If You’re Not Paying Attention to Your Influencers, You’re Burning Money

You’ve made quite a significant investment in building your brand. Aligning with the right influencers for your business is more important than their potential impressions.

We sat down with Bill Karz of the Los Angeles Tourism & Convention Board (LATCB) to discuss the value of influencers, or fans whom have the power to affect the decision making process — bloggers, celebrities, politicians or even peers.

Should we pay for influence?

Some believe that influence should not be purchased, but rather earned. Without debating if an influencer should be paid for or not, our goal is to gain a better understanding of an individual piece of sponsored content’s value. In doing so, brands will be able to create return on investment (ROI) benchmarks associated with influencer marketing.

In a recent Harpers Bazaar interview with blogger Danielle Bernstein of We Wore What, she claimed influencers could make $5,000 to $15,000 for a single piece of sponsored content (such as an Instagram photo). Brands are paying these influencers, but the value and rate cards are inconsistent and fuzzy at best.

A popular method of associating value to sponsored content is using a common metric such as CPM (cost-per-thousand impressions). Whether it’s TV, print or digital, there are standard CPM benchmarks that help companies ensure efficiencies in their media buying practices.

There’s also the opinion that social CPM is not as valuable as other mediums because it’s not guaranteed that consumers are reached on every Instagram post or tweet, but the same could be said for a print ad that is glossed over or an editorial piece in a newspaper left on the coffee table.

A digital display ad that sits in the footer of a website could also be considered a questionable impression. According to Google, less than half of all digital ads are viewable. With that being said, not all social impressions are created equal. As social networks rise and fall in importance to the decision-maker, so too does the certainty of a post’s potential reach.

Some brands employ a blended average of digital display inventory prices across multiple industries to come up with a $5 CPM for social media.

Is there any way to calculate ROI from influencers?

When Italian influencer Mariano Di Vaio (@marianodivaio) posts a photo on Instagram to his audience of more than 3.6+ million followers, the value of that individual post is potentially worth $18,000.

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By comparison, People Magazine’s published rate card has a one-fifth page print ad quoted at $96,900 on a circulation of 3.4+ million readers or the ad equivalent of $28 CPM.

Companies like Instabrand have raised millions in venture funding because so many advertisers are now seeking to tell their story through individuals.

Instabrand is well aware that there are still many advertisers that are skeptical of the value. Their community director and co-founder Joey Chowaiki said this:

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Joey Chowaiki
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As opposed to print advertising, influencers on social media can also be evaluated based on the engagement of their posts. This allows potential advertisers to not only better understand the audience of the influencer, but their authenticity and frequency.

Considering engagement, it allows us to further gauge the value of sponsored content. In reviewing an average of an influencer’s likes and comments over the previous month as a fraction oftheir overall audience, we’re left with a percentage that can be normalized across all potential influencers.

For example, Di Vaio averages more than 120,000 likes and comments on every post — roughly 3 percent engagement. By using a CPM range of $4 to $7 for example, you can determine a more specific CPM based on engagement and even potentially another key metric such as target audience by using a spreadsheet formula.

HandleFollowersAvg. EngagementEngagement %MarketCPMPostsValueCostROI
marianodivaio3,600,000120,0003%international$5.442$39,168$10,0003.9