. And I know some brands from experience aren't willing to provide coupon codes, especially in the luxury commerce market. So how do you handle that?

04:03
McKenzie Clark:

Yeah, there's definitely a conception that having so many coupon codes out in the wild can kind of cheapen your brand, which is very fair. My absolute favorite metric to measure success among influencers is actually CPM cost per thousand impressions. And this is great if you're also running paid media for a brand because you can line up your KPIs across more than one channel. So the way this is calculated is you're going to take how much you pay an influencer per post. So for example, let's say you're paying an influencer $1,000, and then you're going to divide that by their impressions over 1000. So if you're paying someone $1,000, they're getting 40,000 impressions on their post. Their CPM is about $25. And the reason this is such a great metric to use is it allows you to have comparative comparison among the influencers you work with, because you're going to work with influencers that have all different following ranges, engagement rates and that kind of thing.

05:08
McKenzie Clark:
And you're paying them all sorts of different amounts. So it's really hard to say how did influencer A stack up to influencer B if they have very different following counts and payment. So this gives you a comparative metric. The average I would say, is around forty dollars to sixty dollars, which sounds really high when you compare it to the average CPM on a paid social channel, which is usually closer to $10 average. But you're kind of paying for more than that, right? You're also paying the premium of having the impression served from a trusted voice in the community versus from the brand you're paying for the content itself, any materials that they might have needed to create the content. So there's more that goes into it. I think somewhere between $40 and $60. CPM is pretty average for influencers, but you kind of have to start and see what your average rate is for a brand and then determine what your goal CPM is.

06:05
McKenzie Clark:
I would say there are going to be some influencers with really high CPMs, and that probably means that they're charging too much for their value. They have really high rates and they're not bringing in as much reach. Or if someone has a really low CPM below that $10, they might have just had a phenomenal post that went viral and had they had way more impressions than they usually do or they should charge more because they have more value than they think they do and their rates are not matching that. So overall, it is my favorite metric to use for influencers. It just really gives you a comparison, especially if you don't have coupon code redemptions for your brand.

06:45
Lisa Perry Kovacs:
That's really helpful and I'm sensing a lot of variance there. So how do you determine what's fair? How do you determine a fair rate for influencers, especially if they don't have a set rate and you're reaching out and asking, walk us through some of the different approaches that you've taken here.

07:01
McKenzie Clark:
Yeah, so this has changed drastically over the last couple of years. You can kind of go about it two ways. You can either reach out to someone with already a price in mind and say, we want to work with you for this amount for these deliverables, and kind of get their thoughts from there and negotiate if need be. Or you can go a little bit more open ended and say, what's your rate? I prefer the former versus the latter because I think it gives you a little bit more flexibility in the negotiation. I think influencers these days are starting really high because think about it, they're like, let me just say my rate is $1,000. If someone says yes, that's great, I get the $1,000. If I end up at 800, I'm still happy with that. So let me go in high while a brand is trying to go in low and then you kind of have to meet in the middle.

07:49
McKenzie Clark:
But I prefer to kind of come up with a rate that I think is fair based on all of our different metrics and then present that and go from there. The quickest gut check, I would say a couple of years ago, I would say it's probably 1% of someone's following. Now it's much closer to two. So for example, if someone has 150,000 followers, the average rate for one major deliverable would be around $1500 to $3,000 would have been closer to 1500, like a year or two ago. But just with the rise in rates, I don't think an influencer with 150,000 followers would take anything for less than 3000. So that's kind of your baseline. And again, that's really only for one major deliverable. The more deliverables you add into an agreement, the higher the price is going to go up. So if you just want one Instagram reel, that's kind of your starting rate.

08:44
McKenzie Clark:
If you also want stories and a YouTube video and a TikTok cross post, the rates are naturally going to go up.

08:52
Lisa Perry Kovacs:

So you mentioned the gut check being 1% of an influencer's following. What if you don't trust the follower account of an influencer? I mean, I know sometimes people are buying followers, so talk a little bit about what you do there.

09:07
McKenzie Clark:
Yeah, so follower count really doesn't mean as much as it used to. Obviously, some people buy their followers, which with a little due diligence, you can see through pretty quickly. But it's really all about your engagement rate with the algorithms and how so much has changed over the years. It's more about how many people you're reaching versus who are following you. They're both important, but you want to look at both. So again, going back to that CPM model, a great way to determine that rate I was talking about is where you're going in reaching out to someone and saying, we're willing to pay you X. You can kind of come to that number. You can start with that 1% of their following, but you can kind of cross check it with their engagement. So on average, about 5% of the people who see a post like it.

09:58
McKenzie Clark:
So that just means they were served it in their feed, they scrolled past it and they saw it. So the nice thing about Reels and TikToks is that the views are public. So you're able to see all of the views on video content. But if someone doesn't post as much video content and you're wanting to get a feel for what their reach is, that information is not public on Instagram. But if you can see their likes, you can kind of back into a reach number from that 5%. Again, it's an average. It's just kind of where people fall. Someone with really good engagement might have a higher rate and someone might have lower. But in general, let's say that your goal as a brand is to work with influencers on a $40 CPM. So you want to make sure your costs stay around that $40.

10:46
McKenzie Clark:
So when you're looking at an influencer who you potentially want to work with and you're trying to come to a rate to offer them, you can use that model. So for example, if an influencer is averaging around 20,000 views on their reels, which you can see publicly on Instagram, you can offer to pay them $800 because at an $800 rate, if they have 20,000 views, that's a $40 CPM. If they don't end up having 20,000 views on that reel that you pay them for, it might just be a higher or lower CPM. But that's a good way to kind of start with that base pay of what you'll offer. And of course, there's going to be some negotiating in there, but it's a good place to start.

11:23
Lisa Perry Kovacs:
Yes, lots of negotiations happening these days. I remember we used to just gift influencers in exchange for posts. Doesn't seem to be the case anymore. How has the price of working with influencers changed over the last two or three years?

11:38
McKenzie Clark:
Yeah, the price has gone up like crazy. And not just the standard inflation we're seeing in 2022. It's really wild. And like you said, you used to be able to just gift influencers and that did typically happen more with micro influencers, and that in between mid influencer, who's maybe below 20,000 followers. But nowadays influencers with just a couple of thousand followers will likely not say yes to a gifted collaboration, which one hand, I give them props, right, because there's kind of this movement of not doing free work, which I totally agree with. If you have followers and you're serving a brand impressions and you weren't actually paid to promote that product and you just received the gifted product, a lot of people are classifying that as free work. So one hand, I totally get it, they don't need to be working for free. But on the other hand, the rates have gone up so much that it's just becoming a little unattainable for a lot of growing brands.

12:42
McKenzie Clark:
Some of these big brands have deep pockets, they have big budgets. An influencer can come to them and say, my rate is $5,000. And they'll say, okay, great, here's a contract, we're good. There's less negotiating happening when you have a really big budget. But so many growing brands want to grow their brands with influencers and these high rates are just making it a little unattainable. And I think there was a shift in the space where influencers realized how much power they can have because brands might need them, so they increase their rates. And I think it's a combination of some influencer managers for all sorts of different brands might not know how to negotiate. So they're just nodding and saying, great, yes, we can pay that. And then influencers are talking with their friends and saying, charge more. This person said yes to me, you can do it too.

13:27
McKenzie Clark:
So you can go back and forth on it, where on one hand, you want to empower these content creators to make what they're worth, but it's also becoming a little unattainable for brands. So we're kind of in this awkward space with it right now. But at the end of the day, in order to have that profitable program, you really do have to shop around and you have to be cautious with who you're paying and how much and what you're getting out of it. Because if you end up paying every influencer you work with far more than the reach that they're giving you're going to lose money on it.

13:57
Lisa Perry Kovacs:
Yes. Speaking of being cautious, what are some red flags to look out for when negotiating with influencers?

14:05
McKenzie Clark:
Yeah, so I wouldn't say I call it a red flag, but influencers with agents can be a little bit trickier to work with and they're going to kind of stick their ground a little harder than just an influencer on their own would in terms of a higher rate because they also have to get paid. So an influencer with an agent is going to charge more naturally because they have to pay their agent whether their agent is getting a cut of that or let's just say maybe an influencer pays their agency like a monthly fee to work with them. And the two biggest issues that you run into when negotiating are really exclusivity and licensing. Exclusivity is saying you have an agreement with an influencer that in a certain time period they won't work with a competitor. So just an example is if you're negotiating exclusivity with Nike you're going to say, I won't work with Under Armour for 30 days, 60 days, 90 days, whatever it might be.

15:04
McKenzie Clark:
There's usually a time frame tied to it and there's also usually a list of exact brands that you can't work with and the other one is licensing. This just means that brands can use the content created in a collaboration in their other marketing channels. So I think the most common use case is in their paid ads an influencer creates an instagram reel and then that brand goes and takes the content and posts it as an ad themselves with the influencer content serving as an ad through the brand page. But it can also come in forms of website, email, print ads, all sorts of things. And those are two things that can come at a premium, but I think are important to at least be included a little bit, because in terms of that negotiating, if an influencer has a high rate, they're not giving you any exclusivity and any licensing.

15:57
McKenzie Clark:
There might be someone better to work with that at least can meet you in the middle a little bit. So eventually you just kind of have to look at everything holistically and seeing what the brand might be giving up and if it's worth the cost. If the brand really wants to work with someone, they're the perfect match for a campaign. Sometimes you just won't have exclusivity or licensing but you got the post and that's what you wanted. But you really have to take a look at the campaign as a whole, what the brand is getting out of it and making sure that you're at least meeting in the middle with people. So those are kind of some of the red flags that mostly come up in the negotiation process.

16:33
Lisa Perry Kovacs:
Where do you see influencer marketing going over the next few years?

16:39
McKenzie Clark:
I think we're honestly on the cusp of a little bit of a downfall in two different ways. I think rates are just getting a little unreasonable in the sense that like I was saying, these growing brands, it's just a little unattainable for them. They want to work with influencers because influencers can help your brand be very profitable, but they just can't afford the price. They have smaller budgets and they can't work with as many people. So I think there's going to start to be a shift where there is still more supply than there is demand. There's still so many influencers and there's less demand when it comes to brands. So if brands start to say no to these rising rates, influencers will lower their rates and then so I think if we're going up with rates, they'll eventually come down and it'll EB and flow like it always does.

17:30
McKenzie Clark:
But I also think there's becoming a little bit more of a distaste towards influencers from the consumer's mind just because there is so many influencers and there is so much supply. And I think they're starting to be a little tired of seeing right through this perfect life where you don't work a nine to five and all you do is create content, but it's not super relatable, right? Most people who follow influencers work a nine to five, work more hours than that and they like to follow people, but it has to be a little bit of relatable content. I think there's going to be an increase influencers who have nine to five jobs and aren't just making content all the time because it's just not as relatable to their followers. And I think there's also a little bit of a distaste towards affiliate links. I've seen lots of comments on TikTok kind of almost mocking Amazon affiliates being like LinkedIn or like knowing that's coming and if anytime someone's talking about a product, there's always an affiliate link behind it.

18:34
McKenzie Clark:
So I think in order for content creators to really be successful, they have to know how the space is shifting and be smart about it. They have to continue to be relatable and authentic or people won't follow them or won't engage. And I think the smart influencers will definitely shift and will continue to be extremely successful and continue to provide profit towards those brands. But I think there'll be a little bit of a shift in that sense and I think finally there's going to be a shift in user generated content where you might want to work with a content creator to just create content to use as a brand versus having the impressions be served through the influencers page. So you might want to work with someone who will just create content for you. And then you'll post it so you'll pay them less, so it's a little bit more attainable.

19:24
McKenzie Clark:
And then you are able to have that content, that authentic lifestyle content that every brand wants and loves, but you are paying a little bit less of a premium to have it posted on their page. So time will tell. I think it'll be really interesting to see how the space continues to shift.

19:40
Lisa Perry Kovacs:
It's moving very quickly.

19:41
McKenzie Clark:
It's moving very quickly. Personally I see a lot of what's going on. I love to read comments on TikTok to just see what people are saying. I think it's really helpful to kind of get a grasp on how not just influencers are thinking or brands are thinking, but how the general public who's consuming all of this is thinking. Because they're the customers, right? They're the most important piece of this puzzle. And their opinion matters so much because it determines what the rest of the players in the game do. So it'll be really interesting to see how it shifts. I think, though, there will always be influencers. It's just a new phase of word of mouth marketing, and I think it'll always be around in some way, shape or form. It might not always be on Instagram or TikTok, it'll be on some future social media network that hasn't been created yet, but it'll always be around in some way.

20:30
McKenzie Clark:
And I think as long as brands are smart about who they work with and how much they pay people, they can have a profitable influencer program. I've seen it. It's definitely possible. It's just about finding the right people.

20:41
Lisa Perry Kovacs:
Amazing. I have learned so much from this conversation. I'm so appreciative of you taking the time. I want to ask a final question, and that final question is, what is your signature move when it comes to influencer marketing that you can leave the audience inspired to learn?

20:59
McKenzie Clark:
Yeah, I would say don't be afraid to say no. You have to protect your brand's ROI. If you're an influencer manager, if you're the director of influencer marketing, whatever your title is, you have to report your numbers at the end of the day, whether it's to the client, to your boss, whoever, and you have to protect your ROI. And there's always going to be another influencer to work with, at least in this time, when there still is more supply than demand. Know when someone is the perfect fit and you have to pay the premium for it. But in general, there's likely going to be someone else that is going to be more affordable to work with, lovely to communicate with, and you get a little bit more bang for your buck, especially as you're starting out. You need to know how to say no and move on.

21:43
McKenzie Clark:
You can always come back to that person when you have more budget, right? But you have to grow at a reasonable cost or you won't get there. Once you're a huge brand, you can say yes to whoever you want, right? You have deep pockets, you have all the budget you need, but if you're a growing brand, you have to give it the time to prioritize the profitability and know how to say no.