Pennies for Their Thoughts

October 31, 2016

Pennies for Their Thoughts

Marketers and PR professionals always look for fresh new ways to deliver content to their current customers and target markets. As a result, advertising is changing it’s course, and the effectiveness of traditional ads are being diluted by new age methods. The effectiveness of traditional ads, both print and digital are being clouded by the rise and success of influencer ads that are delivered as sponsored content through digital mediums.

If you’ve read about influencer marketing, you know that it is a powerful method of attracting new customers and engaging existing customers. This is the reason behind why about 59% of marketers are planning to increase their influencer marketing budgets over the next year. As seen in the trends below, influencer marketing is gaining interest from advertisers, drawing more attention than both print and television advertising.

As the popularity and budgets for influencer marketing rise at companies, why are roughly 70% of influencers not seeing monetary compensation for advertisements they post on their channels? TV advertisements, Facebook advertisements and all other forms of paid advertisements are paid for using cash, so why should most influencer payments be any different?

Traditional and native ads in most cases are assigned a CPM value to promote content on their pages. When dealing with pricing for individuals to post on their social media channels, a lot of marketers are still trying to figure what an appropriate value associated with sponsored content. As a result, influencers are regularly compensated by brands with product. When creators are paid in cash, they receive checks sometimes months after they’ve finished their work and/ or they lose significant portions of their payment to fees incurred by online payment processors.

Whatever line of work someone is in, imagine working on a contract for 2 weeks. After you complete your contracted work, your employer says, “you will receive a check in the mail as payment for your work in 3 months, or we can pay you now, but you lose 10% of the money to our fee’s”. At this point, you’re choosing the best of two bad options. In most lines of work, when you finish your job, you get paid upon the completion of the task, so why isn’t this the case for creators and influencers that distribute sponsored content on their social channels? This has to change.

Influencer marketing continues to build momentum in the race to deliver quality, authentic advertisements to consumers. However, the adjustments to a new form of advertising have been relatively slow. During this transition, content creators have fallen in the middle of a bidding war that has been fabricated because of an absence of compensation standardization. In short, brands don’t know how much to pay creators. On the other hand, creators don’t know how much they are worth and they also lose a large percentage of their earnings to transfers and platform fees.

The way advertising exists through influencers as sponsored content now is spotty. When engaging with influencers to run sponsored content campaigns on their channels, brands are unaware of what to pay the influencers because this field of advertising and marketing is still relatively new. The thing is, sponsored content distributed through social channels doesn’t work like traditional advertisements, so it’s difficult to transfer over pricing models for CPM’s and CPC’s to these campaigns.

On the creator side, to provide themselves with livable wages, they can’t rely on advertisements that are distributed on their videos from the platforms that host them. The return is just too low to dedicate yourself to becoming a fulltime creator. However, on platforms like Twitch, creators can rely on the dedication of their followers to donate and make enough to turn their passions into a full time job. We’ve also seen this support network drive creator earnings up through services like Patreon. This is a great start to helping creators turn their passions into their jobs, but there are more opportunities for creators to make full time wages.

The opportunity in advertisements is slowly adjusting to improve the earnings received by creators. However, this isn’t positioned as an advertisement on a video, it’s most lucrative as a piece of sponsored content. Providing sponsored content that embodies the personality and tone of the creator, is what fuels a successful advertisement on their social channels. There’s a real opportunity to produce sponsored content for brands. However, the opportunity only exists if the partnership between brands and creators is authentic.

Take this as an example: Sports celebrities such as Jordan Spieth align themselves in an agreement with Under Armour because he’s an advocate and an ambassador for not only their products, but also for their vision. This is the case for all sponsored athletes no matter what sport they play. The same principles should exist for social celebrities and influencers. Aligning the proper creators with brands that share their interests and beliefs, position their sponsored content in a much more authentic light and presents a real opportunity to deliver real product recommendations.

Leaning on sponsored content as a method of compensation for creators can quickly start to bridge the gap that’s needed to turn their creator lives into full time opportunities. Advertisements on top of YouTube videos, etc… hasn’t been lucrative enough to provide this freedom, but sponsored content, delivered in an authentic way could be a way to a creator’s salvation. The next step is figuring out fair compensation methods aside from the distribution of “free product”. CPM’s are a good place to start, but they can’t be compared to the way that CPM’s are measured in a traditional advertising sense. More importantly, transfer fees incurred by creators for agreeing to sponsored content proposals don’t make sense.

Creator’s work to produce quality content that’s loved by thousands, if not millions, of people… why should they have to pay unnecessarily large fees to third parties to try and monetize their skills. Our hope is that one day soon this creative community can thrive by producing sponsored content for brands they love and content creators around the world can make a livable wage doing what they’re passionate about.