- CPM (cost-per-mille) is a key indicator of the cost-effectiveness of an Influencer Marketing (IM) campaign.
- Using CPM gives brands and marketers a standardized measure to evaluate the relative cost of reaching their target audience across different platforms and channels.
- Influencer pricing takes into account factors such as creative, production costs, organic reach, target audience, and campaign goals. Non-monetary compensation such as product samples can also be considered.
When it comes to influencer marketing, it’s important to have a comprehensive understanding of the various pricing considerations . Each payment method, whether based on CPM, engagement rate, partnership marketing, buyouts, or non-monetary compensation, has its own benefits and considerations.
By carefully evaluating campaign goals, target audience, and the available budget, brands can determine the most appropriate approach for their influencer marketing campaigns. Choosing the appropriate payment method is critical to ensuring cost-effectiveness and maximizing the impact of influencer collaborations. By aligning pricing strategies with campaign goals and resources, brands can ensure they are investing in the right influencers and effectively reaching their target audience.
CPM (cost-per-contact price or cost-per-mille).
CPM is a commonly used metric in influencer marketing. It refers to the costs incurred when a brand wants to reach 1,000 people from a specific target group (= impressions). An impression is registered every time an influencer’s post is displayed or viewed by a user.
The CPM serves as a means of assessing whether the costs of working with influencers are justified. However, the final price is influenced by other factors, such as credibility, influence, engagement, and industry, which may result in actual influencer marketing costs exceeding the CPM.
The CPM is calculated using the following formula:
Content production price / gross reach x 1000 = thousand-contact price.
To calculate the CPM, the total cost of an advertising campaign is divided by the number of impressions generated, and the result is then multiplied by 1,000. For example, if an influencer charges $500 for a sponsored post and the post receives 100,000 impressions, the CPM is $5, meaning the brand pays $5 for every 1,000 impressions. By comparing CPM rates across influencers and platforms, brands can make informed decisions about budget allocation and campaign effectiveness.
While CPM is a valuable metric, it is important to consider several factors that can influence the interpretation of “good” CPM in influencer marketing. The industry, target audience, and campaign goals all play an important role in determining an acceptable CPM rate. Typically, a low CPM indicates a more cost-effective campaign as it means paying less for 1,000 impressions. However, it is important to balance the cost with the quality of the KOL’s target audience and engagement. A higher CPM may be justifiable if the target audience closely matches the target market and generates significant conversions or brand awareness.
CPM can vary widely depending on the social media platform and format. Certain content formats, such as videos, are more time-consuming to produce compared to an Instagram post.
How do you calculate the CPM for influencer marketing?
You can break down CPM in different ways, including CPC (cost-per-click), CPA (cost-per-acquisition), and CPL (cost-per-lead).
- CPC (Cost-per-Click): CPC refers to the price a brand pays for each click on the ad created by influencers. In influencer marketing, CPC can be used to calculate the cost of each click on an affiliate link or link in the post. The CPC helps determine the CPM by dividing the total price of the campaign by the number of clicks and multiplying by 1,000. Read also: How to run an e-commerce affiliate campaign with influencers in 5 easy steps!
- CPA (Cost-per-Acquisition): The CPA refers to the price a brand pays for each successful acquisition of a customer or a desired action (triggered by influencers). The CPA helps determine the CPM by dividing the total cost of the campaign by the number of acquisitions achieved and multiplying by 1,000.
- CPL (cost-per-lead): The CPL refers to the price a brand pays for each qualified inquiry or contact (lead) generated, such as filling out a form or subscribing to a newsletter, recommended by influencers. The CPL helps determine the CPM by dividing the total cost of the campaign by the number of leads generated and multiplying by 1,000.
By breaking down the CPM using these metrics, brands gain a better understanding of the relative cost and effectiveness of their influencer marketing campaigns. The methods help provide a more nuanced view of the cost per interaction, acquisition, or lead and help optimize budget allocation and success measurement.
Other payment methods for influencers
Of course, CPM is not the only way to calculate the cost of working with influencers. At this point, we also recommend: How do you build an effective influencer partnership?
We have already mentioned affiliate marketing. Here, influencers receive a predetermined commission for each product sold through their advertising. The number of products (or services) sold and the success of the campaign are tracked via a personalized affiliate link. This link is placed directly in the post or in the social media profile of the influencer and is marked as such due to new legal regulations. Affiliate marketing is particularly effective with micro-influencers who have a small but very specific target audience and a strong connection to their community. Deepen your knowledge: The Kolsquare guide to tracking your influencer marketing campaigns.
In a buyout agreement, influencers transfer all rights to the content they create, such as posts, reels, or videos, to a brand in exchange for a predetermined fee. In this way, companies can use the creators’ images and videos for commercial purposes, publish them on their own channels, and thus recycle them cost-effectively. The price of buyouts can vary depending on the timeframe and geographic usage. In general, it is recommended to price it around 100-200% of the original content price.
In addition to fixed amounts and the pricing models explained above, some influencers (mainly micro or nano influencers) also accept non-monetary compensation. This often takes the form of barter deals in which companies send free samples to the KOL, who then present or rate them on their platforms. Ideally, both parties benefit from the exchange of goods and advertising space. However, it is important to note that influencers are only obligated to showcase the products if this has been contractually agreed upon.
Each payment model has its benefits and considerations and brands should carefully evaluate their goals and resources to determine the most appropriate approach for their influencer marketing campaigns.
How much can I charge as an influencer?
Influencers invest a lot of time and effort into content creation. From concept development to execution, many hours of work can go into a single post. They have a certain amount of freedom to determine the hourly rate, similar to freelancers. Therefore, marketers need to consider the creative and strategic aspects when planning the campaign, which works best through an open exchange. Transparency and appreciation are two key words you should not forget.
The so-called talent fee covers all costs associated with content creation. This fee covers campaign-related costs and an hourly rate. For example, if an influencer spends four hours editing images in Photoshop, he or she can charge a certain hourly rate, such as 30€. The same goes for hiring a team for video or photo production. Every hour and every resource invested in content production can be charged. Of course, the hourly rate depends on various factors:
Engagement rate is an important marketing metric that shows how quickly and strongly the audience responds to the content. Influencers whose posts are actively responded to signal to brands that they have a strong influence on their audience. Measured interactions include likes, shares, and comments, according to the Kolsquare method. Analytics tools that can show these metrics to determine engagement rate: Instagram engagement rate: definition, calculation and tips.
- Social/Organic Reach and Impressions
Reach refers to the number of users who have seen the content and who represent the potential number of people who can be reached by a post.
Finally, the target group is also decisive for the pricing of influencer collaborations. Precise targeting often leads to a higher price per post. For example, a lifestyle influencer with 60,000 followers can charge the same price as a parenting influencer with 10,000 followers since the latter has a more specific target group. The more precise the targeting, the higher the cost per post. This underlines that prices for influencers can depend on factors such as the industry, the reputation of the KOL, and their negotiating position.
How much does an Instagram post cost and what are influencer prices on TikTok?
CPMs for influencer marketing can vary depending on the platform and type of content. As a result, prices on Instagram and TikTok are usually based on various metrics, such as the number of followers, average views or likes per video, and engagement rate.
Even though platforms give the impression that booking influencers is quick and easy, it’s important to remember that it’s a market and prices can rise when demand exceeds supply. This explains why well-known influencers often deviate from these guidelines and charge fixed prices.
Influencers see themselves as brands, and similar to Apple, Mercedes, or Tiffany, you pay not only for a professional and high-quality result, but also for the value of their testimonials.
One example is Steffi aka @diy.mamis who shares her DIY content on TikTok, Instagram and YouTube with a total of 247.5K followers. Her engagement rate on Instagram is 4.23%, so the cost to collaborate is as follows:
- Cost of a post on Instagram: 114 > 157€.
- Cost of a story on Instagram: 57 > 78€.
- Cost for a reel on Instagram: 9,08K > 12,5K €
You can get these insights with the Kolsquare complete solution, which you can test for free. Simply request a personal consultation with our experts here and start optimizing your Influencer Marketing campaigns today!