How much do I charge a brand for a collaboration? That’s a question every budding influencer asks. It is a question quite a few brands also think upon. There is no set answer to it, becuase it depends on a lot of different factors like follower range, engagement rate and content quality.
That said, we can help you choose the right payment model for your content creation.
The lump sum payment model
One of the oldest influencer collaboration payment methods is giving a lump sum amount. It is a flat fee, often paid along with a free product, given upfront.
This model is not too beneficial to small creators or brands. Creators with modest online followings automatically receive a smaller amount, which doesn’t do justice to their engagement rates. Brands can’t determine the ROI on the digital ad spend because the payment is made before they see any results.
The CPM payment model
The cost per thousand impressions or pay-per-view or CPM was created for old media, like TV, which is not trackable. During the start of influencer marketing, many brands carried over the CPM model to the internet.
A creator would get a fixed amount for every 1000 people who see the post. If a brand decides on a CPM of INR 1,000 and the number of people who view your post is 6000, you earn INR 6000.
The CPM payment model is also not too advantageous for nano and micro-influencers. The number of people who see their post might be limited, but most of them take action, which brands want and should pay for.
On the other hand, big creators with a massive following may earn a lot with a single post using the CPM model, but the brand will see no tangible results.
The CPA model of payment for creators
The Cost Per Acquisition or Cost Per Action (CPA) was created for affiliate marketing. Because it solves the Achilles heel of the CPM model, it is now used in influencer marketing.
In this pricing model, a content creator is compensated for the number of actions they deliver. So, every time a follower performs an action on a sponsored post, the creator earns.
Since actions on social media are known as engagements, the payment model has another name – CPE or Cost Per Engagement.
What does engagement mean here?
The engagement or action is pre-defined by the brand before the collaboration begins. It can be one of the following or several of them:
- Clicking a link on an Instagram Story
- Number of likes
- Making a purchase
- Visiting a website
- Taking a survey
- Watching a video
- Leaving a comment
How does a creator earn with CPE?
Let say the brand decides to pay INR 10 for every time a user clicks the link attached to your sponsored Story. 1500 followers tap the link. Your total earning is INR 15,000.
The CPE model is beneficial to both the creator. Assume you opted for the CPA (cost per 1000 impressions) model. In that case, for 1500 followers viewing your post you would have earned only INR 1500. With CPE you earn INR 15,000.
- Even with a small following, you can earn more.
- You are not limited to a one-time payment. A Story, a Reel, a video or post can attract more payments.
- You can work on multiple brand campaigns at the same time.
Even brands benefit from the CPE revenue model because the risks are much humbler. The brand forks over the money only if followers engage in an action. If the creator’s post doesn’t receive any engagement, the brand doesn’t pay.
Further, the brand and you can decide which action is meaningful and hand-pick it for the reward. For creators who see more comments on their posts, that would be the obvious action to pick. For creators who see more clicks on the link in their bio, that would be the evident engagement to be paid for.
Lump Sum amount Vs. CPM Vs. CPE: which should you pick
The answer is none and all. The best payment model is one that combines lump sum, CPM and CPE. The brand pays the creator an up-front fee and a commission for every action they drive.
It guarantees that both the brand and the influencer gain something. For brands, the gain is this – why spend on mere impressions when you can pay for actual consumer engagement?
For you, the creator, it is a guaranteed reward for the effort you put in generating the content even if the engagement remains low. That said, you are motivated to produce highly engaging content so they can earn more with each new action their followers take.
We leave you with one final piece of advice. There is no one-size-fits-all payment model for creators. Always tailor the approach based on the brand, budget, and campaign objective.