As an industry, one of the biggest pain points that both marketers and influencers face is how much inconsistency there is in how much to price a sponsored piece of content.
That said, one of the major benchmarks we can use in evaluating the budget that should be put towards an influencer campaign is by using the pricing metric cost per impression (CPM). As marketers and brands know, you can’t fully regulate the algorithm of many social media platforms, which is why using CPA (cost per acquisition) is a very difficult benchmark to use to price your sponsored piece of content, because it’s never the same. One day your post could reach millions of people, and drive hundreds of orders, and one day it could fall flat and the post drives minimal orders.
With this in mind, using CPM metrics, much like the rest of the media landscape, is crucial in the growth of the influencer marketing industry, as it will create standardization in the rates influencers charge, as well as making sure that marketers are seeing the ROI on their investment in influencer marketing.
So how do you calculate CPM or Cost Per Impression? Simply, divide your total spend on your CPM campaign by the amount of impressions to get your cost per impression. $1000 ad spend / 357,000 impressions = $0.002.
Based on our 2020 averages, we can anticipate that marketers spend just under $.20 per impression.
So why is using CPM as a way to standardize rates in the influencer marketing so important? Well, because as the industry has evolved, one thing that hasn’t happened, is creating any sort of rate standardization. Some influencers charge nothing, and some charge noticeably higher rates.
So how do you understand which influencers will bring you the best CPM rate?
For brands, you want to book an influencer that has an engaged audience. As we all know, it’s not just about follower count anymore. We suggest to look at the prospective influencer’s views and impressions versus their follower count. Pulling impressions and unique impressions will give you an idea of how their audience is interacting with their content. On average, you want to see that over 30% of an influencers audience actually sees their content. That’s how you know it’s a powerful influencer to work with..
From there, use the CPM formula to determine what their rates should be based on their backend impressions!
Why CPM rate is important for influencers.
For influencers, using the CPM rate is crucial for negotiation. When negotiating with a brand, show them your backend impressions. From there, take your average rates, and again divide that by the number of impressions the brand can expect to see. If the cost per impression is under $.20, your rates for that project are completely fair.
When pitching brands include the amount of impressions you receive for both stories and in feed posts. This is crucial when figuring out how much to charge for your content. Check out this comprehensive Instagram pricing guide to learn more.
As we move to make this industry more qualified we must standardize the pricing that brands and influencers agree on. Using CPM to come up with the price of content and reviewing the numbers that the content actually produced is just one step in the right direction. Have any questions about pricing? Send us an email at firstname.lastname@example.org! We are here to help.