A friend of mine’s company is on the verge of potentially acquiring a company whose major source of revenue is a couple of Instagram accounts with a large number of followers. I won’t be sharing those exact accounts – but I will say that the real question at play here is – “are these social following TRULY valuable?”
- Does having a 100’s of thousands of followers on Instagram drive real revenue?
- Does a company that depends on the Instagram algorithm (or Twitter, or Facebook, or whatever’s next) really retain serious value, and is it something you can count on into the future?
- How do you quantify that value? Is it investable?
5 Fast facts about the value of a social media following:
- On Instagram – companies will often pay $10 per 1,000 followers you have, or $1,000 per 100,000 followers.
- On Youtube – influencers will usually receive between $.5-$.10 per view, which equals out to about $20 per 1,000 subscribers, or $2,000 per 100,000 subscribers.
- People paying for fake followers and engagement is rampant in influencer culture and fraudulent activity is costing advertisers $1.3 billion this year.
- The idea that you could pay people who have followings to mention your product – or use P.R. to get solid mentions in the media has been around for much longer than ‘influencer culture’ and an easy way to get the value of following if you are able to see the amount of impressions an account is receiving is CPM x Impressions = this is referred to as “Earned Media Value.”
- Once you have the Impressions an account is getting in a month – you can compare that to the general going rates of a platform – if you just paid them directly for them. An advertiser might have a CPM of $4. This means they pay on average $4 to show their ads to 1,000 people, and while a typical CPM (cost per thousand impressions) on Facebook Ads will be around the $10 mark today, it was closer to $5 on Instagram.
What is an Instagram influencer?
Do you feel like all you see on social media these days is advertisements and influencers doing advertisements? That’s probably because you do.
One thing I’ve always been curious about is why a certain person gets chosen, and honestly, I’ve been wondering how much they get paid to do this. It couldn’t be much right? All they do is take a quick picture and put it on their social account. Over half the world does that for free already.
“Influencers are Instagram users who have an established credibility and audience; who can persuade others by virtue of their trustworthiness and authenticity. Your brand’s influencers are users that employ your brand hashtag who have the largest number of followers.” – Pixlee – User Generated Content & Influencer Platform
Influencer marketing has caught on fire in recent years with the explosion of social media and lack of reach brands are getting in commercials and magazines (probably because we’re looking at the influencers on our phones 🤭).
So many marketers are using this as their platform to reach their audience, and it’s working, it’s working incredibly well.
How do influencers and companies monetize a Social Media following?
Having a huge following and social status can be great and all, but what are ways for you to make use of that large following and maybe pick up some extra cash? Well, let’s take a look at what we can work with.
- Sell online courses – Online courses are more popular now than ever before. People are willing to take the time and expenses in order to learn something they are passionate about all inside the comfort of their home, or wherever it is they participate. Your social media is going to be the key driver of advertising for this, as your followers are following you for a specific reason, and are looking for you to share your knowledge.
- Advertise for affiliate products – Influencers get the chance to earn some extra cash by showing companies products/services and offering a discount code for the consumers to use at checkout. These affiliates earn commission in the promotion of the products/services sold through their promotion efforts. For people who have a specific niche, taking part in affiliate marketing is an easy way to monetize your social media and get some extra cash.
- Participate in influencer marketing – Influencer marketing is everywhere right now. No matter where you look on social media, chances are you’ll run into it within the first minute. Companies are using this more and more now as it gives them a level of visibility that they can’t normally get to on their own. While attracting the big brands isn’t easy (unless you’re a Kardashian) building a group of followers around a specified niche can go further than you think. As you build your reputation within your niche, it is likely that companies will start to reach out to advertise their products/services.
- Speaking engagements – Speaking engagements can be a great way to help you increase your authority on social media and also gain a larger following. In order to get offered the opportunity to speak, you will need to have a large authority in your respected niche, but speaking will be a tremendous boost in your reputation and well worth your while.
- Collaborations with other influencers/companies – By doing collaborations with other influencers, especially the most popular ones, you will gain a bigger following and attract the attention of brands that are thinking of working with that influencer. Working with companies will give you the chance to get your foot in the door, and once you build up your reputation enough, they may offer you incentives for advertising and videos you do for them.
How much of an asset is it?
When it comes how much your following is worth, there are a lot of factors that come into play, such as:
- The number of followers
- The amount of engagement their posts get
- The way the advertisement fits in with their brand and following
- The number of posts you are going to do
- The price is different for an image, video, audio, etc.
- The effort that is needed from the person with the account
- The platform of the ad being promoted
There are three different levels of influencers that determine the worth of your social account. They are micro-influencers, power middle influencers, and macro-influencers.
Micro-influencers are going to have the most authority in a specific niche of people. While they do have a smaller following, the followers they do have are very dedicated to this influencer. Micro-influencers are very popular because of the high levels of engagement they are able to have.
Power middle influencers will have an audience that ranges from 10,000-250,000, and typically have experience working with other brands.
Macro influencers are going to be the top dog of the social media world. These are going to be your celebrities, and the most popular people on Instagram, YouTube, Twitter, Facebook, etc. Their followers and subscribers will range anywhere from 250,000 and higher.
The outreach of macro-influencers will dominate the reach of micro and power middle influencers any day of the week. While there is a larger reach of an audience for macro-influencers, it does have lower engagement and higher cost and could be viewed as more of a shotgun approach.
While there is no set algorithm for these numbers, here is a rough set of numbers reporting the ratio of followers to how much you are paid as an influencer.
- Instagram Influencers:
The amount of money you receive will depend on the following you have. You can generally earn around $10 per 1,000 followers you have or $1,000 per 100,000 followers. Below are some examples of what different amounts of followers can bring for you.
- If you have 2,000 to 10,000 Instagram followers, you can receive between $75 to $250 per post
- If you have 10,000 to 50,000 Instagram followers, you can receive between $250 to $500 per post
- If you have 50,000 to 100,000 Instagram followers, you can receive between $500 to $1,000 per post
It was reported that 66% of people using influencer marketing on Instagram said they pay under $250 per post, while 27% of that same group said they paid between $250 and $1000.
- Snapchat Influencers:
Snapchat is usually done on a per-view contract because the audience size isn’t always available on the platform. Influencers will get around $.10-$.35 per view.
Shaun McBride, who is a Snapchat influencer with 700,000 followers, reported to the New York Times, that it is not an uncommon occurrence for people of his status to charge $10,000 for a story.
- YouTube Influencers:
Youtube can play out a little differently, as it is usually done per view. Influencers will usually receive between $.5-$.10 per view, which equals out to about $20 per 1,000 subscribers, or $2,000 per 100,000 subscribers.
How much money do influencers make from brands?
When it comes to big celebrities and influencers, they can make some serious cash. Kim Kardashian is said to charge $250,000 for an Instagram photo…….. just one photo. I know you’re reading this Kim, but are you kidding me?
She’s not even the highest-paid one either. Her sister, Kylie Jenner, is the highest-paid celebrity and reportedly makes around the $1 million marks per post and has the most lucrative endorsements on Instagram. Selena Gomez and Cristiano Ronaldo are not far behind, as they made around $800,000 and $750,000 per paid post, respectively.
How enduring is a social media following?
- People who gain traction early in a particular platform – tend to stay around, particularly if the account puts out consistent, quality content that gained it initial traction at the beginning.
- AUTHENTICITY is very important, and personality is a huge part of what drives account growth – to work with an influencer, you really want to allow them to be part of the strategy, not just give them a photo and tell them to put it up on their account.
- Because most people follow accounts because of the personality of the influencer if that influencer for some reason was gone – that account’s engagement might go significantly down. (Similar to the key man problem in investing – where the entrepreneur was driving the companies success, and if they were gone, business could be significantly hampered.)
The state of influencer marketing is booming, and marketers are taking heavy notice with their budgets for influencer marketing nearly doubling. According to the influencer marketing hub, “59% of marketers intend to increase their influencer marketing budget in the next year”.
With the amount of business, they are generating through this form of advertising, it is no wonder they are taking full advantage of the times.
Businesses are said to be making around $6.50 for every $1 that they spend on influencer marketing.
It was also found that 6 in 10 YouTube subscribers say they would follow advice and suggestions from their favorite influencer or creator on what they should buy.
Another impressive statistic from the BrightLocal Local Consumer Review Survey, 88% of consumers say that they trust online reviews just as much as personal recommendations. This really shows the type of high-level influence that influencers can have over their audience and why they try to stay authentic with the following they have so they don’t come off as a fake and lose trust.
What are the relevant key metrics for e-commerce businesses?
When working influencers that sell eCommerce, there are a lot of different metrics to look at.
Beyond engagement numbers it comes down to how much are they actually selling.
After all, you want to be sure that you are doing everything you can in order to make your business run right. The most relevant metrics you can look for are customer acquisition costs, sales conversion rate, email opt-in rate, and average order value. These metrics will show you how engaged your audience is, the value of your customers, and the effectiveness of being able to convert leads into sales.
- Customer Acquisition Costs – Acquiring a new customer is something that will naturally cost something. This is called your customer acquisition cost. You can get the customer acquisition cost by taking your total marketing spend divided by your number of customers. Your acquisition cost should be less than your average order value which means you will make money off of every new customer.
- Sales Conversion Rate – Simply put, your conversion rate is the percentage of visitors who make a purchase.
- Email opt-in rate – One of the most powerful tools to increase repeat business for eCommerce stores is email marketing. For this method, you want as many people on your list as possible, even if they don’t buy any products. Track your total opt-ins and where your opt-ins are coming from.
- Average order value – The average order value is the average value of each purchase. To find yours, divide the value of all sales by the number of carts you have. You want your customers to spend as much as possible so you can earn as much as possible, so you should know your average value to try and find new ways to raise it.
How does ‘influencer’ effectiveness change per industry?
When it comes to different industries, there are some that use social advertising more than the next. This has a lot to do with who they are able to reach and how.
For Millenials, the content that they are most interested in is entertainment and information. Some great ways to capture their attention would be through YouTube and podcasts (which are also really blowing up), as these two fit perfectly in that niche.
For Gen X, they are going to be enticed by different promotions and contests, so something like “like and share with three people to enter” posts will be up their alley. The best places for this would be Instagram and Facebook for this type of message.
The Baby boomer’s attention is captured by promotion and information, which is basically a blend of the Millenials and Gen X. The top choices for this generation would be facebook and podcasts.
The share influencer marketing varies by industry, as it works better for some than it does for others. Here is a list of the share influencer marketing has in their respective industries.
- Social Media – 44%
- Food – 80%
- Health – 46%
- Music – 26%
- Entertainment – 43%
- Business – 17%
- Parenting – 65%
- Lifestyle – 74%
- Pop Culture – 20%
- Travel – 40%
- Fashion – 47%
- Video Games – 20%
- Beauty – 52%
- Technology – 42%
- Advertising – 30%
–What are the relevant key metrics for other businesses?
- ROI – ROI is the most common formula and probably the easiest to understand. ROI is a measurement tool used to calculate the effectiveness and value of an investment. It shows the gain and/or loss of an investment by comparing and measuring the amount of return on investment with the investment costs.
- Conversion Rate – The conversion is the number of people who have purchased something from your business. The higher your conversion rate is, the more successful your marketing campaign is. To measure your conversion rate, use this formula:Conversion rate = (conversions / total visitors) * 100%
- Customer Acquisition Cost – Cost per acquisition is what you pay to get a new customer. Many companies use CPA as a deciding factor in how they run their next campaign. To measure your customer acquisition cost, use this formula: Total marketing costs (MCC) / Total customers acquired (CA) = CPA
- Lead Generation -Lead generation is when you attract potential users who are interested in your company. A lead is at the beginning part of the buyer’s journey and is a critical part of your success as a business.
What are the key metrics to value a social media following?
When it comes to key metrics to keep tabs on in your social media account, there are four that I believe are the best, which are follower count, likes, shares, and comments. These are great for not only telling you how much reach you have
- Follower count – One of the easiest ways to find out if you are reaching enough people is to see how many followers you have on each platform. It is important to remember that just because you have a large following, doesn’t mean that it will do much for your brand. You want fans and followers who engage with what you put out, but knowing your company has that kind of reach is a good place to start.
- Likes – Likes are a great way to generate attention for your brand as people like to associate themselves with things that are popular and trendy. This means that a post will receive more engagement when it receives more likes. Likes are also a great way to track and improve the content you are putting out and find what works best for your specific niche.
- Shares – Shares are a huge indicator of brand loyalty and is true engagement from your followers. It shows that they are willing to recommend your brand to their own friends and followers which is huge, especially since people trust their friend recommendations more than any other source.
- Comments – The whole point of social media is to engage with your customers. If you are putting out content that interests, relates to, or informs your followers of something, it can help get conversations going, not just with you, but with other fans and followers as well. Odds are that you’ll get some critics and haters on your content at some point as well. This is a good thing, as it they are taking the time out of their day to bring more notoriety to you and your brand. You will also see a lot of comments about the impact you are having on people and their lives.
What is “Fake Engagement” and how do you sniff it out?
What exactly is fake engagement? It is the buying of fake followers or engagement to give people the illusion that they are more popular online than they actually are.
Another way fake engagement takes place is through social spam bots that give people more followers, engagements, and ultimately, more money. The bots are a set of algorithms used with social media profiles to make engagements with other people’s content attracting engage profiles linked to this algorithm containing both real users and bots. These bots usually go after content users with a connection to whatever it is the bots are looking to sell.
A quote from CNBC tells us what these fraudulent activities are costing marketers. “To appear more influential than they actually are, influencers can buy fake followers and pay for bots to like or comment on their posts. That fraudulent activity is costing advertisers $1.3 billion this year, according to a report from Cheq, a cybersecurity company focused on the digital media space, and the University of Baltimore economist and professor Roberto Cavazos.”
- A follower to engagement ratio – One sign to look out for when it comes to sniffing out fake engagement is the follower to engagement ratio. When accounts have fake followers and bots, they will have a noticeably low engagement rate compared to their massive following. Another thing to look for could be having consistently identical rates of engagement rates on their posts because of purchasing this engagement for each post.
- Analyze engagement quality – The engagement rate can tell a lot about the authenticity of the influencer but is not a set in stone method. Buying fake engagement has become a popular way for influencers to bring up their engagement rate, however, the quality of that engagement is not so great. This means that you will need to go through the engagements manually to see if they are just getting a ton of random comments that have nothing to do with the posts they put out. You will most likely notice a lot of emoji comments, as well as a significant number of posts that are generic and could be used for any post.
- A sudden spike in follower count – Another sign to look out for is a sudden spike in follower count. This spike most likely only resulted in all the bot accounts that started following them because they paid to get more followers. Most influencers will have a steady increase in their followers, but some are a different case. Sometimes spikes in followers come as a result of a post going viral. But having something go viral is not exactly an option for everyone. And in most cases, their followers will continue at a gradual pace after the spike takes place. Also checking for a sudden spike with a drastic drop in their follower count is a good way to point out fake followers.
- Analyze audience quality – The quality of an audience is also a big factor that can tell you a lot about the authenticity they have. Since every social profile is susceptible to bot followers, expecting all real followers may be unrealistic.
How do you calculate “Earned Media Value”?
What is “Earned Media Value”
“But in contrast to paid media, earned media is unpaid. Your brand’s customers, brand advocates, and fans talk about your brand willingly without being paid for it. Thus, earned media is a form of word-of-mouth. This form of media value is particularly important for brands because it shows how many people talk about you apart from your paid marketing efforts.” – Brian Sanchez on Quora
Why is “Earned Media Value” hard to measure?
No defined standard when it comes to measurement.Measuring EMV differs for each brand, depending on campaign goals, content type, or communication channels.
Target audience is often neglected.Brands often focus on metrics, such as social following and engagement, rather than brand resonance. Without access to a niche audience through influencer relationships, engagement becomes merely social noise without conversions. – Media Kix
Earned Media Value – find the cost per impressions on that platform if you were doing paid ads, then:
Earned Media Value = CPM x Impressions
Earned media value is a calculation used to calculate the importance of branded content that is gained from marketing efforts. This includes things like blogs, reviews, social posts, referrals, influencer marketing, and more.
The calculation can be a useful formula for calculating a brand’s online word of mouth and see how useful it really is.
Some final thoughts on the true value of a social media audience
“It’s really hard to measure true influence, but is nonetheless exceedingly important.” – Duane Foster, The Vice President of Organic Search Operations at Bruce Clay
There are calculators online that give you the ability to see how what your media value is. Here are a couple of links if you want to see what yours is worth:
- Instagram Money Calculator
- Upfluence’s ‘Earned Media Value’ dashboard for campaigns
It is crazy to see how much money you can make off of a social media account.
But then again – anyone who can convince people to buy something at scale will always have more opportunities to wield that influence, particularly if they can do it in a way that feels authentic and creates an impression that people identify with and a community people want to be a part of.