Back in the early days of influencer marketing, brands viewed agency services as a commodity and paid flat rate fees.
Those days are long gone — and yet like little else in our ever-changing industry, this outmoded commodity pricing model remains. Now is the time for an industry-wide shift to establishing long-term, retainer-based pricing that matches the bespoke brand planning, agency-minded partnerships that have now become the norm.
But this can only happen together. The entire influencer marketing ecosystem, from agencies to influencers to brands, needs to embrace an agency-based pricing approach. This means shifting from commoditization toward recognition of the strategic, creative, and consultative value agencies contribute to campaigns.
Hourly Pricing VS Flat Fee Costs = More Transparency
What would this change involve? First of all, influencer and advertising fees would become pass-through out-of-pocket (OOP) costs. An influencer agency would bill hourly for all work executed, with rates predetermined and approved by the client.
In the traditional model of influencer marketing, pricing is often opaque, with agencies operating on a flat-rate basis. Here's a typical breakdown:
In this conventional model, all the client sees is the final figure — a bundled price without clear visibility into where their money is going.
I propose a new, more transparent model:
This transparent pricing model not only enhances trust but also enables clients to understand precisely where their money is going. It's a change that could lead to better collaboration and more informed decision-making in the industry.
This model would bring many compelling advantages — for instance, finally making fee transparency crystal clear. Currently, influencer fees are often confusing, scattered, and inconsistent, with hidden agency margins contributing to the chaos. The new model would demystify these costs, promoting fairness and helping to rectify potential rate discrepancies faced by creators of color.
Transparent, hourly pricing would also help brands to evaluate influencer marketing agencies on a level playing field. Selection would be merit-based, determined by creativity, responsiveness, and expertise, rather than desperate attempts to underbid the competition, sacrificing margins as loss leaders to secure business.
Better Finances, Better Due Diligence
This much-needed transparency would extend to financial reporting too. In an era characterized by rapid consolidation and acquisitions in the influencer space, a streamlined, open-book approach could bolster the appraisal processes.
For external observers — whether it’s banks, lenders, potential investors, or potential acquirers — this model would simplify the task of reviewing an agency's financial health. It allows for more consistent, accessible, and easier-to-understand financial statements, fostering trust and aiding informed decisions.
Time for a Change
In essence, brands and agencies alike should be reconsidering the traditional commodity-based pricing model in the realm of influencer marketing. As the industry evolves and grows more complex, transparency, fairness, and merit-based competition are key to future-proofing our agencies and better serving our clients. It's time to disrupt the status quo in favor of better business practices — and collectively set a new standard for the dynamic world of influencer marketing.