Who Pays Influencers For Marketing?
When you watch influencers online, there are definitely a set of questions that arise in your mind, extraneous to the brand or product they are promoting. Anything you ask about the product, they will be quick to answer. But sometimes your mind wanders and you start thinking “How much money do they make? This is a big brand. I am sure they must have made lakhs of rupees for this one post. Who pays the influencer? Do the brands really pay them that much amount?” Don’t tire yourself anymore. We will try to help you out here just a little. Like it or not finances are not discussed openly and maybe that’s what makes it so intriguing.
In the next 15 minutes, we are going to try to breakdown the question, “Who pays the influencers for influencer marketing?” and the nitty-gritty of it. But first, let’s address the elephant in the room. It’s the brands that pay these influencers, of course. But do they always do it by themselves? Do they always have monetary settlements? Maybe not. Let’s look at the three prospect scenarios here to understand this better.
- The brands pay these influencers directly
When a brand approaches influencers, both the parties know that there are more influencers on board for a single project/campaign. Depending on the payment structure this scenario is beneficial for some. If there are limited influencers on board or if they are micro-influencers, then the process is easier. If it’s a small brand, then right from picking the influencers to settling the compensation, everything can be done internally.
However, if it’s a big brand with a big budget and too many influencers on board the process can go a little haywire. Even under circumstances like low bandwidth and time constraint, a brand is not always in the position to carry out the influencer marketing on that project by themselves. That’s where influencer marketing platforms and the second scenario come in the picture.
2. The brands hire agencies to pay these influencers
With the emergence of influencer marketing came influencer marketing agencies. These agencies have different functions of their own that the brands and the influencers can leverage. They are a platform that offers efficient and seamless influencer marketing services. Brands now tie affiliate with these agencies that further not only help them reach out to influencers but they also maneuver the end-to-end process involving the finances.
In a nutshell, the process involves brands approaching these agencies for their influencer marketing with their budget, followed by having some influencers on board. As soon as that is established, the brand gives a brief to the agency or the influencer and when the campaign is live, the payments are settled between the agency and the influencers. The fact that these agencies are aware of the requirements of both the influencer and the brand, everything functions seamlessly. The emerging influencer marketing agencies in India have given the brands the added advantage of having everything served on the platter by these industrial experts.
3. The brands have non-monetary compensation
The collaborations between brands and the influencers are not always monetary. They can be entirely sponsored or affiliate relationships when it comes to the monetary basis. Otherwise, the compensation can be in the form of a product exchange, a trip, or even just goodies. This is what we popularly call a barter system. This is generally seen more often with small businesses and small influencers. Budget constraint on the brand’s side is real and so is the fact that some influencers do not have an audience vast enough to get sponsorship. But since both of them need to put their best foot forward in this field and so a non-monetary compensation can actually go a long way.
This arrangement is generally done by brands directly approaching the influencers. But since there are agencies, online portals as well as payment platforms like PayPal for influencer marketing, the gap between small businesses and small influencers is gradually reducing.
There is no extremity in any of these scenarios and since the market is evolving each day, there’s a lot for every influencer, brand, and audience to explore.
