Despite all the glamour and visibility of being an influencer on social media, it is not always an easy job. In fact, behind the rose-tinted Instagram photos and dazzling YouTube videos, there is a lot of work going on.
Almost every influencer is deeply familiar with just how hard it is to build an audience and an online brand. To build a genuine connection with your followers, and to grow that to tens or hundreds of thousands of followers along the way, is no small task.
So what exactly does an influencer do?
Well, in many ways, the same thing a marketing agency does:
- An influencer creates content, which grabs attention and engages their fans; and
- An influencer shares content across various social media platforms, like Instagram or Twitter or even their personal blogs
But that’s not all! In fact, influencers also run into many of the same issues that a full-fledged business has:
- Influencers have to make money
- Influencers have overhead: answering emails, organizing their day, negotiating brand deals, doing taxes, and so on
In this guide, we’re not going to focus on how to create amazing content, or the best ways to get that content in front of your followers. As the influencer, you probably know best!
But at EarnLocal, we can help when it comes to the other stuff.
- Like, how do you make money?
- And how do you organize the rest of your business so that you can spend your time focusing the stuff you care about most: creating and sharing amazing content?
In the coming weeks, we’ll have guides for how manage your business, how to use various software tools, how to manage your brand and how to grow your following.
In this guide however, we’ll tackle the unavoidable question in influencer marketing: how do you make money?
Why do influencers get paid to begin with?
As any influencer knows, being an influencer is real work. While a lot of the job can be fun and exciting, there is a lot of stuff that isn’t.
You still have to respond to emails, you still have go to events you don’t want to, and you still have to spend time doing the things you don’t necessarily want to be doing (such as post-production, research, sales). In many ways, it is very much like an office job!
And just like a real job, being an influencer provides real value. You’re a trusted source of information to your followers – they respect you and admire you. If there are products you genuinely love – and you tell your followers about them – it is a win-win. Your followers get products they enjoy, and you help sell more of the products you love.
Businesses love when trusted sources of information sell their products. Because, after all, trust sells!
Influencers should be compensated for the work they do because it provides real business value. When influencers promote brands or products or places they love, followers listen! And that drives results, which businesses pay for.
Now, before we move on, we want to emphasize that money should not the only goal of an influencer. Money is important! We get it. But it’s not everything.
The most important asset for an influencer is trust. As soon as followers lose trust in the people they admire, they will no longer believe in the product or business recommendations. When influencers push products they don’t believe in – or sometimes even outright scammy products – followers can tell. And they’re quick to out influencers who have “sold out” – people who have continued to push products just for the money, and not for the benefit of their followers.
We recommend not selling out. Yes, influencers should focus on getting paid, but they should not focus on getting paid so much that they lose sight of what matters most: the trust of their followers.
The best way to not sell out is to only promote products and services you genuinely love. Sometimes it is hard to turn down a sponsored post, or an affiliate link which offers a high commission, but if the products don’t align with your brand, you’ll lose the trust of your followers.
At the end of this article, we think you’ll see EarnLocal as a way to promote the stuff you genuinely love, which is in fact a win-win-win: you, your followers and businesses.
Ok - how do I get paid?
Alright, now we get to the good stuff. How do you get paid as an influencer?
There are five main methods to monetizing your content:
- Sponsored content (also known as brand deals)
- Affiliate links
- Merch sales
- PPC display ads
- PPC native content
#1: Affiliate links
Earnings: Medium to high
Brand hit: Low
One of the most popular ways to monetize is through affiliate links. Well, what’s an affiliate link?
An affiliate link is a link to an online product that you put within your content. When followers click the link and buy a product, you earn a commission (that is, a percentage of the sale).
For example, if a lipstick costs $20 and the commission is 15%, you would earn $3 from that sale. After 20 sales, you will have earned $60!
But how easy is it to get a sale?
This leads to what marketers call the “conversion funnel.” Not everyone who sees your recommendation will “convert” into a sale!
Some people may see your post and scroll past it. Others may like it, but not click on the link. Some may click the link, but then not buy the product. Some may click on the link, learn about the product, and buy it a week later (which would no longer be attributed to you).
And finally some may see the post, click the link, and then buy the product. This percentage is your “conversion rate”.
Often in social media, we see conversion rates between 0.5% and 1%. (This is the percentage of people who purchase divided by your total follower count.)
This means that if 1,000 people saw your post, and your conversion rate is 1%, then 10 people will buy a product.
If you were selling that $20 lipstick above, you’d earn $30 (or 1,000 * 1% * $20 * 15%).
So how do we increase that earnings number?
Looking at the formula, we can see that you need to either:
- Have more people view your post (follower count)
- Increase the percentage of people who end up buying a product (conversion rate)
- Use affiliate links for higher priced products (higher than $100 is generally good)
- Use affiliate links with higher commissions (for example 20% or 25% commission rates)
Of all of these numbers, your follower count is most important.
Let’s take a look. If we change the follower count:
- Say you have 10,000 followers, a 1% conversion rate, and you sell $30 products with a 25% commission, then you will earn: $750
- Say you have 100,000 followers, a 1% conversion rate, and you sell $30 products with a 25% commission, then you will earn: $7,500
(Keep in mind that often with higher follower counts, conversion rates can drop substantially.)
Now let’s change the price of the product:
- If you have 10,000 followers, a 1% conversion rate, and you sell $30 products with a 25% commission, you will earn: $750
- If you have 10,000 followers, a 1% conversion rate, and you sell $100 products with a 25% commission, you will earn: $2,500
In general, it’s very hard to sell products over $100 consistently. As a result, growing your number of followers is the best way to increase your earnings from affiliate links.
Affiliate links are great because you are able to search for products on affiliate networks that you want to sell. If there is a lipstick you love, then just find the product and grab its affiliate link. When your followers buy it, you get paid.
As we can see, affiliate links can also provide high payouts. Unlike sponsored posts, where you are paid upfront for future performance, the performance of your affiliate links is directly tied to how much you are paid. This means the better your content, the more you earn!
But there is one major downside of affiliate links.
They’re predominantly used for online products. In other words, if you can’t find on the affiliate network the exact hat you’re wearing, or the keyboard you use, then you can’t sell that product. As a result, affiliate links only work for some types of content, but not all.
#2: Sponsored content
Earnings: Medium to high
Brand hit: Low to medium
Sponsored content is probably the most visible way that influencers earn money. Sponsored content is when a business sponsors (or pays to be in) the content you produce. You feature the brand in your content – whether it’s a YouTube video or a Tweet or an Instagram photo – and they pay you for the brand mention.
Sponsored content can occur on one-time or recurring frequencies. In a one-time deal, the brand will sponsor an individual post. For recurring deals (also known as brand deals), a brand will negotiate some payment structure (for example, once a month or based on certain performance) and pay you for continual content.
In general, sponsored content is limited to influencers with sizeable followings. Most brands look for influencers with at least 10,000 followers, and – depending on the product niche – sponsored posts can fetch between $100 and $500 per post.
Let’s do the math on that: if you produce 4 pieces of content in a week and there are 4 weeks in a month, that is 16 pieces of content. 16 posts for $250 each is $4,000 in a month.
However, keep in mind that you probably need to create content besides exclusively paid content. Otherwise, your followers may think you’ve sold out. So, if you produce 16 pieces of paid content in a month, you actually may need to produce 30 in total!
The reason sponsored content is sometimes hard to get is because it is not – from a business perspective – a particularly easy process.
If you’re a business, you need to:
- Research and find influencers
- Conduct due diligence (such as making sure their followers aren’t fake)
- Reach out to influencers (knowing only a fraction will respond)
- Negotiate with influencers (on price, terms, etc.)
- Pay influencers
- Monitor the performance of the sponsored post
That’s a lot of stuff!
As a result, businesses are often reluctant to engage in influencer marketing, and only do it for influencers with large followings and with whom they are reasonably sure will provide a business impact.
Keep in mind of course that if you’re an influencer, securing a sponsored post is not always easy either!
- You need to build your following and brand
- You must visible so that businesses can find you (we recommend registering on influencer networks)
- You need to negotiate with businesses
- You need to provide them performance metrics from your account and in general respond to their emails/questions/concerns
All things considered, sponsored posts are a great way to monetize if you can get them. Sometimes they can be a hassle to coordinate, but they generally provide the largest cash payouts (such as $250) for a single piece of content.
#3: Merch sales
Earnings: Medium to high
Brand hit: Almost none
Merch, short for merchandise, is another common way for influencers to monetize. Influencers sell their own branded clothing, fashion accessories, jewelry, mugs or anything else you can think of.
Merch sales work just like selling any product.
You source the product from somewhere – for example from a local producer or from somewhere abroad – and then you stick your logo on it. You can also add other slogans, catchphrases or anything you want on the products. They’re yours after all!
When you sell merch, you collect the difference between what you spend on the products and the price at which you sell them.
For example, you may buy 500 T-shirts for $5 each and sell them for $20 each, which would be ($20 – $5) * 500 = $7,500 in sales! Of course, that is just your “gross revenue”. You still need to deduct any other expenses you had, such as website costs, advertising costs, shipping costs or even your time!
The problem with buying 500 T-shirts in advance is that you just spent $2,500 ($500 * 5) of your own money before you even knew a single T-shirt would sell! That is kind of risky. In fact this is called “inventory risk”, or the risk that you buy a bunch of inventory and none of it sells.
So how do you reduce inventory risk?
Don’t hold inventory! This is the world of “dropshipping.”
In “dropshipping”, you basically let someone else hold the inventory for you. For example, a mass T-shirt producer may print custom T-shirts on demand for you as soon as a customer purchases one. This way, you don’t buy 500 T-shirts in advance – you only pay the moment a customer orders.
Of course, this service does not come free.
If you paid $5 per shirt to buy all 500 in advance, you will probably pay around $10 per shirt using a dropshipping service. That means instead of $7,500 in sales, you now get $5,000 in sales. Basically, you paid $2,500 to reduce the risk of you holding a bunch of inventory that doesn’t sell.
Merch sales are a great way to monetize if you have a strong brand. Followers often buy clothes or items from their influencers because enjoy supporting the people they admire. Celebrities like Paris Hilton, Kylie Jenner and Emily Weiss have built enormous product empires, essentially selling merch!
Just keep in mind that if you use a dropshipping service, they may charge you high fees because they take all the risk in case your products don’t sell. And if you avoid the dropshipping service, then you have to manage all of your inventory yourself! (In other words, purchasing it, storing it, tracking it, selling it, shipping it, etc.)
#4: PPC display ads
Difficulty: Easy (after you set it up)
Earnings: Low to medium
Brand hit: High
PPC display ads are ads which “display” on the sidebar or above the navigation menu when you go to websites. These ads are (generally) pay-per-click, or PPC, which means that whenever someone clicks on the ad, the advertiser pays.
For the vast majority of PPC display ads you see, you can’t actually earn money from as an influencer.
For example, when ads are jammed between content on Facebook or Instagram, those are PPC display ads. However, as an influencer, you can’t get paid for those.
On the other hand, you can get paid for PPC display ads on personal blogs or YouTube.
If you have a personal blog, you can sign up for a Google AdWords account and set up your site to display PPC ads. When followers visit your blog, they will be shown ads, and when they click on them, you earn some money.
You can also make money from YouTube ads. If your account has enough subscribers, you can allow for ads to display at the beginning (or in the middle) of your YouTube videos. When subscribers click on the ad, you earn money.
While sometimes you can earn money using PPC display ads, we don’t really recommend them compared to the other options above. Sponsored posts, affiliate links and merch sales almost all consistently generate more money.
In addition, there’s almost nothing people dislike more than seeing display ads. They are obnoxious, irrelevant and fill up the screen with “spammy” information. There’s a reason why people use ad blockers – it’s because of PPC display ads!
We think you should use PPC display ads as a last resort. They can substantially affect how people perceive your online brand, especially if you clutter your content with ads.
#5: PPC native content
Earnings: Medium to high
Brand hit: Almost none
Finally, the last way to monetize is using PPC native content. PPC native content is like a hybrid between affiliate links and PPC display ads. You go to a PPC native network and grab a referral link for a business you support. When followers click on your referral link, you accrue earnings.
They’re similar to PPC display ads because you are compensated per click. However, they’re also similar to affiliate links because they are embedded into the content (or “native” to the content). This means that when you provide genuine information about a product or service, and people learn about it from you, you are paid for that.
The nice advantage of PPC native content, unlike affiliate links, is that they work for things you already do. For example, if you go to a restaurant in NYC, you can grab its referral link and include it in your content. You’re no longer restricted to online products only.
But how much money can you make?
Right now, on EarnLocal, the current “base” rates are $0.50 per click. This means that if you get 100 clicks, you earn $50.
Let’s run the math on this.
Say you post a Tweet that includes a referral link to your favorite restaurant. If you have 40,000 followers, let’s say 2% actually click on the link, or 800 followers. That would translate into $400, or 800 * $0.50 in earnings.
Keep in mind that’s for a single post! Compared to “sponsored posts”, PPC native content offers almost as much (if not more) in earnings but is much easier to set up. There is no contract, no negotiation, no performance tracking you have to do. You just focus on creating engaging content and driving traffic to the business.
When businesses pay for ads on Facebook or Instagram, they often pay $1.00 per click at minimum. This means that the earnings-per-click (EPC) is very likely higher than $0.50 for the businesses you go to.
And finally, how about the brand hit? Does driving traffic to the businesses you already go to and genuinely love hurt your brand? Well, you decide. 🙂
Now, we at EarnLocal should of course disclose that we are a PPC native content network. We pay content creators and influencers to produce amazing content for businesses. If you don’t think PPC native content is right for you, we still highly recommend merch sales, affiliate links and sponsored posts.
If you do want to try PPC native content, we recommend giving EarnLocal a shot!
Creating an account is free and there are never any membership fees. The moment you are approved on our platform, you can start creating content and including EarnLocal links in your content. We’re confident that, using EarnLocal, you’ll get paid for all the work you do so that you can focus on what matters most: creating and sharing amazing content with your fans.