Are influencers and agencies ready for the CPA showdown?

New Delhi: With customer acquisition costs rising and brands now prioritising sales and leads over engagement and reach, a pressing question arises: Will influencers feel the pressure if they fail to deliver the conversions brands expect?

This challenge isn’t limited to influencers alone—it also affects agencies navigating the shifting dynamics of the Cost Per Action (CPA) model.

While brands are moving towards a performance-driven model, the challenge of attribution remains at the forefront.

For example, a customer starts watching a reel where an influencer is promoting a particular brand five minutes before he gets into an office meeting and ends up buying the product after a month.

In this case, the question is: who will the attribution go to?

Attribution challenges are the root cause behind influencers distancing themselves from brands that pay them based on the number of leads or sales they generate.

But before we dive deep into the problem of attribution, let us take a look at why brands are shifting to a performance-driven model and what it means for influencers.

Why are brands shifting towards a performance-driven model?

Vipasha Joshi, an expert in the creator economy space, believes the shift towards a performance-driven model in influencer marketing was inevitable. She highlights the disparity in payment between nano or micro-influencers and top-tier influencers, where brands often chase eyeballs rather than focusing on actual ROI. 

Joshi points out that nano and micro-influencers typically deliver greater ROI for brands compared to macro-creators. However, many brands continue to prioritise influencer metrics such as follower counts—50,000, 1 million, and so on—while allocating budgets, rather than establishing clear KPIs to measure campaign success. 

Moreover, she also highlighted that brands are now having conversations about whether the views of influencers are real or not.

Elaborating on the challenges in the current influencer marketing landscape, Joshi stated, "Many agencies are now focused on selling views and subscribers. However, even when brands run campaigns that generate millions of views on a single video, they often fail to translate these into tangible outcomes like website visits, product clicks, or footfalls. This has always been a fundamental issue.

A great example of an effective approach is Nykaa, which has executed influencer campaigns with nano and micro-creators exceptionally well. They’ve engaged influencers from smaller towns and meticulously tracked sales generated through these campaigns, whether through the influencers' links or by monitoring how many people bought the product post-marketing.

It was only a matter of time before other brands adopted a similarly transparent model, like CPA.”

Resounding, Joshis thought, Rachit Sharma, Head of Brand Solutions at Qoruz, mentioned that he is observing a significant shift towards CPA models. Brands are under increasing pressure to justify their marketing spend, and the traditional influencer marketing model, which focuses on reach and engagement, isn't providing the ROI they need. 

“By moving to a CPA model, brands can directly tie their influencer marketing efforts to sales and revenue. This shift is making the influencer marketing ecosystem more performance-driven, and it's forcing influencers and agencies to rethink their strategies,” Sharma added.

Impact on influencers and influencer marketing agencies

Speaking of how this shift will impact influencers and agencies, Samriddhi Katyal, CEO and Co-founder of Influns, said, “Cost-per-acquisition (CPA) significantly disrupts traditional influencer marketing agency models, especially those that rely on flat-fee campaign management. 

It shifts the focus towards reducing upfront influencer fees in favour of performance-based payouts, compelling influencers to demonstrate their ability to drive conversions rather than just generate engagement. This change also pushes agencies to transition from merely serving as intermediaries to adopting a more strategic, performance-driven approach to their operations.”

Katyal also mentioned that margins for influencer marketing agencies are being increasingly squeezed as they are now required to justify their fees based on tangible results rather than merely acting as intermediaries for matchmaking. This has led to a shift toward hybrid pricing models, where agencies combine base retainers with performance-based incentives to mitigate risks. 

“Additionally, there is a growing emphasis on data, with agencies needing to deliver real-time analytics and conversion insights to demonstrate campaign effectiveness. Agencies that fail to adapt to these changes risk losing relevance, as brands increasingly demand measurable outcomes,” Katyal noted.

Adding more insight, Sushant Sadamate, COO & Co-founder of Buzzlab, said that the days of simply matchmaking influencers and collecting a commission are over. 

“Now, it’s about sales, measurable impact, and proving real ROI. And let’s be honest, most influencers aren’t natural-born salespeople. They can engage; they can entertain, but can they convert? That’s the real question. So what happens next? Agencies can no longer just sit back and watch the numbers roll in. They’ll have to step in, level up influencer content, and actively shape campaigns. That means investing in post-production, high-converting storytelling, and laser-focused content strategy, essentially doing the work influencers either won’t or can’t do on their own. 

Agencies will charge a premium for these services because if they’re the ones making influencers drive results, they deserve a bigger slice of the pie. The result? Everyone wins, but differently. Influencers keep their earnings steady, agencies increase their margins by carrying the weight of execution, and brands finally get what they’ve always wanted but never truly get actual conversions at a lower CPA. More profits, less wasted budget, and no more paying for vanity metrics,” Sadamate noted.

How willing are macro-influencers to adopt a performance-driven model?

Chhavi Mittal, co-founder of Superb Ideas Trending (also a macro-influencer), feels that driving sales and leads is not the job of an influencer in the first place. 

“An influencer's primary role is to create engaging content and share it with their audience. However, whether this effort translates into sales or leads depends on various factors, the most significant being the consumer's need for the product. Therefore, brands must carefully consider the influencer they choose for their campaign. 

Key questions include: Who is the influencer? What is their audience like? Does their audience align with the brand's target demographic? These factors play a crucial role in the campaign's success. While there are many valid reasons for brands to collaborate with influencers, lead generation or its failure is often a minor concern, as these outcomes are typically driven by highly targeted performance marketing strategies,” Mittal quoted.

Weighing in on the discussion, Sadamate said, “For years, macro-influencers have enjoyed flat fee sponsorships based on reach, impressions, and engagement, getting paid whether a campaign converted or not. Now, brands are demanding measurable results, not just visibility, and many influencers aren’t happy about it. To them, CPA feels like a pay cut in disguise; instead of guaranteed earnings, they’re now expected to prove their impact through direct sales and leads. And here’s the real issue: massive reach doesn’t always translate into conversions. 

Unlike nano and micro-influencers, who have high trust and niche authority, macro-influencers often struggle to drive action beyond likes and comments. Some will adapt; those with deep audience engagement and content that persuades, not just entertains, will still thrive. But many will resist, preferring to work with brands still willing to pay for reach over sales. The ones who refuse to evolve? They’ll watch from the sidelines as brands shift their budgets to those who can deliver results.” 

Further elaborating on how macro-influencers are looking at this transition, Katyal (influns) said, “Macro-influencers, though initially hesitant, are gradually adapting to the shift in compensation structures. Traditionally accustomed to receiving high fixed fees based on their audience size, they now face the challenges posed by cost-per-acquisition (CPA) models. 

CPA demands that influencers accept less predictable, performance-based earnings, optimise their content to drive conversions rather than simply generate views or engagement, and compete with smaller influencers who often achieve higher conversion rates. While some macro-influencers resist this transition, others are embracing hybrid models that combine guaranteed payments with performance bonuses, allowing them to maintain a degree of stability amidst these changes.”

An opportunity for nano-influencers?

Sharma thinks that nano-influencers are well-positioned to capitalise on the shift to CPA models as they often have smaller, more engaged audiences, and they can provide more targeted and effective reach for brands. Additionally, nano influencers are often more willing to experiment with new formats and models, which makes them a good fit for CPA-based campaigns. 

Agreeing with Sharma, even Mittal asserts that a performance-driven model is a good opportunity for nano-influencers. 

Providing an example, Mittal said, “For instance, if someone operates within the fitness space, their audience is likely engaging with their content for fitness-related insights. This presents a fantastic opportunity for them to endorse fitness brands effectively within a structured framework. They can add value to the product, depending on the nature of the product they are associating with.

Nano-influencers, in particular, can create a significant impact if their audience aligns with the target demographic. For example, if a nano-influencer happens to be someone from my neighbourhood, and I come across their content, there’s a much higher likelihood that I might end up purchasing the product they are promoting. This personal connection and relatability often amplify the effectiveness of nano-influencers.”

The challenge of attribution

As we mentioned earlier, attribution challenges are the root cause behind influencers distancing themselves from brands that pay them based on the number of leads or sales they generate.

Voicing her thoughts on the issue, Mittal highlighted that brands and influencer marketing agencies both need to invest significantly to make sure that if an influencer causes brand recall for a customer or influences their decision to buy a particular product, then the sale should be attributed to the influencer.

A lack of attribution technologies will lead influencers to rely more on content behind the paywall and figure out other ways to leverage their distribution, such as starting a new business, mentioned one of the experts.

Sharing her perspective on the attribution challenge, Joshi emphasised the need for better analytics. She pointed out that online sales have always faced attribution issues, which is why attribution windows were developed—to improve analytics. According to her, a key aspect is understanding the type of attribution window being used and linking analytics to determine when users actually engage with content, such as viewing a reel.

However, Joshi noted that brands don't rely solely on influencer campaigns. They also invest in retargeting, performance marketing, and other advertising strategies. She suggested that larger brands like Swiggy, Nykaa, and Cultfit typically have robust attribution models in place. These brands collaborate with platforms like Google and Facebook to ensure that attribution data is effectively routed to the appropriate channels, enabling them to optimise their marketing efforts.

For influencers, Joshi acknowledged that this could feel like a rough deal, as attribution complexities might overshadow their contributions. Nonetheless, she mentioned that brands can provide influencers with unique codes, similar to affiliate marketing, to better track their impact and effectiveness in driving conversions.

Summing it up in the words of Avi Chanodia, Co-Founder of CREATE, “Brands that adopt a CPA model must have confidence in their product, knowing that it has the potential to sell regardless of influencer involvement. For example, a widely used healthcare product can gain traction simply by raising awareness and prompting consumers to purchase once they become familiar with it. In such cases, brands may prefer the CPA model and entice creators by capping their real costs while offering performance-based incentives. This approach not only aligns with the brand's confidence in the product but also ensures that creators are motivated to participate.

However, brands must recognise that working with a large pool of creators may yield varying returns. If a brand collaborates with 100 creators, only 40 to 50 might generate significant results. To maximise success, the initial offer should be attractive enough to engage a wide range of creators. Over time, brands can refine their strategy by retaining high-performing creators and offering them additional rewards, creating a scalable and sustainable funnel for long-term success.”