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With the rising number of influencer marketing agencies, experts have called for standardised pricing for survival. Despite all the growth in the industry in recent years, influencer marketing agencies have to work at a very competitive pricing and sometimes are forced to look beyond profits.

Kalyan Kumar

According to Kalyan Kumar, Co-Founder and CEO, Social Catalyzers, “Everybody wants to spend less and get more, and that is a standard practice across all media and all businesses in this landscape or even the technology sector. The question is also what brands do when they pitch. Brands are pitching agencies for every new campaign, which means for every little campaign, you have 15 agencies fighting for it.”

He said some agencies take businesses at lower costs because the agenda is not profitability but a longer-term play.

Danish Malik

For every small campaign, brands approach a number of agencies, and this practice can affect both sides, says Danish Malik, Founder and Managing Director of Boomlet Media.

“Cost phishing—getting the lowest prices — is always there and competition is always healthy. But I think in the influencer business world, it's different. Sharing the requirements to a couple of preferred partners always helps to cross-verify things — mainly costs, ROI and other aspects. But broadcasting it increases the demand of a particular influencer when he/she starts getting campaign requirements from multiple sources, resulting in a high quote, which is eventually a loss for the brand.”

“If sometimes a brand drops a plan, there is a reputation loss involved and agencies like us face major roadblocks to reaching out to the same influencer for the next campaign,” he said.

Experts suggest there is some level of lack of transparency when it comes to pricing with brands and influencers. They say there is a need to standardise pricing in the industry.

Pranav Panpalia

“While some growing influencers do not know what they should charge, there are a few who over-quote. There needs to be a streamlined way of calculating what could be an approximate fee of an influencer. We at OpraahFx are trying to set a standard for this to help the younger and emerging influencers,” said Pranav Panpalia, founder, OpraahFx.

“Negotiation on the commission is always there. The bigger the budget, the less the margins and vice-versa. But nowadays agencies seek commitments such as retention, visits, enquiries, engagement, views, etc., based on the guaranteed requested metrics,” Malik said.

How do the agencies bear the costs?

Kumar said most celebrity and top influencers want their money before the campaign hit the floor. This often means agencies have to ask the client for a 100% advance or else they have to bear the cost. He said most clients are okay with it because they are aware that big influencers will want an advance and the money could be in lakhs.

But sometimes a client may say no, and pay according to their standard cycle, which for most is 90 days. This means that those lakhs of rupees have to be funded and that increases the cost of the campaign.

Even mid-level influencers want their money within 10 days but a brand would pay in 90 days.

“There are advances involved in most premium and celebrity buying. In some cases, it's even 100%. However, for micro and mid-range ones, a corporate billing cycle of 30-45 days is followed after completion of the campaign. This is irrespective of the deal and billing cycle that the agency has signed with the brand,” Malik said.

How do agencies determine their prices or commissions?

While some agencies determine their prices based on the number of posts a brand requires, others calculate it based on the reach of the influencer. The duration of a campaign, manpower required and logistical support needed for a campaign are some other factors that determine the costs.

A lot of planning happens around influencers, how many posts they do, and what kinds of posts are required because that is their real estate. An influencer will always charge according to the number of posts required. Various factors are at play when determining the commission for a big campaign. But a small one consisting of just shoutouts and stories can fetch a commission of between 7-15%, Kumar said.

“The primary factor is engagement rates and views. However, advanced analytics and insights for followers and understanding the influencer's audience is the second one to check the relevancy of the profile for a particular campaign’s requirements. The last, but not the least, is the personal background checks within the network or from records of how an influencer performed in any of the last campaigns or with any agency or brands, the execution process followed, payments terms, etc,” Malik said.

What conditions do brands keep in mind while looking for an agency?

Many brands reach out to influencers directly via social media while others rely on agencies to get their campaigns in motion. However, a brand can also look at the past work of an agency, turnaround time and costing when zeroing down on one, said Panpalia.

Rumi Ambastha

“Mostly, we do not have to pitch. The agencies come to us with ideas that work for us. That's how we have worked with so many different agencies with so many different campaigns because they approached with a wonderful idea,” said Rumi Ambastha, Director, Brand Marketing at The Man Company.

She said working with an agency brings a plethora of knowledge to the table. “I’m not paying just for their service. I am also paying for their intelligence. I prefer to work with agencies when it comes to campaigns. But for smaller and simpler campaigns, which can be much more tactical and transactional, I work with influencers directly.”

Pawan Sarda

Asked what kind of pricing and strategy works best for brands—reach or the number of posts—Pawan Sarda, Group CMO, Digital, Marketing and e-commerce, Future Group, said it has to be a combination of both as using just one strategy will never work. He said while they have not approached multiple agencies at once, the quality of work an agency has done is important.