Influencers have a variety of ways to make money. However, the revenue mix, as shown, could be changing drastically as a number of new rules and regulations around privacy, advertising, and commerce are being crafted, edited, and revised.
We believe that brand sponsorships will continue to be at the top of the pack for a while as the FTC has made clear how they plan to enforce their rules. However, the third party cookie decision by Google and Apple’s respective browsers will force rates on advertising to fall. Similarly, commissions and affiliate marketing will continue to fall as marketers need to revert back to the inaccurate last click attribution model. As real life physical events start up again in a post-COVID environment, event appearances will decrease as a source of income as event planners have high cost venues to pay for. However, virtual events could still be a relevant source of income depending on the public’s desire to continue to stay online given the option to meet in person. Finally physical and digital product sales will increase as well as donations due to a number of tax issues and willingness of people to begin to pay for digital goods like NFTs and content.
Sponsorships are still going to be a strong part of the influencer revenue ecosystem. Brands need the credibility that influencers provide while influencers need the product, branding, and infrastructure that brands provide … today. (See physical and digital sales channels below for how influencers are working around this.) Regardless, brands have the scale, the capital, and the desire to work with influencers to promote their products. Furthermore, brand sponsorships are the easiest way for influencers to do what they do best: promote products, build audiences, and tell stories. Finally, the FTC has made the rules surrounding sponsorships fairly clear and deal friendly.
Paid Ads and Commissions
Advertising has been a reliant source of revenue for all publishing websites since the inception of the Internet. However, since programmatic advertising and the infinite supply conundrum, advertising rates have been scraping the bottom of the barrel. Even top YouTubers are making $2-$4 CPM, where 1m views grosses you $2,000-$4,000. As third party cookies are being eliminated, expect these rates to continue to drop to rates similar to those seen during the “MySpace” days, rumored to be around a dime per thousand views.
Commissions are also falling. Most commissions net you between 1% and 5% of a sale; $100,000 of sales is $1,000 – $5,000. However, the competition is fierce. With a number of services like Honey, RetailMeNot, and similar coupon plugins, the commissions are either sniped or split making it very difficult to get full credit (and with cookies disappearing, partial credit) for a sale.
Event appearance fees worked during the recent COVID lockdown. Event organizers had little to no expenses. “Real” expenses like venue rental, food, drink, security, and other fees eat into in-person events revenue, but virtual events held on the Famecast or similar platforms are highly profitable. Niche events held and hosted by the influencer are also highly profitable especially if they are held virtually. However when “reopening” happens event appearance fees may disappear. Appearance fees are feasible if the influencer has a localized following or large enough to hit a critical mass in certain areas (a “name”), event organizers typically do not want to pay for this, especially when many others are open to the publicity and influence from appearing on a panel or event.
Merchandise and digital sales are highly profitable, however, most influencers do not see this as a viable model because of the high cost of inventory as well as the logistical nightmare and headaches of returns and customer service. Services like Famecast, offers inventory that is created “just in time” and takes care of shipping, return, and customer service logistics. As the influencer, all you have to do is create the demand, which is what you do best! Influencer sales have grown since the new ruling, “South Dakota v Wayfair”, that allows states to collect sales tax even if there is no physical location. There is an exception made for small businesses, defined as under $100,000 in in-state sales or less than 200 separate transactions, that removes the tax burden on them and their customers, which makes the products even more attractive.
People understand that creating good content takes time and with the success of tools like Patreon, OnlyFans, BuyMeACoffee, GumRoad, and more, they are willing to pay for good quality content that they consume. However, all of these tools also causes much confusion as it’s hard to distinguish what tool is right for your given situation. Famecast provides the ability to offer memberships to your fans and only takes a fee from paid members. It also is able to tie in all of your premium content to prevent leakage, which few of the aforementioned platforms can offer.
The revenue mix for influencers is changing quickly. With the erosion of cookies and the growth of memberships and merchandise, you can be assured that the above chart will change soon. We believe that Famecast is leading that change, so we’re here to listen to your thoughts, comments, improvements, or suggestions. Drop us a line!