How Do Influencer Marketing Agencies Make Money? – Professional Advice, Tips, Tricks, FAQs, & More
Table of Contents
While influencer marketing started off as a fad, it has quickly turned into a marketing strategy that many major brands make use of today.
Influencers are a great tool for most brands which is why it can help to work with an influencer marketing agency.
They can help you find the right influencer for your brand and even strategize marketing plans to ensure business growth.
Quick Summary
In this post, we will discuss what influencer marketing agencies are, how they work and how they earn revenue.
So without further ado, let’s get into it.
What is an Influencer Marketing Agency?
An influencer marketing agency is a creative agency that works to develop and nurture relationships between brands and social media influencers.
They also offer managerial services to social media influencers as well and help them connect with brands best suited for them.
Competent influencer marketing agencies work to develop influencer marketing campaigns and execute them accordingly. They have expertise in the industry and they work to develop campaigns in a personalized manner so that every brand’s specific needs are met.
Influencer marketing agencies work with both brands as well as social media influencers.
With the help of an influencer agency, a brand can connect with an influencer that would be appropriate for their brand image. This means that the influencer would have similar values, aspirations, and goals for their personal brand.
As a result, there’s a high chance that the brand and the influencer could have an overlapping target audience. As a result of this, the brand has a much higher chance of finding new customers that would be interested in what they have to offer.
In this day and age of advertising, consumers are increasingly suspicious of the authenticity of claims made by brands regarding their products. One way to counter this suspicion is to work with influencers that many consumers trusts.
How Do Influencer Marketing Agencies Make Money?
Every creative agency needs to have a pricing model that they can stick to in order to generate revenue in a reliable way. Influencer marketing agencies are no different. Most of them have several different ways to generate revenue.
Typical ways through which influencer agencies make money include:
Fixed-Rate Pricing Models for Campaigns
As we mentioned earlier, influencer marketing agencies work with both brands as well as social media influencers. When it comes to fixed-rate pricing models, these are typically done for single campaigns that an influencer agency might conduct for an entity.
That entity could either be a social media influencer or a brand.
For an influencer, the social media campaign might have goals for audience growth, increasing conversions, developing authority, and more.
For brands, the influencer agency could get them in touch with a social media influencer that they are managing. The campaign would then consist of the influencer working with the brand to increase their reach and widen their audience.
Again, the influencer agency would be the one that would create and nurture the relationship between the influencer and the brand for the duration of the campaign.
For example, let’s say a brand approaches an influencer marketing agency and asks them to develop an influencer campaign for them. The goal of the campaign would be to find more individuals within their target demographic and get them acquainted with the brand.
The agency would charge a fixed price based on the projected hours that would be required to compose and execute the campaign.
Sometimes, the brand would take a down payment from the brand which would be a certain fraction of the total price.
Once the campaign is successfully completed, the rest of the payment would be issued to the agency by the brand.
Value-Based Pricing Models for Campaigns
This pricing model also deals with a single campaign for brands and influencers but it’s not based on a fixed payment. Rather, the payment is defined based on the level of value that the agency provides to their client; Whether it be a brand or an influencer.
When it comes to value-based pricing, influencer agencies ensure that the end goals for these campaigns are measurable. That’s because the price will be based on the level of value that the agency brings.
It’s important that that value can be measured so that the price can be negotiated in a fair and clear manner. Measurable goals can be:
- An increase in followers
- An increase in conversion rates
- An increase in impressions
- An increase in shares
And much more.
Naturally, if the agency fails to meet the goals of its client, then the price must be lowered. Hence, this can be a tough gamble for creative agencies.
A Percentage of the ROI
Another common method through which creative agencies price their services is by charging a percentage of the return on investment (ROI).
This is typically done when the campaign the influencer agency runs is based on paid advertisements rather than organic ads. Since paid ads are, well, paid, that means that the agency is putting money out of its pocket to facilitate the advertisements for the client.
Hence, they might choose to charge the client for the paid ads but in most cases, they choose to get a percentage of the ROI once the campaign ends.
This means that a fraction of the revenue that is generated by their client as a result of the agency’s efforts is given to the agency.
Charge for Original Media
Original media or owned media is anything that an influencer or an advertising agency creates on its own to facilitate its client’s campaign(s). This means that any visuals, posts, blogs, tweets or content of any kind you create has to be paid for by the client.
The goal for this type of content is to increase the reach of the client and to find more people within their target audience on their social media platform of choice.
Agencies typically charge based on the number of original media that is created and published as part of a single social media campaign.
Hence, the longer a social media campaign runs and the more posts that are made as part of that campaign, the higher the pricing will be.
Agencies can also charge a percentage of the ROI alongside a separate charge for the price of all the original content they created.
One-Time Projects
As the name suggests, one-time projects occur when an agency develops an influencer marketing strategy for a client only once.
This is for a single project that would have a single or multiple goals. One-off projects are typically priced so that the rates can be flexible based on how well the goals are achieved.
This is why it’s important for agencies to have measurable goals for one-time projects so that there’s a clear way to check whether the project was successful or not. Then, based on the success of the project, the pricing can be negotiated.
For one-time projects, the influencer or social media agency can offer a variety of services such as content creation, ad management, scheduling, customer services, and much more.
For example, an agency may charge a client a certain amount if the project exceeds the goals that were set.
If it hits the goal that was set, then the pricing might be lower.
However, if it fails to hit the set goal, then the pricing might be even lower.
As you can probably tell, this is an example of a value-based pricing model.
Examples of one-off projects can include social media campaigns that run for a few weeks or months with the goal of audience growth or increasing conversions.
One-time projects require less effort than long-term projects and can be a great way to get some extra cash flowing into the agency.
The downside of one-time projects is that it does nothing for the agency in terms of nurturing long-term relationships with notable figures on social media.
Contracted Clients
Contracted clients are clients that “have the agency on retainer”. You could call this a long-running partnership where the terms are already agreed-upon beforehand.
So, when an agency enters into a long-term contract with a client, that client could be either an influencer or a brand. Either way, the agency would work to improve the client’s standing within the social media platform(s) of their choice.
This would obviously be done through social media campaigns and marketing efforts.
The client would not be charged for each social media campaign that is run by the agency.
Instead, they would be charged a regular, predetermined fee either monthly or weekly. The pricing of the fee would be negotiated before the client enters into a long-term contract with the agency.
Once the contract is signed and agreed upon, the agency would regularly compose and execute social media campaigns for the client to maintain their relevance. Not only would they maintain it but they would also put in the effort to increase it.
For example, an agency could set up a one-year contract with a brand and the terms of it include that the agency handles all of the brand’s social media pages.
The contract would include a fixed monthly or weekly rate that needs to be paid by the brand regularly.
In return, the agency would offer them services such as running campaigns, setting up paid advertisements, monthly analytics reports, and much more.
Once the duration of the contract ends, the client can choose to continue the relationship by signing another contract for another year.
On the other hand, if they’re unhappy with the performance of the agency, they can also choose to walk away once the contract ends.
Most influencer agencies out there use this method to charge their clients as it’s a great way to develop and nurture long-term relationships.
As you can probably tell, long-term relationships can be extremely beneficial for the agency since they are a source of constant and reliable revenue.
Not only that but it also helps the marketing agency do its job better. This is because when they work with a single client for a long time, they are acquainted with the client’s followers and target audience.
As a result, once they develop a better understanding of the audience, it helps the agency create more personalized and more efficient campaigns that resonate with them. This, in turn, typically leads to an increase in the revenue generated by the client.
While long-term contracts can definitely be extremely beneficial, it can be difficult for an agency to find clients willing to enter into them if they’re new. An agency needs to develop credibility and trust before it can reliably expect clients to enter into long-term contracts.
Hence, when such an agency first starts, they usually take up one-off projects that involve managing a client’s social media channel for a fixed duration, etc. Then, once they have built their reputation, they transition into long-term contracts for clients.
Inbound Marketing
So far, we have talked about how an influencer agency devises marketing campaigns for its clients.
However, an influencer agency doesn’t just conduct campaigns for its clients. They also compose and execute marketing campaigns for their own brand.
Examples of these include:
- Social media marketing campaigns
- Influencer marketing campaigns
- Email marketing campaigns
- Paid advertisements
And much more.
When an agency markets itself, it’s able to deliver its message to clients that are looking for the services that they provide. Hence, it allows them to easily find clients that would be interested in their services.
This makes them save time and effort and thus, they can enter into projects and contracts with them to generate revenue for their agency.
When they share the link to their landing page through social media marketing and email marketing campaigns, they use link shorteners.
This makes their message much more concise and less messy.
You can use link shorteners such as Pixelfy to shorten your landing page links. However, you should never use them to shorten affiliate links since that’s usually against terms and conditions for most affiliate programs.
Testimonials
Once an agency develops a name for itself and has a few happy clients under its belt, it can leverage that to make its audience understand the value that it can provide.
Testimonials and referrals can be extremely powerful tools for any brand and when it comes to marketing agencies, they are very important.
So, how do testimonials work?
A client has to trust the agency to develop and execute a marketing strategy for their brand. Their brand is their bread and butter so obviously, they wouldn’t want to jump into a contract with an agency if they are not aware of the quality of their services.
However, if the agency can provide testimonials and referrals from past happy customers, clients may trust them a lot more to develop effective campaigns.
In addition to finding new customers, testimonials can also strengthen the relationship between an agency and a client. If the agency chooses to have a certain client’s testimonial displayed on their website, the client would most certainly be flattered.
As a result, they might return to that agency for future campaigns as well.
Wrapping Things Up…
While traditional advertising is still present today, it’s fairly obvious that influencer marketing works much better in today’s digital age.
If you’re unsure how to find influencers to promote your brand, consider contacting an influencer marketing agency. Not only would they be able to find and get you in touch with a suitable influencer, but they will also work with both of you to develop an effective marketing strategy.
If you have any more questions, feel free to ask us in the comments section below. If you’re interested in finding out everything there is to know about Marketing, CLICK HERE.
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