One of the top reasons that brands and influencers don't see eye to eye in pricing conservations has to do with the different ways in which creators and brands define what is valuable.
Here's a great example:
Creator A has amazing, high-quality content that takes a very long time for her to create. When working with a brand, there is a lot of time that goes into producing quality content. The creator takes a lot of pride in what they produce and so Creator A prices their services at a high worth.
ExampleBrand is looking to create brand awareness for its products. They typically do not re-use the content. What is most valuable to them is the single mention of their brand and a link. They are measuring the success of this campaign by achieving CPMs on par to that of their best performing Facebook ads.
Creator A is offering an APPLE, while ExampleBrand is looking for an ORANGE.
ExampleBrand has no use in the value of the content because they are looking at the result of the mention. While it is true that better quality of content can help more people become interested in a brand - it's not always the case. It has more to do with lifestyle fit around certain topics and buyer personas. ExampleBrand here is just looking to tap into the persona and audience without high value in the quality of the content.
Creator A places high value based on their content quality - the time and effort that goes into producing top notch content, but pricing this way in some cases can cause higher CPMs that do not keep brands on par with best performing ads.
It's likely in this scenario, ExampleBrand will perceive the creator to be too expensive and Creator A to assume that the brand is cheap. (This is REALLY what we are seeing right now in the sentiment within the marketplace). Neither is true. Creator A is priced just right for a brand campaign that places higher value in the content creation aspect of their partnership. ExampleBrand is better matched with a persona who favors less staged content.
There are a few things a creator can do in this scenario:
Adjust the quality of content to come within pricing that aligns with the brand's CPM targets - otherwise, meeting the brand at their measured value.
Many creators will not decrease their content quality, and it's respectful. This is their personal brand, what they have become known for, and reduction of their content quality can have negative effects on their actual influence and audience connection. In this case, the best course of action is for the creator to partner with a brand who is aligned with measuring the same value that the creator can give and the brand to partner with a creative who is more in line with what they are looking for in terms of value.
You can measure your value to a brand in MANY different ways (after all, there are 9 that we are trying to open up the minds of brands to accept!). I recommend knowing your measurable value in at least the top 3: sales value, content creation and potential sales value.
Calculating Ad Value
Advertising value Is the value you are giving to a brand when compared with another kind of display ad. It's one of the top ways that brands quantify awareness. Your ad value Is typically $100 or lower for every 10k followers you have. This makes your results competitive with other ad platforms while accounting for the additional benefits of using Influencers over brand produced advertising.
Example: Creator B has 50k followers. For Creator B to meet the industry standard of $5-10 (or 0.005-0.01 per impression), he has to be priced near the $500 range.
Your Number of Followers x Target Cost Per Impression = Your Valuable Rate (10,000 x .01 = $100)
This equation gets tricky for nanos and micro influencers, who could see their value estimated at less than $100, which gets us into questions and pushbacks of "is this worth time and effort?". Be aware as a nano or micro influencer that your ad-value is low - and either seek out companies who are measuring on different value objectives or be open to accepting lower rates until you grow.
You can use the same formula for YouTube and Instagram, swiping out Target Cost Per Impressions to industry Cost Per View.
Calculating Content Creation Value
Content value Is the monetary expression of what your content is worth to a brand. Typically content value can be measured by the freelance price for your media plus your ad value and the advertising value It holds when Its re-published on a brand's feed. Brands who re-use content can often justify higher content value because they are re-leveraging your media In ways that produce a cost-savings.
Example: Creator C is making a YouTube video for a brand with approximately 1min of dedicated brand footage with about 10,000 subscribers. The going rate for a the brand to hire a freelancer to do the same thing is approximately ~$100. You can distribute video, on average for as low as 0.01-0.02 per view (CPV), meaning that to produce a piece of content and reach 10,000 a brand would have to invest approximately $200-300. If Creator C keeps their content creation and distribution within the $200-300 range, it will have content creation value.
Freelance Price for Creation + (Your Followers x Target Cost Per Impression) = Your Valuable Rate
($100 + (10,000 x 0.01) = $200)
The higher the production value content, the more expensive the freelance rate and the higher the following, the more distribution costs - so it's easy to see how higher quality of content and larger subscriber bases increase the content creation value.
Brands who measure the value of influencer creation using this method often look at influencer content creation as a. way to contribute produced content to their social media feed, ads, email lists, retailer decks and more - so whether or not value exists is really a question of whether the rates are near competitive with the cost to produce this content through other means.
Brands who are re-leveraging your content in additional places, increase the distribution of your content, which can also increase your value. Some influencers can justifiably ask for an increase if the brand is distributing content elsewhere as there is considerable savings to a brand when a piece of content can be used and pushed across a variety of channels.
Calculating Potential Sales Value
Easily measured when a brand Is DTC and e-commerce based Is the potential sales created by looking at traffic and conversion. This Is where your swipe-up rate helps you show potential sales value. Most brands will have what's called a CPA (Cost Per Acquisition) which denotes how much they are willing to spend to acquire a sale. If you, as a creator, provide competitive CPAs, you have potential sales value.
Example: Creator D has 200,000 followers. Of the 200,000, her stories reach approximately 4% of her audience, where approximately 20% swipe-up (these are actually real industry benchmarks!) Creator D may send approximately 1600 clicks to the client's website. ExampleBrand knows that they convert about 1-2% of their new-user web traffic, meaning there is potential for about 15-30 sales to occur. ExampleBrand is looking to hit a Cost-Per-Acquisition of no more than $30.00. In order for Creator D to hit the proposed CPA, she would have to price no more than $900.
Potential Click Throughs = (Your Audience Size x Your Stories Reach %) x Swipe-Up Rate %
Potential Sales = Brand's Web Conversion % x Potential Click Throughs
Potential Sales x Cost Per Acquisition = Your Valuable Rate
As you can see, this is actually the lowest of all values brought to the table. It's why as consultants and agencies, we spend a lot of time educating the client on other values aside from solely focusing on sales. But for small brands who are just starting out - every penny counts. They do not have the luxury of creating "awareness" without correlation to sales and revenue. They do not have the luxury of paying for the highest quality of content. They need something that works for them.
Your job here is to understand that not every brand measures value the same - and if you LIKE a brand and you WANT the brand to succeed, it may be worth if for you to accept your potential sales value. This also helps you see the value in long-term affiliation with a brand, including coupon codes. Your agreement with the brand allows you to earn what you produce in sales, including paying for anything above and beyond your base agreement. Where paying a 1x fee of let's say $2000 for "awareness" this gives long-term opportunity to earn, especially if it's a brand you will use in your everyday life. A brand's success overall will also help your success as an affiliate - greater brand awareness and infinity increases the brand's conversion rate, which can increase your ability to sell through and the earnings you receive back.
There are more ways in which influencers contribute ROI to brands. The more integrated a brand is, typically the more value an influencer-creator can bring. I just urge creators to be mindful that not all brands measure the same way or see the same value. If you want to improve your negotiations with brand and increase your valuable outcomes with a brand to build your business on, consider:
Asking a brand their KPIs or how they are measuring the success of the brand. What are they looking for in terms of results? What would a favorable campaign look like to them?
Tailoring your value to their needed outcome. Meet them on how they measure success, even if it means adjusting expectations for the partnership. If it's a certain CPM meet them in that range. If it's content creation, be sure you are in line with freelancing prices.
Making comparisons or calling our expected results to "sell your worth".
Simply walking away from mismatches.