Factors that Determine Influencer Pricing - Episode 9

Ty Smith0:04

Welcome to another episode of the Coinbound podcast. My name is Ty Daniel Smith. With me is TJ and Kylie, and today we are discussing the factors that determine influencer pricing. So Coinbound is an influencer marketing agency originally, so that is our, I guess, background and expertise. So TJ, what do you think are the top factors?

TJ0:18

Why do we always start with me is the first question. No, I was going to say because I have a lot to say. All right, well let me run all this off real quick. Okay, under 10 minutes.

TJ0:27

There's like a bazillion factors that come into play with influencer pricing. It can be, in my opinion, just real quick, anything from the demand on their time, like from everybody else, meaning like if they're doing speaking engagements, if they already own another business, if they have high demands on their time as it is, that kind of establishes their perception of the value of their time. The amount of time it takes them to create the content is a big factor in it. The level of reputation they have, I mean there's a lot of different points. How organically it fits within their brand, like if it's a brand that fits within their kind of everything they're talking about already and it's a natural fit, that's one thing, versus if it's something that's from left field and they really have to force it in and their audience is going to know it and it's going to stand out and look different, like they're going to put a higher price on that than something that is something that they wanted to talk about or a product that they wanted to use anyways. So I think, I mean there's four right there, but, and we could go into subtopics of any of those, but I don't know, what do you guys think?

Kylie1:32

I mean all of that for sure.

Ty Smith1:33

Yeah, I think that's probably my top list as well. So why don't we break it down a little bit, a little bit more. Let's talk about the amount of work required to go into. That's probably the most obvious one. Like a YouTube video is obviously a lot more difficult to or time-consuming to produce than a tweet.

TJ2:09

Well, I mean that's the magic word, you said is time. Like that's what it comes down to is how long, like production level quality and time does it take. Do they have to research your project? Do they have to shoot the video? Do they have to edit the video? To shoot a 10-minute YouTube video is a lot more time, like you said, than just to write off a one tweet like, 'Hey, I just heard about this thing, sounds interesting, check it out.'

Ty Smith2:20

And I actually think this is one of the reasons why there's sort of a very uncorrelated, a very small correlation between the size of a person and their pricing because when you hit a certain size of influence, you've sort of developed a business out of it and you've sort of built a workflow that means you can produce a lot of content quickly and easily, so there's less labor that goes into it in a sense.

TJ2:34

For someone that's smaller, they're basically just kind of working through it as it comes up, so they are going to charge you based on the time, which isn't really the correct way to price anything because a business that's hiring an influencer doesn't care about the time they're putting in, they care about the value that they're getting.

Ty Smith3:08

Right, or how many people see it. That's another point you made is like the distribution of it, the level of following, the level of attention that person has also is a big factor in...

Kylie3:14

The level of quality following.

TJ3:15

Exactly, or engagement is the magic word we use all the time, where people that are the amount you can really see the results of somebody that can drive an audience's attention. So beyond just engaging on your tweet, but actually clicking on the link, or if it's a YouTube video that you're describing the project, actually clicking through the description and seeing like, 'Oh, we're going to go get more information about this project.' The creators that can really drive an audience and move the needle in that regard are the ones that generally, that drives their pricing up.

TJ3:38

As well as just how useful it is to the client after the fact. So if it's somebody who is a name and has a reputation in the industry already, and a client can then take that video or that endorsement or recommendation and use that in their booth at a trade show, use it on their website, use it in their own social media, and just kind of repurpose that content in other ways, it gives more value to the content because you're kind of an industry leader, a thought leader. Again, the higher, the more uses you have for the content, the more you can charge for it.

Ty Smith4:23

Yeah, that's definitely true.

Ty Smith4:24

In terms of how organically it integrates, that's definitely a big one, and that's the reason why, I mean we try to do everything as simply as possible. So when we first onboard an influencer, we try to get their pricing and everything like that, and probably the most common and also most frustrating answer that we get is, 'It depends.' Because it's very difficult for us to build a campaign around. But honestly, it does depend, and it depends for a good reason because to promote something that's sort of unestablished is a little bit more of a shot at the influencer's reputation than something like like a eToro, like a big exchange that everyone knows is reputable. It almost bolsters the reputation of the influencer to be working with a brand like that.

TJ5:14

Or even just the ease of integration within your brand. So like say somebody, depending on the type of content you create, say you're a miner, right, and everything you talk about is mining products, GPUs, builds, hardware, and then somebody comes along and they want you to talk about trading, you're like, 'Well, I'm not a trader, I'm not going to talk about these things.' I'm going to put a higher price on that than if you are wanting to sell, send me LED lights for my rig, and you're going to send them to me for free, and you want me to talk about it and tweet it, like I'm more willing to do that because I think because it's going to, again, it integrates organically within the ecosystem that I already try, the brand I'm already trying to build, more or less.

Ty Smith5:40

Yeah, so most savvy marketers do everything on a CPM basis or a CPC basis, but influencers aren't necessarily savvy marketers. They don't realize what the brand is looking for sometimes, so they don't price anything like that.

TJ6:16

Yeah, I would say, yeah, a lot of times the people that are creating the content, they spend a lot of their time trying to figure what engages the audience versus what the advertiser is looking for. So like you said, they're not thinking in a CPM, CPC type basis, they're just thinking like, 'What does my audience want to see, and how can I make that?' So, yeah, that's where I think where we can come in a lot of times is helping people take a long-form piece of content that they did a really good job in creating engaging content with the audience, but it's still only one piece, so you're only going to generate so many impressions off of it, and then clipping it into 10 different pieces that then both the creator and the advertiser get the value out of all of that exposure, and taking the same amount of work, time, effort, energy, research, input, but generating a lot more exposure and a lot more brand awareness for the advertiser kind of helps both parties, which is a lot of what we do.

Kylie7:16

And I think a lot of influencers base their pricing off of their own personal emotions for their own content. Everybody thinks their content's worth maybe a little bit more than it is, or whatever the case is, like there is certainly an emotional attachment to what you're putting out there, especially when it's you.

Ty Smith7:26

Well, it's status, too. If you're getting $1,000 per tweet, you will see yourself as better and bigger than someone who's getting $100 per tweet. And just and if you ever, we had this conversation before, if a person once got this pricing, that very quickly becomes their standard pricing. And that isn't necessarily true because every customer is getting a different level of value out of that influencer.

TJ7:40

Yeah, it's ego is the magic word. Yeah, ego has a big factor in influencer pricing, and their perception of their own worth, because like you said, you're essentially asking somebody to put a value on their opinion, and that's really hard to ask somebody to do because that can change at any point, and like you said, what somebody, like once somebody pays you a certain number, you have a feeling like, 'This is what it's worth.' So anytime I do that, I'm discounting myself. So it's...

Ty Smith8:24

Well, influencers are people, so obviously they look at themselves as people, but businesses that are hiring influencers aren't necessarily looking at them like people, they're looking at them as another advertising channel.

TJ8:34

A distribution channel, yeah. They're looking at the numbers. Yeah, they don't, there's no emotion in it at all, which is why that was such a good point of what you said, emotion does play a huge part. And even market sentiment, we feel that all the time, like when the markets dry, people are willing to do things for cheaper than when money is flying all over the place.

Ty Smith8:41

We see all the pricing. We speak to influencers every day, every week, depending on who it is. Pricing changes every week, and it's because of the market. It's how much money is being spent. In late 2017, you could be a pretty no-name influencer and get over $1,000 for a tweet. Now people that were once getting a huge amount of money are not.

TJ9:18

Right, well, and it's because the marketers, like you said, are looking at engagement, they're looking at hard numbers, and it's supply and demand, it's just the market. Anytime when the supply is good, or the demand is high, then people can raise their prices. But right now, it seems like everybody's kind of, it's the calm before the storm. I really feel like the best content creators are really starting to hone in and create really good content right now, and a lot of the advertisers, I feel like are saving up budget and are planning for the next six months, and they kind of, I feel like a lot of people see what's coming in the next six or eight months.

Ty Smith9:38

I mean, we hear it all the time. 'I want to run an influencer campaign, but I'm kind of waiting for the market.' Every week I hear that.

TJ9:43

Right, and so we really feel like it's going to be like a switch. As soon as the market takes off, all these people that have kind of have this budget sitting in the wings waiting for that kind of market sentiment to pick back up, the hype to pick back up, all those marketers, that money is going to start flowing, content is going to start flowing, and yeah, it'll be interesting to see where we're at summer 2020.

Ty Smith10:21

Yeah, I mean, I don't, I'm not someone who is constantly checking the price of Bitcoin in the markets, but I always know the price, at least of how it relates to how it's been because...

TJ10:27

Somehow we never check, but we always know.

Kylie10:30

I really never check, and I know.

TJ10:31

So what's the price right now? It's what, it's Tuesday night, right? Yeah. On... I was going to say, yeah, okay, so what's it, it's Tuesday, what, October 2nd? October 8th, so I'm a week off. So it's October 8th, so what's your, and it's what, 8:00 or 9:00? 9:00? Yeah. All right, so, and I'm going to guess 8,235.

Kylie10:44

8,236.

Ty Smith10:48

I don't even care. I don't even look at the number. I just, I know the number of emails that I wake up to, and that is a very closely correlated...

TJ11:25

That's a good market indicator. That's a fun way to do it.

Ty Smith11:26

It is. I want to, I'm going to start plotting it out, and that'll be an indicator. All right, guys, so thanks for tuning in. We are now on Slack, too. So if you have any marketing or crypto marketing questions for us, join us on Slack at coinbound.io/joinslack. We will be there answering any questions you have.

TJ11:36

Yeah, and like it and share it and follow us everywhere else.

Kylie11:43

Tweet at us.

Ty Smith11:46

Doesn't matter. Thanks, guys. I'll get you next time.