A recent report published by Insightpool and Jay Baer analyzes many different elements of influencer marketing. There is a big section in the ebook that goes in-depth into paid influencer marketing, which is described as “paying social influencers to create content that will see high reach and engagement among audiences.” Basically, paid influencer marketing is paying popular social media accounts to endorse a product or brand.
— Trey Kennedy (@TreyNKennedy) April 1, 2017
Popular social media influencer Trey Kennedy shows an example of paid influencer markting with his sponsored Wendy’s tweet.
Paid influencer marketing is a great way for marketers to raise awareness for their brand, although it does come with a price. Marketers need to understand the benefits and costs of paid influencer marketing before they start paying influencers.
Benefits of Paid Influencer Marketing
Paid influencer marketing has many benefits to it. The ebook highlights the main advantage: immediate marketing lift. Paid influence works similar to other types of advertisements (television, radio, etc.) in that it immediately gets a ton of eyes on a product and raises general awareness overall. If companies are looking to get a ton of eyes on their product, this is a great route to take.
A graphic from the report that shows just how effective PIM is.
A benefit of using paid influencer marketing over earned influencer marketing is that with the former, it is much easier to control issues involving licensing and intellectual property. Because paid requires a contract to be signed, companies can more closely control the terms of the deals and be in charge of who owns what aspects of the advertisements or posts.
Disadvantages of Paid Influencer Marketing
The previously mentioned benefit of legalities being involved is also a disadvantage because the transaction of money means that the advertisement is subjected to FTC guidelines. The FTC states that influencers are legally required to explicitly disclose that posts have been paid for by a company. This means that the company could face legal repercussions if the influencer does not properly disclose that they were paid for it.
Big brands like Warner Bros. and Lord & Taylor have come under fire by the FTC. Just a couple weeks ago, the FTC announced that it had sent 90 letters to brands and influencers whose sponsored social posts were not properly disclosed.
Another reason the FTC guidelines could be a problem is that it makes potential customers skeptical about the endorsement. The report states that “eMarketer found that more than 30% of women think that posts disclosed with a required #ad or #spon (“sponsored”) tag are inauthentic.” In order to make the ad legal, companies must sacrifice authenticity.
Another disadvantage of paid is that it can be really, really expensive. The report estimates the price per post for many social media accounts. Posts by users with three to seven million followers have an average cost of $187,500 per post on Youtube. Instagram and Snapchat go for $75,000, while Twitter averages at $30,000. The sheer expense of paid influencer marketing may turn a lot of marketers off to that kind of marketing strategy.
Paid influencer marketing can be very beneficial to companies for a multitude of reasons. However, before deciding to adopt this form of marketing, companies need to weigh the cons and compare it to other forms of marketing that might be better suited for the situation and desired results. A lot of times, companies will use paid influencer marketing in circumstances where earned influencer marketing would work much better. Marketers need to analyze all the pros and cons before choosing a course of action.
For more information, check out Paid & Earned: The Two Sides of Influencer Marketing by Insightpool and Jay Baer.