Influencers have become a favorite of brands but advertisers are increasingly expecting a lot more than just content creation.
Influencers and influencer marketing firms said categories like FMCG, online gaming, e-commerce, edtech, fintech are preferring to pay influencers based on their performance for a campaign.
"Streaming deals for gamers follow this model a lot where if a streamer is able to pull in ‘x' number of watch hours he is given a certain amount," said Pranav Panpalia, Founder, OpraahFx, an influencer marketing platform.
Payment based on performance
YouTuber Mayank Singhal, who runs a channel called Masa Tuber where he posts videos about his life for 271,000 subscribers, said brands were approaching him for performance-based campaigns, especially e-commerce brands.
"I recently did a YouTube collaboration where I was given a standard payment for 150,000 views and incremental 20 percent payment for every 20,000 views," said Singhal.
Ritesh Ujjwal, Founder & CEO, Kofluence, an influencer marketing platform, said that they have implemented performance-based pricing for several clients across gaming/ medicine-technology firms wherein it’s a function of app installations influencers deliver.
"Typically, in such cases, we’ll have 50 percent of payment based on content and balance on performance," added Ujjwal.
An influencer, who did not want to be identified, said he recently did a campaign for a financial app where the payment terms were agreed upon keeping in mind that he would provide at least 25 new user registrations.
"I received 50 percent payment after publishing my content and the balance after I met the promised registrations," the influencer added.
Changes due to COVID
YouTuber Dirven Hazari, who runs a channel called Sindhionism and has 160,000 followers, noted that "specifically post pandemic, we are seeing a lot of creators coming up in every content category. Race for the right reach and better content has gone really far."
Prashant Puri, Co-Founder & CEO, AdLift, a digital ad agency, said brands were moving to the pay-for-performance model for their engagements to make sure their spends are not wasted given that there is a high percentage of followers of influencers that are fake between 50 percent to 60 percent.
The pandemic has also resulted in more brands looking for a better conversion rate through their marketing campaigns.
"Better return on investment (ROI) is definitely the foremost reason for performance-based pricing, and brands today are looking for sales rather than awareness campaigns. And this is more so because of the pandemic," said Panpalia.
For brands it is better ROI, but does performance-based pricing impact an influencer's earnings?
"Yes, it definitely does. Many brands do not pay when influencers fail to meet the targets despite doing their best and providing extra deliverables," said Panpalia.
He added that while having clear expectations in terms of number of reach, views, likes, comments, and shares is justifiable, brands cannot and should not hold influencers responsible for conversions.
"Influencers are mere mediums and a medium cannot be questioned and have to be paid for the service undertaken irrespective of the conversion/performance. Just like how a newspaper or a billboard cannot guarantee brands conversions via an ad, influencers should be treated likewise," he added.
Anita Tejwani, Founder, They Sway, an influencer marketing platform, said that while performance-based pricing removes the risk of paying an influencer for non-performance, the end result has been mixed.
"On one hand influencers have learned to create better content and convey the right story to motivate their audience into taking action. On the other hand, this has pushed influencers into sharing misinformation and buying fake views and engagement."
Adding to this, food influencer Kuljyoti Dhingra who runs a YouTube channel with 86.9 thousand subscribers said that having a goal to drive conversions will only add a lot more filters to the branded content and is most likely to lose the influencer’s essence. It will be more in the face and ad-like.
She further said, "An influencer marketing campaign can generate viewership and conversations, but conversions are not always possible."
But what metrics do brands look at while measuring an influencer's performance for a campaign.
"We use various trackers like Appsflyer, Branch among others in tandem with UTM parameters (Urchin Tracking Module is used by marketers to track the effectiveness of online marketing campaigns) to see performance across the funnel. Typically, metrics can be cost per clicks, registrations, paying customers, revenue etc. The metrics are usually derived based on what the success factor for the campaign looks like for the brand," said Ujjwal.
Other metrics that brands may track include traffic volume on website or Playstore, app installs, conversions, revenue, audience engagement, said Tejwani.
Kofluence's Ujjwal said that this model is gaining more traction given the emergence of influencer marketing across various industries in India.
Performance is key but not for all
"It has seen widespread adoption especially in Chinese markets wherein KOLs (key opinion leaders) have been driving massive sales via their engaged audience," he added.
But in India, it is mostly emerging content creators who are adopting this payment model.
"We have seen this approach by brands for all sorts of influencers from nano to micro to macro to celebrity. However, usually micro and nano influencers take up such opportunities in order to build their channel and get monetized," said Panpalia.
The influencer quoted above noted that a few brands have approached him with this payment structure.
And this is why he sees this model picking up pace in India with brands being more selective with the kind of influencers they associate with who they know will generate value, the influencer added.