Instagram has become the prefered social media platform for billions of users all over the world. The photosharing app has taken the social experience and reduced it into its simplest form making it easier than ever to share content online. Fans of the platform have turned their profile into a business by selling the attention they receive from posting content on their profile.
These super users are known as influencers, and the discipline has started to gain traction and is driving the revolution of personal branding version 2.0. While Instagram may be the preferred influencer hang out other social media platforms also have their fair of these super users. Depending on the type of content a user prefers to create, some have taken to Twitter while others are using YouTube to gain an audience.
Influencer marketing is the act of merging social media personalities with products and services to leverage their personal branding and as a new promotional avenue. This infantile industry has already reached an estimated $2 billion in 2017 and is predicted to grow into a $10 Billion industry by 2022.
Influencer marketing in South Africa
This international phenomenon has begun to hit South African sure, and local "influencers" are already earning between R500 and R10,000 from a single Instagram post. While the market is still tiny when compared to more developed countries there is still an opportunity for Instagrammers and the like to start cashing in on their audience.
If you want to know more about finding opportunites with infleuncer marketing check out our post - What Are Micro-Influencers and Why Businesses Should Care
The unregulated market for attention
The problem with influencer marketing is that there is no central authority or auction where brands can compare profiles and measure the effectiveness and fit of an influencer. Brands are often swayed by only one metric the sheer number of followers the influencer has, rather than how valuable their posts would be in promoting their product or service.
By not doing proper due diligence brands are often overpaying for influencer marketing and not getting a fair rate. Companies who are interested in using influencer marketing need to start evaluating the return on investment (ROI) when adding influencer marketing to their marketing mix, but because little is known about how to gauge their relevancy, it is often overlooked. Social media account followers can be filled with bot accounts, fake accounts, ghost accounts or dead accounts that offer no real value and reach.
In a bid to help brands and influencers quote a fair value for a collaboration we've put together a few formulas you can use to get a good estimate.
How to calculate a South African influencers worth
To calculate the price of an influencer based on performance metrics, we need to look at more than just the follower numbers and need to deep dive into how their reach and appeal would match that of running ads directly on the Instagram platform.
- Value reach per post, in ZAR - Work on an average of R70 CPM (Cost Per 1000 Impressions) - Which is Instagrams average CPM
- Audience Quality, in % (This takes into consideration the interactions a user has on their posts. To get the % for audience quality add the average number of likes and comments together, say it’s 100 on a single post, and then divide by your followers, like 1000, which gives you .1. Then multiply by 100 to get your percentage, which would be 10%. That’s your average engagement rate!)
- Target Group Accuracy, in % (This can be how many followers of a region or a demographic like gender or age group)
- Brand Fit, on a scale of 0.5 to 1.5 (How relevant the user is to your brand and how relevant their audience would be)
- Content Value, based on a quality of R500 to R10 000 (This could be based on the content creators cost to work IE hourly rate to produce the post)
To help illustrate how the formula works I've put together three examples of accounts with 1000, 10 000 and 100 000 followers. As follower accounts get larger metrics like audience quality and target group metrics tend to decrease, which I've considered in these calculations.
Basic collaboration calculation for a user with 1 000 followers
Calculation example: 70 X 0.25 X 0.90 x 1.5 + R500 = R524
Media Value per Post R70 Audience Engagement Quality 25% Target Group Accuracy 90% (South African followers) Brand Fit 1.5 Content Value R500 Price R524 per post
Basic collaboration calculation for a user with 10 000 followers
Media Value per Post R700 Audience Quality 12% Target Group Accuracy 60% (South African followers) Brand Fit 1.5 Content Value R1000 Price R1075 per post
Basic collaboration calculation for a user with 100 000 followers
Media Value per Post R7000 Audience Quality 5% Target Group Accuracy 30% (South African followers) Brand Fit 1.5 Content Value R5000 Price R5157 per post
Note: There are also soft factors that may add to the final price such as production quality if the content creator has to do editing, shoot or be active in a specific location as well as the authenticity of the influencer as a perceived authority on a specific topic.
Important to consider during collaboration negotiations
Keep in mind that factors like long-term relations between influencers and brands impact the pricing as well and are not included in the formula. Also, each influencer has a different value due to the content and style of content they produce. The more relevant the material, the better the reaction from audiences and the more valuable the influencers profile will be for brands.
Thus, this influencer pricing formula is not a fixed pricing system but serves as guideline marketers. The final price will naturally be decided in negotiations, and smart marketers should always aim for a lower value than the calculated one to ensure they get the best deal and try to drive a higher ROI.
Influencers should be held accountable
As a digital marketer with experience in a range of channels, I firmly believe influencers are getting the benefit of the doubt when it comes to pricing and should be held accountable for performance metrics and results. They should know how to work out a rate card based on their metrics and adjust it as their profile improves or deteriorates. I would recommend an influencer review their metrics each month and update their rate cards to reflect a fair market price.
Tell us your social media story
Have you ever used influencer marketing or are you an aspiring social media influencer? Share your experience with us in the comments.