How do influencers make money?
We’re, by now, well aware of the role of today’s influencers. But what’s the story on how they get paid — and perhaps more importantly, who pays them. We’ve been a part of many brand deals, so we’ll shed some light on how these content creators earn an income.
Why influencers monetize their popularity
The reason influencers are able to monetize their popularity is just that; because they are popular. There are many eyeballs watching their every move, and when you have that, naturally advertisers are going to be interested in tapping into that creator’s reach.
Some creators have relatively small followings (below 10,000). Others have followings of millions of people. As you can imagine, only larger brands are able to afford working with a creator with millions of followers. The more followers, the more expensive the campaign will be. This is why we generally see smaller brands working with smaller creators. It comes down to budget.
Revenue streams
Influencers are able to monetize their popularity in a number of ways, making this a lucrative career for those with large followings. The most clever of these creators will not rely on a single source for revenue. Instead, they will utilize all of the following streams to maximize their income.
Platform revenue sharing: Perhaps the most popular revenue stream, platform revenue sharing is when a creator signs up for something like the YouTube Partner program, which allows their content to be monetized; giving them a percentage of revenues (about 70% for YouTubers) on ads shown in the content. You’ll see these as pre-roll ads, mid-roll ads, and banners. So if YouTube earned a total of $100 from advertising on a video, they’ll share $70 with the creator. In actuality, it’s more complicated than that, so this example is for illustrative purposes only.
Memberships and subscriptions: Platforms like Twitch, YouTube, and Kick allow content creators to offer subscriptions and memberships, giving these users access to exclusive perks like early access to videos, special “stickers” for use in comments/chat, along with other benefits. For more on this, check out the YouTube Memberships page.
Product sales and merchandising: Just like musical artists, influencers can earn a good living selling their own merchandise. No doubt, you’ve probably seen some of your favorite creators offer up a new t-shirt or hat with their logo on it. Some influencers may come out with their own product lines, as well (generally in partnership with another brand). We’ve seen other creators launch their own product lines from scratch, too!
Affiliate marketing: Affiliate marketing is huge in the influencer world and involves creators splitting revenue with a brand on a particular product of service. For example, the influencer might post a special coupon code for use at a given store. When viewers use that coupon at the store, the store owner knows that the influencer sent them, and splits a percentage of the sale as a reward. Brands like affiliate marketing because it requires little to no financial outlay. What the influencer earns is purely performance-based.
Sponsored content and partnerships: This is our bread and butter. Ever see a YouTube video with a “this video is sponsored by …” ad in the middle? That’s a brand deal, and it’s something we work with both creators and brands on. This involves the brand effectively purchasing a chunk of real estate in the video and having the creator talk about their product or service. By leveraging the creator’s popularity, the brand is hoping to win over the viewers using influence. Hence the name influencer marketing. Sponsored content tends to be the best paying of all revenue streams, but also happens to be the most difficult for creators to secure.
Negotiating sponsored content and brand deals
Many creators have issues determining what to charge a brand when they come a’knockin’. Agencies like Dalton Street can help on this front by analyzing the details of the deal, determining an influencer’s rates, understanding industry standards, negotiating, and so forth. There’s also the responsibility of ensuring that contracts protect both the influencer and the brand.
Brand deals are a big business. In fact, you may have noticed that most major influencers have a sponsor on every one of their uploads.
A personal brand and personal responsibility
Ultimately, what you normally see with influencers is the development of a personal brand. Between ad revenue, brand deals, and merchandising, they have effectively monetized their persona. But this comes with big — no, huge, responsibilities.
When an influencer advocates for a product, they are the product. So if they are advertising a scam, they themselves will be seen as a scam artist, in many cases. Think back to the FTX controversy of 2022. Many attribute the rise of the crypto start-up to influencers who plugged the service. Many of these influencers were household names.
Unfortunately, many are remembered as “the one who advertised FTX”, which caused many consumers to lose billions of dollars, collectively.
This is why were are adamant that influencers know and like the product they are advertising. If it even feels questionable for a moment, it’s not worth pursuing, at least from our perspective.
Concluding remarks
As you can see, not every influencer will earn money the same way. Some will leverage only one or two of the revenue streams listed above, while others might leverage all of them.
In either case, there’s plenty of opportunity for a creator to make money doing what they love — and we love helping them along the way.
