How Much Should US Brands Really Pay Influencers Per Post?

Influencer marketing has come a long way in the last ten years from being just another marketing tool to becoming an integral part of marketing for brands. When it comes to all social media platforms, TikTok digital marketing has managed to change the way influencer marketing works for brands in the US. Unlike other social media marketing platforms, where the number of followers of an influencer was the only factor taken into consideration for determining the pricing for influencer marketing, TikTok digital marketing has introduced another factor of creativity and relevance of posts published by the influencer for determining the pricing for influencer marketing.
The pricing for influencer marketing has been significantly impacted by the introduction of the new model of digital marketing for influencers. Brands in the US have come to realize that the pricing for influencer marketing, where a certain amount of money is paid to influencers for publishing their posts on social media depending on their number of followers, does not really reflect the value provided by the influencer to the brand. The digital marketing scenario has reached such a stage that even the influencer with the fewest followers is capable of generating millions of views for their published posts on TikTok, provided the posts are relevant to the recommendation engine of the TikTok platform.
Additionally, the emergence of short-form videos on TikTok has altered the expectations of the audience regarding the influencer marketing campaign. The audience on TikTok expects to see content posted by the influencer that is real, funny, a good story, and most importantly, edited in a hurry. The influencer is not just a person who posts a picture with a logo of a brand; they are a mini entertainment producer.
On the other hand, TikTok has proved to be the most effective discovery medium in the world of digital marketing. Going viral is one of the most effective methods of creating awareness regarding a specific product. The campaigns are also effective in creating sales. The TikTok marketing for brands campaign provides access to new demographics, which is normally hard to achieve through the use of other forms of advertisement.
However, this has proved to be a challenge in the determination of the pricing of the influencer. The algorithm of TikTok works on the basis of how effective a specific piece of content is performing. For instance, the algorithm of TikTok works on the basis of the number of views, shares, and interactions a specific piece of content receives. The effectiveness of a specific piece of content is hard to achieve. For instance, a specific video of an influencer might only receive a few thousand views, while another video of the same influencer might go viral, receiving millions of views.
Thus, the brand has to be ready to break away from the basic understanding of influencer pricing. It has to be ready to understand that it is not all about the basic variables such as the number of followers the influencer has. It has to be ready to understand other variables such as the influencer's ability to create content that elicits responses.
It is essential that the company understands the various variables that affect the pricing of the influencer in the context of TikTok digital marketing. In the sections that follow, the various variables that affect the pricing of the influencer will be discussed. In the sections that follow, the traditional influencer pricing will be discussed, and the new and better way of compensating the influencer will be presented.
From the above discussion, it is quite evident that the success of the digital marketing TikTok campaign is based on the selection of the right influencer with the right pricing.

What Goes Into Influencer Pricing

It is essential that while determining the amount that the US brands need to pay the influencer for the post, it is imperative that the various variables be taken into account. As discussed in the above section, while explaining the TikTok digital marketing campaign, it is not just the average views that determine the pricing; rather, it is essential that the overall value that the influencer brings to the table is taken into account.
Various variables play an essential role in the pricing of the influencer in the context of digital marketing on TikTok. For example, the engagement rates, the quality of the content, and the usage rights that the influencer brings to the table play an essential role in the pricing of the influencer. It is essential that the overall understanding of the various variables be achieved.

Engagement

The importance of engagement in relation to digital marketing on TikTok:

Engagement is an extremely important factor that plays an important role in influencing the overall value that an influencer brings to the table in the context of digital marketing on TikTok. This is because, unlike other social media platforms, the recommendation engine of TikTok focuses on the overall engagement that is generated by the audience.
The overall engagement can be explained by the following:

• Likes
• Comments
• Shares
• Saves
• Watch time
• Completion rates

Engagement is an extremely important factor that plays an important role in influencing the overall value that an influencer brings to the table in the context of digital marketing on TikTok. This is because engagement is what influences the overall reach that is achieved by the video on TikTok. This is because the recommendation engine of TikTok is designed in such a manner that it promotes videos that receive higher engagement from the audience.
In terms of engagement rates, it has been identified that a 5-12% engagement rate is considered healthy in the context of TikTok. However, there are influencers who receive higher engagement rates than this.
Therefore, brands that seek to understand the pricing of influencers in the context of TikTok marketing for brands need to consider engagement statistics. Rather than focusing on the overall number of followers for a particular influencer, it is important to consider various recent posts in order to determine the engagement that is received by the content published by the influencer.
Influencers who achieve high rates in the engagement metrics show that they have managed to gain the trust of the audience. This is an indication that the audience would respond well to the products promoted by the influencer. This would ensure an improvement in the return on investment.

Content Quality

Another factor that affects the pricing of the influencer in the context of TikTok marketing for brands is the quality of the content that the influencer creates. For effective TikTok digital marketing to take place, it is vital to highlight that high-quality videos are not created easily. It is not just about being creative; it is also about being knowledgeable about the trends within the TikTok platform.
For instance, the influencer who creates high-quality videos within the TikTok platform has invested a lot in creating high-quality videos. For an individual influencer, the processes that might be involved in creating a video post might include the following:

• Development of the concept
• Development of the script for the video
• Development of the filming setup for the video
• Development of the editing for the video
• Development of the sound component for the video
• Development of the trends component for the video
• Development of the caption component for the video
• Comment moderation

For brands that wish to create effective digital marketing strategies in the context of TikTok marketing, it is vital to highlight that the influencer who creates high-quality videos will be very useful in enhancing the effectiveness of the digital marketing strategy. This is due to the fact that high-quality videos will be very useful in enhancing the integration of the created content within the TikTok platform.
As high-quality content takes money, it is vital to highlight that the influencer takes into consideration the money spent in creating high-quality content before setting their prices. An influencer who is good at storytelling or cinematic video editing will demand high prices compared to an influencer who lacks such video editing skills.
It must also be noted that the extra amount spent on the influencer is an investment for good quality work. It must also be noted that influencer marketing done well for the influencer will also be done well for the brands that are using the influencer’s content for their paid advertising.

Usage Rights

One of the most overlooked aspects when determining the price for the influencer for the TikTok marketing for the brand is the usage rights. If an example is taken into consideration, the brand pays the influencer for the content they are going to create for the sponsored posts on the influencer’s TikTok account. But what if the brand needs the influencer’s content for other marketing strategies as well? There are possibilities for extra costs.

Possible Usage Rights

• The possible usage rights are as follows:
• Running the video as an ad for advertising on social media advertising platforms
• Posting the video on the brand’s TikTok account
• Posting the video on other social media channels like Instagram or YouTube
• Posting the video on the company website, landing pages, and other company marketing materials
• Posting the video on email marketing channels
• Licensing the video for long-term advertising use

The more usage rights involved in the influencer marketing for the brand, the more the influencer needs to be paid. This is because the influencer’s content is being utilized for advertising purposes and not for the influencer’s social media accounts.
It has been observed that the majority of the marketers have seen that the content related to advertisements seems to perform exceptionally when it comes to influencer content. This is because, in most cases, the content related to the influencer seems to be much more organic compared to the advertisements. The influencer content has been observed to perform exceptionally when it comes to advertisements due to the way it looks, as it is part of the social media platform, while the advertisements have the tendency to interrupt the user experience. Due to the above reason, the majority of the marketers have opted to utilize the usage rights related to the influencer in the TikTok marketing campaign. As such, the influencers who understand the above reason have opted to charge extra for the usage rights.
It is imperative that the brands that invest in the usage of the TikTok digital marketing platform create an agreement that will govern the usage of the platform, as it would be helpful in the prevention of any entanglements in the future, while the creator would be compensated accordingly for the usage of the content.

Why Flat Rates Don’t Always Work

It has been observed that the influencer marketing has been in existence for quite some time, and as such, it has been observed that the pricing that was used in the past was flat rate pricing, which is where the creator is offered a flat rate for the creation of the content related to the advertisements.
For example, the TikTok platform has an interesting way of distributing the created content, depending on the algorithm used in the process. Thus, many are questioning the effectiveness of flat rate pricing models in the context of the TikTok platform.

Two Key Challenges: Why Flat Rates Don’t Work

Performance Uncertainty

As has already been discussed, the defining feature of the TikTok platform has been the unpredictability of the performance of the content. For example, unlike many of the more traditional forms of social media, where the creator of the content can be reasonably certain of how many people will see the sponsored content that he or she has created, the TikTok platform has a unique algorithm for the distribution of the content based not just on the level of followers of the creator of the content, but also on the level of engagement with the content created.
For example, in the case of brands that use a flat rate pricing model, this unpredictability results in a situation in which the value of the created content does not necessarily correlate with the cost of the created content. It is possible that the influencer has been overpaid for the content that he or she has created. It is also possible that the influencer has been underpaid for the content that he or she has created.
This unpredictability of the performance of the influencer is one of the most important reasons why companies in the TikTok marketing for brands industry are looking to change the way in which they compensate their influencers.

Changing Nature of Influence

The other reason why the flat rate structures have been less effective in the TikTok digital marketing industry is the influence of the changing nature of influence. It is quite obvious that there are new influencers in the TikTok digital marketing industry. These influencers have been able to gain a lot of traction on the platform due to the nature of the content that they have been able to create. However, it is also obvious that there is also the possibility of the influencer who had been popular for some time now to be in a position where their level of influence takes a dip.
It is quite obvious that all the pricing structures that have been used in the past in the influencer marketing industry have all been based on the premise that the level of influence that the influencer has will be directly proportional to the level of influence that they have. However, in the case of the TikTok digital marketing industry, it is obvious that this is not the case.
For example, it is quite obvious that the micro-influencers have been able to ensure that they have been able to obtain the desired results due to the level of influence that they have. For instance, it is quite obvious that the level of influence that they have is such that the people who they have been able to attract as their followers feel as though they are part of their circle.
Flat Rate Pricing Schemes: This pricing scheme would not be effective for the TikTok industry since two influencers may have the same number of followers but will definitely have different results. For instance, the creators of the TikTok industry are not just advertisers but people who have a connection with the platform and can therefore create content that is bound to have a great impact on the audience.
It is therefore not the value of the creators’ contribution that is based on the fact that they have access to the audience but the fact that they have been successful is the only thing that makes the campaign successful. In the case of the TikTok industry, which is a digital marketing-focused platform, the value of the creators’ contribution cannot be overstated. This is because the creators of the platform are not just advertisers but collaborators.
Therefore, when pricing schemes fail to take these factors into consideration, the influencer and the brand they have partnered with would be doing themselves a disservice by not acknowledging the value of the influencer marketing campaign.

Smarter Pricing Models

However, as the brands become smarter in their utilization of the TikTok digital marketing campaign, they are adopting smarter pricing models that take into consideration the value created for the brand as well as the influencer.
Intelligent pricing models for the TikTok campaign will give the brand and the influencer the opportunity to collaborate in a mutually beneficial way by providing value for the work created for the influencer as well as the results generated for the brand.
The two pricing models that have become popular for the TikTok campaign include the performance bonus pricing and the revenue sharing pricing.

Performance Bonuses

The most commonly used pricing models are performance bonuses. In the performance bonus pricing model for the TikTok campaign, the influencers are paid a certain amount of money for creating and promoting sponsored content. However, the influencers are given additional payments for the sponsored content if the sponsored content reaches or exceeds certain performance thresholds.
The performance thresholds may include:
Video views
Engagement rates
Number of shares or saves
Click-through rates
Conversion metrics
For example, the brand may agree with the influencers to create sponsored content for the TikTok campaign. The influencers may be given a certain amount of money for creating the sponsored content. However, the influencers may be given additional payments for the sponsored content if the sponsored content reaches or exceeds a certain number of views, for example, a million views or exceeds a certain engagement level.
This pricing model is particularly effective for TikTok marketing for brands. The pricing model takes into account the viral nature of the TikTok digital marketing campaign. The influencers are compensated for the creation of sponsored content that reaches or exceeds high levels of engagement. The brands are only required to pay extra for the sponsored content created by the influencers when the campaign is successful.
Another advantage associated with the performance bonus pricing model is that the influencers are motivated to create sponsored content that reaches the highest level of engagement. The influencers are compensated for the creation of sponsored content. As such, the influencers are motivated to create sponsored content that reaches the highest level of engagement.
Another advantage associated with the performance bonus pricing model is that the brands and influencers are likely to agree on the success of the campaign. The influencers and the brands agree on the performance thresholds prior to the start of the campaign. As such, the chances of the brands and influencers disagreeing over the success of the campaign are low.
However, the brands are required to ensure that the performance thresholds are realistic when using the performance bonus pricing model. An example is the influencers’ performance thresholds. The brands are required to ensure that the influencers’ performance thresholds are based on the influencers’ normal level of performance.
When applied correctly, performance bonuses are likely to ensure that there is a well-balanced reward system that encourages creativity, participation, and achievement.

Revenue Share

Revenue share agreements comprise another creative pricing strategy that has started to gain popularity among TikTok digital marketing campaigns. Instead of compensating the influencers for exposure, the brands are required to compensate the influencers for the sales generated from the sponsored content created by the influencers.
Revenue share agreements normally utilize the following ways of measuring sales:
Affiliate Links
Discount Codes
Custom Landing Pages
TikTok Shop
If the customer makes a purchase using an influencer’s affiliate link or code, the influencer receives some amount of money for that sale. The higher the sales generated from the influencer’s sponsored content, the higher the revenue generated for the influencer.
Revenue share agreements have proved to be an effective pricing strategy for brands that practice direct response marketing. Through the application of the pricing strategy, brands are able to turn influencers into long-term partners who have a vested interest in the success of the campaign.
For brands, the application of revenue share pricing minimizes financial risks. The pricing strategy ensures that brands spend an equitable amount of their marketing budget in order to make sales.
For influencers, revenue share pricing offers the possibility of earning higher amounts if the sponsored content performs exceptionally well. Influencers who are good at storytelling and have high audience engagement are likely to perform well using the pricing strategy.
Revenue share pricing has become popular among digital marketing TikTok advertising campaigns for consumer brands, cosmetics brands, fashion brands, and technology brands. The availability of shopping features on TikTok allows brands to track sales generated from the sponsored content.
For brands, there is a need for proper planning when using revenue share pricing. Brands need to ensure that they have an effective way of tracking sales generated from each influencer. Proper agreements need to be put in place for both parties.
When done properly, these revenue-sharing partnerships have the potential to blossom into long-term collaborations that are beneficial to all parties involved. The influencers become true ambassadors for the brands they partner with, and the brand gets an extremely motivated partner in their marketing endeavors.

Role of Agencies in Pricing

As influencer marketing continues to become more sophisticated, many brands are looking to agencies that can help manage the influencer marketing strategy, including pricing negotiations. Agencies play an important role in helping brands deal with the complexities of TikTok digital marketing, especially when it comes to determining pricing for creators.
This is because agencies work with many different brands, handling many different marketing campaigns. This gives them access to information that individual brands might not be privy to. This way, agencies can help create pricing benchmarks that are fair, suitable, and relevant to the market at the time.
There are two ways in which agencies can help brands in TikTok marketing:

Benchmarks

One of the most important things that an agency can do for a brand is provide access to industry benchmarks. The pricing of influencers can vary depending on many different factors, including niche, audience, engagement, and content creation. Without access to industry benchmarks, a brand might not know whether or not the pricing of influencers is fair.
Agencies have access to various brands and various marketing campaigns within the influencer marketing industry. Hence, they can draw from the past performance metrics and pricing structures that can provide an idea of the market.
For instance, the influencer pricing benchmark has the following categories of influencers based on the number of followers they have:

• Nano Influencers: 1,000 – 10,000 followers
• Micro Influencers: 10,000 – 100,000 followers
• Mid-Tier Influencers: 100,000 – 500,000 followers
• Macro Influencers: 500,000 – 1 million followers
• Mega Influencers: 1 million+ followers

Each of these has a different price level. However, the rates of engagement and the level of relevance differ.
For digital marketing using TikTok, the marketing agencies are keeping a tab on other trends in the influencer marketing industry, such as the increased demand for user-generated content and the importance of long-term partnerships. This will help the company in setting the marketing budget properly and avoid overcharging the influencer for the services.
For new brands that are using influencer marketing for the first time, the benchmark proves to be an extremely useful tool. It becomes a guide in the negotiation process and ensures that the pricing is at the right level.

Negotiation

Besides providing the benchmark, the marketing agencies get involved in the negotiation process between the influencer and the brand. The pricing of the influencer marketing campaign becomes complicated, considering various factors such as the cost of the influencer's content creation, the usage fees, and the performance incentives.
These experienced marketing agencies are well aware of the various strategies that can meet the requirements of both the influencer and the brand. The agency’s role in the influencer marketing campaign may include:
Evaluating the influencer marketing proposals
Clarifying the influencer marketing proposals
Negotiating the usage fees
Structuring performance bonuses
Ensuring the influencer marketing proposals are legal
Negotiation is an extremely crucial part of the TikTok digital marketing campaign, considering the influencer marketing strategies involving the prominent influencers or the influencers from various platforms.
Apart from the advantages of using the benchmark, another advantage of the marketing agency is the role they played in the negotiation and the influencer marketing relationship. Influencer marketing is successful when the relationship between the influencer and the brand is collaborative and not transactional.
Most successful TikTok marketing for brands strategies include the long-term partnerships with the influencers and not the sponsored posts.

Case Study: e.l.f. Cosmetics and Influencer Marketing Campaigns on TikTok

One of the most popular case studies concerning the effectiveness of the digital marketing campaign on TikTok is the “Eyes Lips Face” campaign by the e.l.f. Cosmetics. The beauty brand demonstrated how an effective marketing campaign can reach millions of users and engage them with the content.
In 2019, the beauty brand e.l.f. Cosmetics launched the “Eyes Lips Face” campaign with the original song created exclusively for the TikTok platform. Instead of using the advertising strategies, the beauty brand collaborated with the influencers to encourage their audience to participate in the challenge.
The influencers were challenged to create their own videos with their makeup looks and dance to the song. The challenge was popularized when the influencers started creating their own versions of the video and posting them.
The campaign was highly successful with:

• More than 5 billion video views
• Hundreds of thousands of user-generated videos
• Massive brand visibility among the younger audience

As far as the pricing strategies are concerned, the campaign revealed some significant aspects that could affect the effectiveness of digital marketing campaigns on TikTok:
Influencer marketing was not just about the audience but also about the creativity and originality of the content. Many influencers created their own versions of the campaign idea and inspired their audience to participate in the challenge.
Engagement was more valuable than the number of followers. Micro-influencers and other users also contributed to the popularity of the challenge.
Influencer marketing was more effective than other advertising strategies. The videos created by the influencers and other users were more effective in engaging the audience and popularizing the challenge.
The success of the e.l.f. campaign revealed the significance of flexible influencer payment schemes. Brands that reward creativity, engagement, and viral activity have a higher likelihood of creating a successful outcome for TikTok marketing for brands.

Conclusion

The question of how much brands in the United States should be willing to pay for an influencer post has ceased to be a matter of mere calculation. The TikTok digital marketing phenomenon has dramatically changed the way we view the influencer economy. The new variables have introduced a new set of factors that influence pricing and campaign outcomes.
When building an influencer payment structure, there are various factors to consider. These are the engagement rates, content quality, and usage. These provide a better representation of the value received by the brand marketing campaign.
However, traditional pricing models for influencers could not take into account the ever-changing nature of digital marketing campaigns. The viral nature of TikTok could increase the potential of a particular post. Therefore, there are many instances of brands adopting a smarter pricing model. The smarter pricing model offers a payment as well as a bonus. The bonus could be in the form of revenue sharing.
Influencer marketing agencies play an important role in helping influencers as well as brands. The agencies provide valuable insights, helping businesses create a payment structure. The agencies ensure that the brand is able to adapt to the ever-changing nature of TikTok marketing for brands. The agencies ensure that the brand is cost-effective as well as in line with the marketing campaigns.
It is important to understand that pricing for an influencer campaign is based on the value. Brands that are able to form a relationship with influencers have a better chance of creating a successful campaign for TikTok marketing for brands.