How Much Should You Really Be Spending on Influencer Marketing?
As more and more companies consider investing in influencer marketing, the question that repeatedly arises at conferences, dinners and client meetings is: How much should I spend on influencer marketing? And, not only that, but how much do I need to spend to make influencer marketing effective?
Starting at $20,000, if you’re working with an agency.
“I think $20,000 is the minimum budget required to create impact for brands. We think that’s the starting point for working with a group of professional influencers,” said Yuli Ziv of Style Coalition. “The space is so complex. You need a partner to help you navigate.”
At that price point for entry, you are getting an agency to help you manage, navigate and access top tier influencers with proven campaign results. They will have the knowledge and ability to work on a wide variety of brands, projects and concepts.
Of course, larger brands are spending millions of dollars on influencer marketing with agencies (sometimes many agencies) and mid-sized brands are spending hundreds of thousands of dollars, too. Twenty thousand dollars is just the starting point.
Kristin Luck of Luck Collective consults with a beverage company that is generating nearly $20 million in revenue and spending nearly 1 percent of that on influencer marketing – more to be allocated in 2018.
The more money spent is not necessarily correlative to more success, but it does allow top tier brands to try multiple tactics and concepts until one ultimately proves successful.
With this level of spend, comes access to better connections, better analytics and more campaign experience. As a result, the time to find success with influencer marketing is often significantly reduced.
Buyer beware: sometimes money isn’t everything.
“You can put a ton of money in and get huge results. You could put a ton of money in and get nothing,” said Julia Moonves, COO at Nomad Armory. “As with any form of marketing, this one is not necessarily about the amount you spend but how you spend it and what your goals are.”
Moonves suggests that you spend more time thinking about strategy than you do about the dollar amount associated with your campaign. She suggests that paid advertising and paid search begin at the same time as influencer marketing. Doing so allows all paid forms to work together creating an overall halo effect. This means that influencer marketing is not inexpensive and needs to be part of a coordinated overall digital marketing spend.
One of the biggest mistakes brands make is underspending on influencer marketing or overspending on their own time and efforts. In an era in which $24 million is estimated to be spent on influencer posts in 2018, ROI continues to be the largest question mark.
If you want to do it for free, allocate in-house resources
Finally, many brands, especially small, young brands are able to go it alone for little to no spend. This small amount of spend can correlate to big results.
“You do not need a big budget or a budget at all to start engaging influencers, you should be targeting micro-influencers versus ‘larger’ influencers, and to build a future-forward brand, you should honestly treat every community member as an influencer. Because they are,” says Alisha Ramos who has built Girls Night In into a community of more than 10,000 people in just six months. “Now, we’ve actually scaled back on influencer outreach because our subscribers literally do all the work for us without us asking.”
While Ramos’s success is astounding, it is also rare. Many small young brands struggle to see this return even after spending substantial time and energy working in this space.
“I honestly can’t tell if running a small spend really gives us the insight needed to understand the power of influencer marketing. My gut tells me that the more influencers post about your product, the more weight you have in search results which yields more unique visitors,” said David Hitt, of Ted’s Brain Science Products. This year, he’s spent around $500/month trying to figure out the space and not seen the type of growth that Ramos has experienced.
The secret may be in the type of product you have, the type of community you’re organizing and what your brand call to action is.
Investing nothing but time and energy can often lead to frustration. Even investing small amounts can sometimes deliver less than hoped for results.
What’s a good rule of thumb?
Based on our research, influencer marketing accounts for anywhere from 1 to 25 percent of a brand’s overall marketing budget. This should be the measure of what you can and should spend in this space.
If you’re small and 1 percent of your marketing budget is less than $5,000 you should consider doing this work in-house. You will receive more results and better long-term engagements.
If you have $10,000 or $20,000 to spend to bring on an agency, you will be able to scale quickly and professionally with higher quality influencers delivering more professional work. At this price point your influencers should understand how brands operate and what makes for a successful brand campaign.
If you can afford to spend more than $20,000 on your influencer campaign, you’ll likely see the strongest results. It’s in the $50,000 spend range where marketers are most often increasing budget allocations to influencer marketing due to the high return on investment.