With the development of the internet society, the success of social media marketing advertising is very evident. Among them, influencer marketing is gaining attention due to its great benefits.

 

It's a cost-effective advertising method that can achieve high CV impact at low cost, but how influencers are rewarded will also affect results. There are three types of remuneration, performance-based remuneration type and fixed remuneration type, and hybrid type which uses both.

 

In this article, we will compare and explain the types with a focus on performance-based influencer marketing.

 

What is performance-based influencer marketing?

 

Influencer compensation is central to the cost of implementing influencer marketing. Here, let's take a look at performance rewards (affiliate rewards) which are the core of online advertising.

 

When practicing influencer marketing with performance rewards, it is possible to set out a detailed CV (conversions/achievements).

 

In social network advertising, there are different CV settings for performance-based advertising. As the main conversion setting, you can set the following goals.

 

●     Purchase of goods and services

●     Acquisition of business negotiations such as inquiries and document requests

●     Free trial

●     Application for sample

●     Event application (securing prospective customers)

●     Member Registration

●     Mail Magazine Registration (Protected Users)

 

You can freely set other CVs, but the point is that you only pay when you achieve the conversion you set. For companies requesting advertising, a fairly clear marketing strategy is possible. The biggest characteristic of performance-based influencer marketing is that "costs and results match numerically".

 

A unit price is set for each success fee. For example, if you sell a beauty product with a sales price of $1000, you will receive a $100 performance fee. The price of this unit is negotiated between the influencer and the client.

 

Since the difficulty of achieving results varies depending on the conversion material set, it is important to set a unit price that both parties can agree on for each individual project.

 

Main reward items

●     Rewards are generated for the number of "likes".

●     Number of Plays: Rewards are generated based on the number of times the pasted ad video is played and for how long.

●     Billing per click: Billing for each click on embedded banner ads

●     Remuneration accrues according to the number of products purchased

 

These performance rewards are typically used by affiliates who run blogs and advertising sites. But recently they have also been adopted as a reward system for active influencers on TikTok and Instagram.

 

This is because there is a growing need to enhance the branding effect as well as the response to advertising that increases awareness of the products and services offered by companies. It is possible to improve sales performance by implementing cost-effective affiliate-type and performance-based advertising with highly influential influencers.

 

Next, let's summarize the pros and cons of influencer marketing based on performance-based compensation

 

Advantages

Performance-based influencer marketing has three main benefits.

 

1.    Increase cost-effectiveness with precise conversion settings

2.    Avoid wasting money

3.    Improves the quality of influencer creatives

 

1.    Cost-effectiveness can be improved with precise conversion settings

If the reward type is based on cost per follower unit, it may be difficult to clarify advertising objectives. The advertising materials deployed will also vary greatly depending on product name recognition and sales promotion. Combining objectives with reward systems clearly defines impactful content.

 

In addition, it is also an advantage for the client to numerically judge the level of achievement, and this has the effect of avoiding ambiguous results.

 

Avoiding wasteful expenses and reducing corporate risks

Companies that practice influencer marketing often run into financial problems. Offering rewards per follower tends to be expensive if the desired conversion rate is not reached. However, this problem is solved by making it a result-based reward type.

 

Also, even if the number of followers is insufficient due to budget constraints or the desired results cannot be achieved due to inconsistencies, a system that rewards the results will avoid wasted costs.

 

Improving the creative quality of influencers

The tricky part about social media advertising is that it doesn't mean "influential with lots of followers = high-performance rate". Often, the expected PR effect is not achieved, which does not lead to increased sales.

 

This is a problem due to the lack of completeness of the ad content posted and the mismatch of influencers.

 

For influencers who receive a request, the leeway to make award decisions can make it difficult to maintain motivation to increase the impact and quality of content. Also, immaturity that is not familiar enough with influencer marketing also determines the results.

 

Thus, if you are only rewarded by results, influencers can be expected to focus on the perfection of ad content and focus on creating results that emphasize performance as much as possible.

 

Disadvantages

Pay attention to the following four disadvantages of performance-based influencer marketing:

 

1.    It's hard to secure highly influential influencers with performance rewards

2.    The reward for achieving the result will be more than the fixed reward.

3.    Total advertising spend is difficult to estimate

4.    Conversion value may decrease

 

1.    It is difficult to secure highly influential influencers with performance rewards

Not only is influencer marketing but also social media marketing; those who work in advertising seek fixed rewards rather than performance rewards. This is because the barriers to achieving goals are high with performance rewards and difficult to lead to income.

 

If the product is popular, it will be easier to collect clicks and sales, so the performance fee unit price will be set quite low. On the other hand, the reality is that high-value products or low-profile products with little exposure won't get likes or even play videos.

 

Rather, specific reward types, where rewards are given based on the number of followers, are more attractive to influencers. Influencers with more followers prefer fixed rewards over performance rewards.

 

2.    Compared to fixed rewards, the rewards for achieving results tend to be higher.

There are many cases where it is difficult to achieve conversions through social media advertising. Thus, the unit cost of performance awards is not cheap at all. Pay special attention that the unit price for sale will be more than 10% of the price.

 

When we used popular influencers to increase conversion rates, we found that the more popular the influencer, the higher the unit cost.

 

Also, thanks to popular influencers, branding will be promoted and compensation for influencers will increase as results improve. As a result, there is a risk of cost increase.

 

3.    The total amount of advertising expenditure is difficult to estimate

Performance-based rewards are paid when results are actually achieved. Thus, there are times when it is difficult to properly set a budget that divides time.

 

Of course, it is possible to stop the project when the budget is reached, but the disadvantage is that it is not possible to schedule.

 

4.    The quality of conversion may decrease

For influencers to receive rewards, the primary goal is to increase profit margins, and sometimes they try to create content that targets simple results rather than post quality. In that case, the normal application of the result will not be possible and the result will not be generated.

 

In influencer marketing, it's rare to increase sales by posting creative posts focused on overselling, and even increasing sales may not gain fans or improve the company's credibility.

 

Summary

Influencer marketing is a very interesting advertising method in the digital market. It is becoming a major media for all age groups. As the number of users who dislike existing ads is increasing, it can be said that this measure is going to be relatively effective.