Define your budgets

There’s a huge potential to spend big on influencer marketing. Expenses include content planning and scheduling, searching for influencers, influencer payments, management and data analysis. Regardless of your own budget, the main aim is to make that money stretch as far as possible. Here are five of the best ways to spend your influencer marketing budget.

Finding the Right Influencers

You want to work with the best influencers your money can buy, and your first thought may be to reach out to influencers with huge audiences. After all, a large following means a lot of people are going to see your sponsored posts. However, bigger isn’t always better. In many cases, working with influencers who have just a few thousand followers can be just as effective, or even more effective. Micro-influencers achieve an average of seven times more engagement than the bigger influencers, according to Social Media Today.

Micro-influencers are likely to have competitive rates, so it makes sense to consider them as an option for stretching your budget. Additionally, influencers you want to work with should:

• Specialize in creating content related to your field of business
• Have an audience that fits your market demographic
• Have a voice that’s in-keeping with your brand message
• Works on the right social media platforms

Most importantly, when you work with an influencer, your partnership should feel organic and authentic. It helps if work is grounded in mutual respect. Don’t simply approach an influencer with a job offer; take the time to know them. Follow them on social media and comment regularly. Let them know what content you enjoyed, so you’re on their radar before you make any business proposition.

Forming a bond with influencers may cost some time and money, but it’s worth the investment. When an influencer feels appreciated and respected, it reflects positively in the content. By building a rapport, you significantly increase the chances of forming a partnership.

Calculate Potential Conversions

For this example, we’re looking at working with an influencer who has 100,000 unique monthly views (UMV). Make two estimates:

• The number of people who think might see a post from this influencer.
• The number of people you think will convert (purchase a product) from that same post.

As a conservative estimate, we’re going to assume 1% for each of these – it’s a safe bet to make until you’ve actually worked with a specific influencer a time or two and know more about how their followers will convert. So, of the 100,000 UMV for this influencer, the assumption is 1%, or 1,000 of those visitors might see the post. The math: 100K X 1% = 1,000 visitors might see the post. Of that 1,000 visitors who might see the post, the assumption is that 1%, or 10, will convert and purchase your subscription. The math: 1,000 X 1% = 10 of those who saw the post might purchase a subscription

Calculate LTV + CAC

A customer’s Lifetime Value (LTV) and the cost to acquire them (CAC) are extremely important metrics to track overall, and are necessary to know when calculating your influencer marketing budget. You can learn more about these metrics, and others, in our “Key Performance Indicators for Subscription Boxes” post on the Subscription School blog.

To make, we need to know two things:
Subscriber Lifetime Value (LTV) = The total $ amount attributed to the average customer throughout the lifespan of their membership.
Customer Acquisition Cost (CAC) = The $ amount you spend acquiring a new customer.

For this example, we’ll assume the following for calculating LTV:
Box Cost = $45
Profit Margin = 35%
Average Customer Lifetime = 4 months
The math: $45 X .35% = $15.75 X 4 months = LTV of $63

Now, we divide our LTV from above ($63) by 3. Why? Because the ideal CAC:LTV ratio is 1:3 – meaning, for every dollar you spend on acquiring a customer, you should be making 3X that in the LTV.

Calculate Influencer Marketing Budget & Profit

Now, we’re ready to calculate the budget we have to work with this influencer. To do this, multiply CAC by the # of estimated conversions.

The math: $21 X 10 = $210 influencer marketing budget

…and what will your profit be should those 10 new subscribers actually convert? Subtract the CAC for those 10 potential conversions from the LTV for those same 10 potential customers.

The math: ($63 X 10) – ($21 X 10) = ($630 – $210) = $420 profit

Having the Right Payment Structure

There are several ways to pay influencers for their service. Some offer the potential to make your budget go further.

Upfront payment: Upfront payment in full is a common payment option. You agree a fixed rate for the content with the influencer and pay on delivery. This is the best option if you expect content to do very well and you’re able to agree a competitive price.

Results-focused payment: Some influencers like to be paid based on performance. Methods for measuring performance include the number of likes and shares or the number of sales generated. This method is beneficial if you’ve misread a market and the campaign under-performs, as you don’t have to pay for the failure. However, if the campaign takes off you may find a huge amount of your budget gets siphoned away.

Payment in goods: Some influencers, especially micro-influencers, may be happy to take on a project to receive early review products or access to free services. They use the sponsorship to get products they want and to build their own audience. Of course, as competition for the best influencers becomes fiercer, you may find it increasingly difficult to strike such a deal.

Making Cost-Effective Content

When it comes to influencer marketing campaigns, one of the biggest costs is often content creation and paying for influencer services. However, there are ways to get more value our of your content, or even to create content at significantly lower costs.

Reused content:
You’ve paid an influencer to create a post. The influencer has done exactly what you asked and shared the content with his or her followers. What now? If you leave it at that, you really aren’t getting the most out of the money you’ve spent. Reusing content has the potential to improve its reach and generate a better return on investment. Make sure you share videos and photographs on your own social media pages, and recycle content and quotes for your newsletter. It may even be possible to translate some information for use in more traditional advertising, such as a website banner advert. Any loyal fan has the potential to be a brand influencer. Encouraging customers to share their own content means you get genuine, authentic endorsements from the people who matter most.

Influencers produce fresh content every day, as it’s essential to stay relevant and drive engagement with fans. Not every post they make is sponsored. Some products they use or recommend may simply be products they like, or which they think their audience would like to know about. For example, beauty influencers are always sharing fresh makeup looks, using a range of products they might not necessarily be sponsored to recommend. An influencer using your product is a free endorsement for you to mention and link to in your own content. Use social media listening tools to identify when your brand gets mentioned, and make the most of every instance.

Analyzing Data

For an influencer marketing campaign to be successful in the long-term, it must be data-driven, so invest in good analytics. At the start of the campaign you need to determine your metrics for success and find a way to quantify them. For example, your metric may be engagement, with success measured by the number of likes, comments and shares your sponsored post receives. As the data starts coming in from your campaign, analyze it carefully. Identify what’s working and what isn’t and adapt accordingly. Emerging trends and patterns make it easier to invest your budget wisely as your campaign progresses.