Create The Optimum Influencer Marketing Budget

It’s hard to believe that during the rise of social media, influencer marketing was seen as something of a novelty. But times have changed and virtually every brand is increasing their influencer marketing budget to reach customers in ways that other channels can’t deliver.

A recent 2024 survey of businesses found that nearly 25% said that influencer marketing makes up more than 40% of their total marketing budget. That number truly shows how popular influencer marketing is becoming, but it doesn’t mean that number is the right target for every business.

Brands know they need to focus on influencer marketing, but how can you both determine and optimize your budget to get the most returns possible?

In this guide, we’ll go over the proven steps that successful brands are using to determine their influencer marketing budget. These steps can work for small startups as well as large established brands.

Applying these methods will help you leverage influencer marketing to the fullest and reach the audiences you need to grow your brand.

How Much Should You Budget For Influencer Marketing?

When it comes to any number within a business, there’s not a perfect answer that applies to all companies. Whether you’re talking about profit margins or revenue projections, each business and industry will have unique properties to consider.

However, there are baselines that you can use to put yourself in the ballpark of where you want to start your deliberations.

With your influencer marketing budget, the baseline across all industries is generally between 10% to 20% of their total marketing budget.

This is the average amount and includes both businesses that solely rely on influencer marketing and those that only use it occasionally.

If you’re completely new to setting up your budget, somewhere around 15% is a good starting point to allocate towards your influencer marketing budget.

Some brands may want to go higher or lower and we’ll touch on specific situations below that you’ll want to consider when fine-tuning your budget forecast.

How Are Your Other Channels Performing?

If there are other marketing channels that you’re developing and experiencing growth and a strong ROI, that will impact how much you want to allocate to influencer marketing.

If paid advertisements or other channels are showing growth, you want to stay closer to 10% of your budget for a new influencer campaign.

If something is already working for you and growing, you want to continue to lean into that. So your foray into influencer marketing should be more of a test to gauge results.

If the results are strong, you can compare the ROI and decide if you should take resources from other marketing channels and funnel them into new influencer campaigns.

Your Target Audience Demographics

Another thing to consider is your target audience demographics. While every customer group is represented on social media today, it does tend to skew lower in age than other marketing options.

If you’re target audience demographic skews younger, you may want to budget more of your marketing dollars toward influencer marketing. 

Younger people are getting most of their product and brand information from influencers and social media platforms. This includes product discovery and product research.

If this fits your target customer, you likely want to allocate more than the 15% baseline on influencer marketing.

You’re In A Niche Industry

Some brands operate in niche categories that are difficult to target through standard marketing channels. Whether it’s a specific hobby or lifestyle, finding these audiences is difficult.

Influencers in these niches can often be your only bridge to the audience you need to reach. In these cases, you may want to allocate a much larger portion of your overall marketing budget to influencers.

Niche brands and product categories also have a very difficult time scaling paid digital advertising like PPC or display ads. Once the targeting falls below a certain level as they scale, the ROI starts to crater.

Influencer marketing allows brands to maintain targeting by accessing more micro and nano influencers with the right audiences. This allows them to scale and maintain ROI for their campaigns.

If you operate a brand in a smaller niche, then you want to allocate more resources to influencer marketing. In today’s environment, social media is becoming the only place to reach niche audiences and influencers are the best way to do that.

It’s not unusual for some niche brands to allocate 40% or more of their marketing budget to influencer campaigns for this reason.

Fashion or Beauty Related

There are several industries that are very popular on social media. The most obvious are fashion, beauty, and travel. If you operate in these industries, then you may consider allocating more of your budget to influencers and influencer partnerships.

This is especially true for smaller brands or startup brands. In these cases, you generally don’t have the resources to market through other channels in a way that can yield the ROI you need when you’re on a tight budget.

Focusing on influencer partnerships will likely offer the chance for the highest return possible on your marketing spending.

What Makes Up An Influencer Marketing Budget?

So far we’ve talked about what percentage of your overall marketing budget should go toward influencer partnerships.

In this section, we want to cover what the actual costs are for an influencer marketing budget so you can start to figure out a dollar amount for your specific situation.

Different campaigns can have a lot of different expenses, but below we’ll outline the most common costs associated with an influencer campaign.

Influencers

This is going to be your biggest expense and it’s the total amount you’ll be paying influencers to promote your brand. 

This cost can vary quite a bit and range from as little as $150 to well over $10K per influencer. This will depend on the audience size the influencer has as well as how many influencers you choose for your campaign.

One thing to always keep in mind is that just because a smaller influencer costs less to partner with doesn’t mean their audience or the results will be lower quality.

If you use proper vetting and analyze each influencer carefully, smaller influencers can yield results that often outpace that of larger influencers.

Their reach may be smaller, but other metrics like engagement or conversions are often going to be higher with smaller influencers.

To start preparing for what you’ll need to spend on influencers, below are the typical costs to partner with an influencer depending on their audience size and other metrics.

Nano-Influencers

• Followers: 1,000 – 10,000
• Average Cost: $50 – $150 per post

Characteristics:

• High engagement rates
• Niche audiences
• Often seen as more authentic

Nano influencers are the most budget-friendly option but they can still provide precise targeting. Many large and well-known brands use nano influencers to help bring authenticity to a wider campaign that utilizes celebrity or mega influencers.

Micro-Influencers

• Followers: 10,000 – 100,000
• Average Cost: $150 – $500 per post

Characteristics:

• Strong niche focus
• Higher engagement than larger influencers
• Good balance of reach and authenticity

Micro influencers are used by brands of all sizes, from small to the largest international brands. They have audiences that are large enough to provide good reach yet are still capable of being utilized for extreme targeting within a niche or customer demographic.

Whether alone or as part of a larger campaign that uses celebrity influencers, micro influencers often provide a good overall balance between cost, reach, and engagement.

Mid-Tier Influencers:

• Followers: 100,000 – 500,000
• Average Cost: $500 – $5,000 per post

Characteristics:

• Broader appeal
• Professional content creation
• Significant reach within their niche

While mid-tier influencers can range in price by quite a bit, most with authority in their field or niche will end up being closer to the $5k price point. 

Some mid-tier influencers with more general content that’s less targeted can be found for less than that. Although care must be taken to ensure your product fits with the influencer’s general audience.

Mid-tier influencers can deliver strong results but you have to maintain your targeting as the audience size increases. This makes vetting more critical as a mistake in this area can end up costing you tens of thousands of dollars if the campaign fails to deliver.

Macro-Influencers

• Followers: 500,000 – 1 million
• Average Cost: $5,000 – $10,000 per post

Characteristics:

• Wide reach across demographics
• Often celebrities or industry experts
• High-quality content production

Macro influencers represent the higher tier of influencer in terms of audience size. These influencers are some of the most sought after so you generally need more lead time to work with them and secure a partnership.

Although, you can sometimes get simple product mentions at the last minute with macro influencers if they have openings in their content schedule. More complex campaigns will require several weeks of lead time and working with their management company to secure all the details.

This can increase your overall costs above just the rate of the partnership, so take this into consideration when using macro influencers for your campaign.

Mega-Influencers

• Followers: 1 million+
• Average Cost: $10,000+ per post

Characteristics:

• Massive reach
• Often mainstream celebrities
• Potential for viral content

These are the highest tier of influencers and most are celebrities or professional athletes. However, today there are more and more mega influencers who are domain experts in specific industries and don’t come from an entertainment or sports background. 

For example, certain tech influencers or fashion influencers fit this bill. Their celebrity status has come from their social media accounts.

Brands using these types of influencers generally already have extensive experience with influencer marketing or are using an agency that does.

Most DIY campaigns won’t be working with this level of influencer. There is also more research required for these larger accounts since maintaining ROI is the most difficult when the audience size is over 1 million. 

Generally, only experienced marketers and brands should consider a campaign made up of mega influencers.

Product Costs

The next expense to consider is the cost of any products you need to send to the influencers you partner with.

Even if you are just paying for a simple product mention, you’ll generally want the influencer to have the actual product in their hands. This can be during the mention or so the influencer can shoot b-roll footage to show during the mention.

For physical products, this will have a cost associated with it that you’ll need to add to your influencer marketing budget. If you sell a digital product or service, you can generally skip this expense as it’s minimal.

One option some brands use is to supply the b-roll footage for influencers to show while they read the script or perform the product mention. Then there’s no need to send a product.

For some products, this can work well. However, in some cases, this can detract from the engagement and other metrics.

This is highly product-dependent so make sure you choose the appropriate method and budget accordingly.

Content Production

If you’re supplying video footage of your product or image for influencers to use, you’ll need an influencer marketing budget for that content creation.

Some brands may do this in-house and create their own content. But others will want to hire a professional for these services to get the best results.

Depending on your influencer campaign type, you may want different styles of content for each influencer. The reason for this is so the imagery more closely matches the specific audience of the influencers.

For example, if one influencer you partner with has a more polished and professional style of content, you will want your product imagery to match that. If an influencer uses a more casual style in their content, you may want to tone down certain touches when producing footage for them to use.

The key is to make sure you budget enough money for any additional content or product photos you’ll need to produce to match your campaign type and the number of influencers you need.

Standard ecommerce product photographs generally cost between $50-$100 each.

Professional product videos start at around $2,500 for a two to three-minute video. Prices can go up to $10,000 for more involved videos with custom animations or other features.

Budget For A Influencer Marketing Platform If Needed

Finding influencers is going to be central to any influencer marketing campaign. Just like anything in business, this can have a cost associated with it.

If you’re going the DIY route, finding influencers can cost $0 if you do all of the research, vetting, and outreach yourself. There is time involved, so you will need to calculate your time to ensure it’s worth it to do it yourself instead of going a different route.

But doing it yourself is the least expensive method and we have a guide on how to find influencers that you can use as a reference.

The other method for finding influencers and managing them is to use an influencer marketing platform.

These platforms offer a variety of features to help you find and manage your influencer partnerships. However, you need to allocate money for these in your marketing budget as they can be quite expensive.

Platforms such as Upfluence can cost up to $2,000 per month. They do provide a lot of utility for the price, but it’s something to consider as that can take up a portion of your budget you may want to allocate elsewhere.

There are cheaper options available. Services like Sprout Social offer a more scaled-down influencer finder tool and prices start at $199 per month.

Finally, you can choose to work with a full-service influencer marketing agency. In that case, you’ll tell them your entire budget and they’ll create a campaign to match it.

This makes the process the easiest and also can help to ensure the campaign is a success. For some brands, this is the best option and it also makes budgeting easier as there are fewer moving pieces that the brand has to manage itself.

Alternatives To Manage Your Influencer Budget

There are options brands use to manage some of the costs associated with influencers or securing partnerships.

The first is to offer your product or service in exchange for the brand mention or review. This is common with smaller creators such as nano or micro influencers.

The price of your product will have a lot to do with this and if you are selling a high-ticket item, it likely won’t benefit you to offer this over simply paying the rate for the influencer.

However, many brands offer influencers expensive items to review at cost or near cost. This works if the influencer is interested in the item and allows you to reduce your costs for the campaign.

Finally, you can set up a loan situation where the product is loaned to the influencer for a set period or an open period. This can provide an incentive for the influencer to become more familiar with the product while saving you some room in your budget.

The purpose here is to try to get the most reach with the least amount of money spent. By offering free products, you can work with more influencers without burning through your budget.

Feel free to also be creative during this type of negotiation. Influencers in various niches can be more open to different types of compensation. It won’t work in all cases, but it’s a proven way to extend your budget.

Affiliate Partnerships

Another way to control your influencer marketing budget is to use affiliate partnerships. With this method, you pay influencers a percentage of sales they send to your brand instead of a flat rate for the partnership.

This helps you control costs and can also reduce any initial costs if your partnership is 100% affiliate-based.

To do this, you’ll need to have an affiliate program in place to track sales and traffic. Certain influencer platforms include this service so you can set it up very quickly.

Some common ecommerce platforms like Shopify also have their own native affiliate programs you can use. These are mostly free and the affiliate program may take a percentage of total sales.

There are also third-party platforms you can use that exclusively offer affiliate functionality that you can add to your website or ecommerce store.

Third-party affiliate platforms will have minor costs associated with them that you’ll have to budget for. But most are usage-based with a much lower monthly fee than most influencer platforms.

Do It Yourself Or Hire An Agency?

A key budget consideration is whether or not you want to do everything yourself. From a budget standpoint, this will be your least costly option.

If you or your team are already active on social media and have experience in digital marketing, this is a great option and you can likely have success if you create your influencer campaign carefully.

Your budget will go the farthest if you do everything in-house, but it may detract from other tasks that your business needs to continue growing.

If that’s the case, you can consider using an influencer marketing agency. With an agency, a portion of your budget will go toward paying the agency, but the upside is that all you have to do is choose the right agency.

After that, they take care of almost everything from finding the influencers and creating the campaign to tracking results.

This may not seem like much until you start to perform these tasks for yourself. Vetting influencers can take a good deal of time. You’ll also need to negotiate with each one, develop a contract, and then manage the process to ensure the content is created and published as outlined in the contract.

This can really start to add up to a lot of overhead, especially if you’re dealing with several influencers on one campaign.

If you go at this alone, you may need to dedicate a single team member to these tasks or bring on a new team member. That’s something to consider for your budget and may cancel out any cost savings from the DIY approach to influencer marketing.

Generally, if you’re using 5 or fewer influencers, you can manage that internally without too much strain on your current team. But more complex campaigns or campaigns with more influencers can quickly require more attention than you have available.

Finally, you’ll want to consider your own strengths and weaknesses when deciding which approach works best for you. If you’re the type of person who enjoys diving into new business initiatives and making constant improvements, the DIY approach may excite you.

If you prefer to delegate or depend on experts to perform various business tasks, then an agency might be your better choice even if your total budget won’t go as far.

As with anything in business, make sure to play to your strengths and avoid putting yourself in situations that don’t allow you to shine with your best abilities.

Measuring Influencer Marketing Campaign Success

To effectively gauge the impact of your influencer marketing campaigns, it’s crucial to track and analyze key performance indicators (KPIs). Budgeting is important, but you also need to ensure the money being spent is delivering a return for you.

Below are some of the key KPIs that most brands and businesses use to assess their spending on influencer marketing campaigns.

1. Engagement Rate

• Formula: (Total Engagements / Total Followers) x 100
• Example: An influencer with 100,000 followers receives 5,000 likes and 500 comments on a sponsored post.
• Engagement Rate = (5,000 + 500) / 100,000) x 100 = 5.5%

2. Reach and Impressions

• Reach: Number of unique users who saw the content
• Impressions: Total number of times the content was displayed
• Example: A sponsored Instagram story reaches 50,000 unique accounts and receives 75,000 impressions

3. Conversion Rate

• Formula: (Number of Conversions / Total Click-throughs) x 100
• Example: Out of 10,000 clicks on an influencer’s affiliate link, 500 resulted in purchases.
• Conversion Rate = (500 / 10,000) x 100 = 5%

4. Return on Investment (ROI)

• Formula: (Revenue – Cost) / Cost) x 100 [to get the percentage]
• Example: A campaign costs $5,000 and generates $25,000 in sales.
• ROI = (25,000 – 5,000) / 5,000) x 100 = 400%

5. Cost Per Acquisition (CPA)

• Formula: Total Campaign Cost / Number of Acquisitions
• Example: A $10,000 campaign results in 200 new customers.
• CPA = 10,000 / 200 = $50 per acquisition

6. Brand Sentiment

• Measure changes in brand sentiment before and after the campaign
• Use social listening tools to track mentions and analyze sentiment
• Example: Positive mentions increase by 30% following an influencer campaign

7. User-Generated Content (UGC)

• Track the amount of UGC created as a result of the campaign
• Measure engagement on UGC posts
• Example: A hashtag challenge generates 1,000 user posts with an average engagement rate of 3.2%

8. Follower Growth

• Calculate the increase in followers during and after the campaign
• Formula: (New Followers / Initial Followers) x 100
• Example: Your brand gains 5,000 new followers from a base of 50,000.
• Follower Growth = (5,000 / 50,000) x 100 = 10%

Tracking these metrics helps you know if your budget needs to be raised or lowered. Great metrics generally mean you want to lean into what you’re doing and increase the budget.

Just make sure to carefully study why you’re campaigns worked so you can recreate the success in subsequent campaigns.

You also want to make notes of what may not have worked out. There’s always room for improvement, even with a successful campaign.

Influencer Marketing Budget Reference Guide

Below is a summary of each step to help you create and optimize your influencer marketing budget for your unique brand.

Following this will help you land on the right budget and ensure that the money spent is giving you the ROI to compete with other channels you’re currently using.

1. Set Initial Budget

• Allocate 10-20% of total marketing budget

• Adjust based on industry & audience:

  – Higher for fashion, beauty, travel

  – Up to 40% for niche industries

  – More if the target audience is younger

2. Calculate Costs

• Influencer fees (varies by follower count):

  – Nano (1K-10K): $50-$150 per post

  – Micro (10K-100K): $150-$500 per post

  – Mid-tier (100K-500K): $500-$5K per post

  – Macro (500K-1M): $5K-$10K per post

  – Mega (1M+): $10K+ per post

• Product costs (for sending to influencers)

• Content production (if supplying footage/images)

• Platform/tool fees (if using)

3. Consider Alternatives Influencer Payment Structures

• Product exchange partnerships

• Affiliate marketing programs

• Loaning products to influencers

4. Decide: DIY vs Hiring An Agency

• DIY: More budget control, requires more time

• Agency: Higher cost, but handles campaign management

5. Track KPIs To Determine Future Budgets

• Engagement rate

• Conversion rate

• ROI

• Cost per acquisition

• Brand sentiment

• Follower growth

6. Analyze & Adjust

• Review campaign performance

• Increase budget for successful strategies

• Reallocate resources from underperforming channels