When a social media influencer is posting a brand deal or integration, there's a few different ways to structure the compensation. The most common versions of compensation are some mixture of flat fees and/or contingent compensation.
Flat fees are pretty straight forward; influencer gets paid X dollars to make Y number of post(s). In my experience, the first offer a brand makes is rarely their best offer. This is especially true when the brand is making an offer to a relatively new influencer who may not know their worth. Influencer clients are always shocked when they hold their ground and find out the brand was always willing to go a lot higher.
Contingent compensation relates to any form of compensation that is payable only upon the occurrence of a specific event. To put it simply, brand will pay influencer X more dollars if Y happens as a result of the post. Some common forms of contingent compensation include view bonuses, engagement bonuses, percentage of the sales as a result of the post, and percentage of the ad spend directed towards the post.
View and engagement bonuses are exactly what they sound like, if the post hits X number of views, likes, comments, and/or shares then the influencer will receive Y compensation. Most brands and influencers like view and engagement bonuses because if the post is a success and everyone is winning as a result of the post, then nobody has a problem shelling out additional compensation. View and engagement bonuses exist in other areas of entertainment, for example when athletes receive performance bonuses or actors get nominated for awards.
Percentage of the sales are similarly self-explainable. The influencer's compensation on this is trackable through a direct link on the influencer's social page or directly on the post where viewers can click to purchase. Most influencer reps aren't fond of this type of revenue being the main source of income for the influencer on the deal because the trackable link doesn't tell the whole picture. How many purchases are being missed because the viewer took out their computer to make the purchase, decided to buy down the road, or told their friend about the product who then made the purchase? Advertisers are paying for exposure and hopefully direct purchases. Exposure is a huge part of advertising and the piece of the puzzle that gets overlooked in a percentage of the sales deal.
Another area of revenue for the influencer that often gets overlooked is negotiating for a percentage of the advertisement spend attributable to the post. A lot of brands like to include language that they have the option to boost the post through whitelisting or utilize the content as some other form of advertising. Brands do this because they usually make a bunch of similar influencer brand deals at the same time. Brands take the content that gets the best traction and throw money behind it to get more additional exposure and sales. Keep in mind that the brand isn't going to exercise the option with every influencer on a particular campaign. If a brand exercises its option to throw additional money behind content because the creator made the best content, then it makes sense that the influencer should be rewarded for having the best content. As such, the influencer should negotiate for a percentage of the additional advertisement spend directed toward their post (typically between 5% - 20%).
At the end of the day, every deal is different and it really boils down to the interests of both parties. For the influencer, it's generally wise to have a base flat fee and some kind of bonus compensation. This way the influencer is covered for taking the time to make the post and gets rewarded when the post is a big success.
Nothing in this post intended to be legal advice and should not be taken as legal advice. Always consult with your attorney for legal advice. Feel free to reach out to my office at (424) 202-4239, [email protected], or pittentertainmentlaw.com.
