A Step-by-Step Guide to Effective Budgeting for Influencer Marketing Campaigns

When it comes to budgeting in influencer marketing, it might initially seem like a straightforward process; check the price lists of your target influencers, add them up and there you have your final budget. However, the reality is much more complex and there are many factors you should consider.

In general, the budgeting process depends on the business priorities and goals — an obvious but often overlooked step.

Let’s say your goal is to acquire as many customers as possible. In this case, you’ll aim for a broader reach and a higher number of influencer posts. Of course, this work requires more time, so the budget will focus on hiring new managers.

On the other hand, imagine you only need several posts per year — let’s say around 10. However, each of them should be highly effective and impact business results. In this case, one manager can easily handle the task. But now, you’ll need to spend more on analytical platforms to select the perfect influencers.

Now, let’s explore the essential elements of every influencer marketing budget.

Collaborations

Partnerships with creators will be a major part of your influencer marketing budget regardless of your business objectives. To estimate this part of the budget, you should multiply the planned number of posts by their average cost.

For instance, suppose in 2024 you want to collaborate with 1000 influencers, resulting in 1000 posts. Based on my experience, up to 20% of them will perform exceptionally well, making it beneficial to engage with them again. So, the total number of posts would be 1200.

Of course, the cost of collaboration differs depending on the size of the influencer’s media weight. Let’s presume that you want to publish 250 posts with influencers with over 1 million followers, 250 with those that have 500 thousand, 250 with 100 thousand, and 250 with micro-influencers. Multiplying these numbers by the average price in each category will provide an approximate estimate of the total cost for the 1200 publications.

Compensation and Hiring

Retaining talent and recruiting new employees are other crucial components of every influencer marketing strategy.

On average, a middle manager can handle 30–40 influencer placements per month, and therefore 480 placements per year. If you’ve planned 1300 placements for the upcoming year, a simple calculation shows that you’d need 3 managers for this task. Here I’m referring to entirely manual work — no help from technological platforms.

For sure, this is an oversimplification, as there are other tasks in every manager’s routine such as meetings, calls, presentations, and so much more. Nonetheless, this provides an estimation of the funds you need to allocate.

Moreover, remember to account for annual or quarterly bonuses and rewards for outstanding achievements.

Finally, if you have plans to expand the department, allocate funds for bringing in new employees.

Marketing Activities

Marketing activities include events for influencers, press tours, product seeding, and gifts. These are powerful tools for brand promotion, relationship building as well as maintenance of existing relationships with content creators. Furthermore, these activities can help your brand get additional reach on social media. They are also an excellent mechanism to gather honest feedback from influencers on the product. So, make sure you allocate money for this budget item.

Evaluation of these activities should be done in collaboration with the PR team or the event team. Generally, 10% of the budget will be sufficient to cover these expenses.

Platform Subscription and Analytics

If your goal is simply to maximize reach by engaging a larger number of influencers, then detailed statistics might not be necessary. In such cases, there are tens of budget-friendly platforms that analyze data and provide insights into engagement rates, growth trends, or follower demographics. However, if the goal is to drive sales through influencers, analytics become crucial.

Firstly, you’ll need a CRM platform, since handling many creators manually becomes challenging. Next, a communication automation platform might be of great use, especially if there’s a need to increase the number of influencer collaborations without hiring new managers. Finally, some platforms provide post-campaign analyses — an essential tool to increase efficiency.

Legal Risks

Creators are media channels that influence thousands of people, both targeted and untargeted. No doubt, federal agencies monitor the compliance of your advertisements with legislation. For example, hidden advertising or issues related to data privacy carry risks that can result in penalties.

Furthermore, it’s natural that situations may arise where people express concerns about your communications, saying, “This ad should be illegal, I’ll take you to court.” For instance, let’s recall the recent case of the Calvin Klein ad featuring FKA twigs, which was banned in the U.K. by the Advertising Standards Authority (ASA) for portraying the artist as a “stereotypical sexual object.” Similar issues can arise on social media, potentially leading to fines.

So, I always recommend allocating a budget for such situations — around 5–10% of the budget for placements.

Additional Costs

This category includes all other expenses. For example, sending company products or samples for testing. If influencers are endorsing a product, they must use it to know what they are promoting. This is a fundamental requirement. Even though the cost of the products may be minimal, with numerous creators, it can result in a significant amount. So, consider it when estimating your budget.

Moreover, allocate some funds for promotions and media support. If you’ve created an impressive post that has gained substantial organic reach, you might consider boosting it through paid promotion or engaging in some PR activities.

3 Tips for Increasing Your Influencer Marketing Cost-Efficiency

Here are some tips for reducing your budget without compromising effectiveness.

1. Limit hypothesis testing. If you’re just starting with influencer marketing, nearly all of your collaborations will involve testing hypotheses. This is understandable because you may not yet have a complete understanding of your audience or know exactly which influencers are the best fit. So, if you believe these collabs will reach your target audience, give them a try. However, as your experience grows and you see a positive return on ad spend (ROAS) from most campaigns, I recommend limiting the number of such tests to a maximum of 30%. But don’t fully eliminate them, as they often contribute to significant growth.
2. Automation. Focus on automating communications to boost the capacity of managers. With the help of digital platforms, managers can handle more tasks, contributing to overall cost-efficiency.
3. Introduce competition among managers. Foster a competitive environment among managers. If they challenge each other to create more impactful collaborations, your capacity will expand naturally. Develop and implement a motivational system where they receive bonuses for their achievements, just like in the sales department.