Influencer marketing may ensure viewership of your Ad campaign but can it really guarantee viewers engagement with your brand or product? The answer is No. Then how do marketers decide on influencers' payment terms? Read on to find out.

There is no set rule or industry norm regarding compensation of influencers. Companies had been following the most popular payment term called CPM (i.e. cost per mile where advertisers would agree on a cost per thousand views) method till recent years which meant the influencers with more number of followers would demand more payment. However, with transformation in marketing strategy and practices, the marketers now focus more on engagement in digital marketing rather than mere views. When a viewer lingers on the page for a few seconds more to watch the ad or hover over an Ad to watch the video or to comment, the marketers see them as potential consumers. Such engagement transpires into increase in sales of that brand thereby making the profit level higher. Marketers are now adopting this performance based pricing and hence, a new method evolved for compensating influencers called CPE which is cost per engagement. CPE has been regarded by advertising agencies and influencer networks as most transparent pricing model.

Cost per engagement directly reveals and reflects the performance of influencers. With evolution of automatic measuring devices in digital marketing, cost per engagement features real-time performance and calculation by considering various factors viz. comments, likes, re-tweets, clicks on brand URLs, etc. The CPE keeps getting automatically updated for influencers as and when their followers and subscribers engage with brand’s Ad and its content. The application of CPE provides clarity and boosts confidence in marketers and influencers in its transparency.

With CPE, the income of influencers become uncertain hence one may argue that influencers could indulge in the practice of buying likes and shares thereby diluting the authenticity of sole purpose of CPE. Influencers may also try to persuade followers to engage in the brand by giving them incentives through giveaways. Followers may take part in such engagements only to win gifts without paying slightest attention to the brand. For this reason, some marketers still prefer CPM over CPE. Nevertheless, there always remain uncertainty in impact of Ads and viewership in the world of advertising whether its conventional marketing or digital marketing. The risk involved in CPE can be mitigated by staying vigilant and with active participation with influencers. Also, it depends on the risk appetite of a marketer who remains invested in engagement of consumers. Besides, the incentives could also be a part of influencers creative idea to engage followers in the content hence, marketers must motivate influencers to keep inventing creative work and encourage them to disclose such sponsored posts.

The best way to work out on CPE is to talk to influencers and estimate an approximate level of engagement on different networking platforms then combine it with influencer’s quoted price. CPE works best for marketers as they get more competitive prices with increasing number of influencers. It becomes a win-win for both marketers and influencers as with CPE gaining popularity, the prices increase steadily for influencers as well.

CPE is yet to catch the speed as many massive brands still prefer to cut a cheque of flat fees based on the number of followers and subscribers of the influencers. However, CPE is here to stay as its slowly catching marketers’ attention for its transparency and impactful result. Tying CPE model with sales is challenging. New platforms always struggle to align sales but in due course CPE has the potential to convert the engagement into sales as consumer’s engagement over digital marketing is not done under compulsion or to kill the time or in lack of other options.

Influencer marketing can never be on the same platform as a banner Ad or something similar for a simple fact that people trust influencers and follow them only when they like them. Hence, an advertisement on influencer’s post also receives the same trust from people whereas a banner Ad is just another marketing strategy of advertisers to grab attention of onlookers. Banner Ad can be termed as a quantity metric while influencer marketing falls into the category of quality metric. There hovers a danger in viewing influencer marketing same as a banner Ad. Keeping the above comparisons in view, CPM payment model is akin to banner Ad whereas CPE ensures that the brand falls in quality metric. The bottom line is: CPE is a much advanced, transparent and better paying model than the flat fees payment based solely on the reach and number of followers.

The views expressed in this article are solely mine and do not in any way - direct or indirect - represent the opinions of my current or past employers.