What Exactly Is Cost-Per-Sale Influencer Marketing?
Posted on April 10, 2020
Thanks to the rise of word-of-mouth and social media marketing, today from common man to celebrities, you will find influencers in every spectrum of marketing. Most of the brands believe that if planned and executed well, influencer marketing can deliver a good return of investment (ROI). However, it is not a secret that a significant portion of influencer media advertisements do not reach real customers or fail to generate expected sales as the playing field gets more diverse and creative for the influencers.
From Pay-Per-Post, Pay-Per-Click to Pay-Per-Acquisition, different collaborations and campaigns are in practice. Pay-Per-Acquisition (also known as Cost-Per-Sale) generates payment when an influencer’s efforts result in a new sale. Chinese social media landscape is chartering new heights with Key Opinion Leader (KOL) Marketing. The influencers engage with their followers on various social platforms and sell a gigantic number of products in a very short time. With their hard-selling techniques, they are superstars in their own way.
In the recent Alibaba Malaysia Week in September, an influencer was able to sell over 80,000 bottles of Malaysian birds’ nests within five minutes? This is an example of the success in using influencers to sell products.
So, what is the Cost-Per-Sale model?
Here the influencer focuses on sales as the ultimate aim. In China, Social selling is way sophisticated. On platforms like Taobao or DouYin or Weibo, you can now add products to cart directly and pay directly via AliPay or WeChatPay. But taking it down one notch, Southeast Asian sellers rely on affiliate links as the social media platforms we have at the moment still does not have a cart system. This link or code takes the follower or the customer on the brand’s website, from where the product can be bought.
Once the deal is completed, and the customer has purchased the advertised product using the affiliate link, the influencer gets paid. Brands compensate influencers for the number of acquisitions or sales they drive.
Still, quite a number of influencers stick with the soft selling methods. They collect upfront fees or are paid a fixed amount at the beginning. They don’t want the hassle of keeping track of conversion stats - that is before they know about our new solution. :)
What are the benefits of Cost-Per-Sale model for the influencer?
- In the traditional method, the influencers do have a tracking issue. Since the actual sale is only known to the brand, an influencer can’t gauge whether he/she sold one product or 100. They need a mediator in such a case. If an influencer is working with fifty brands, charging USD 200 per month from each of them, he/she can have a tough time to track all the brands and will need lots of effort to check the records.
- This problem can be easily solved. With technology and a good neutral platform that aggregates all the sales numbers into one (check out my new platform www.confirmpluschop.com), the click and payment are captured real-time, providing that trust level that is needed between brands and influencers. With this platform, influencers has a clear idea of how many products are sold/actions taken by him/her.
- Most of the influencers work with the upfront fees or a fixed amount. If they are good at what they do and have dynamic creativity, they can earn a much greater income than just a fixed-fee only arrangement. Because the payouts are in line with an actual value generated.
- Equipped with a data set around how exactly their account is performing, and the behavior of their fans, the influencer can gain a very clear understanding of their worth. Instead of relying on the soft metrics like likes or clicks, the influencer has real data demonstrating the conversion numbers that generated sales for the brand. This way the influencer can leverage more in future negotiations.
- Most of the influencers in Southeast Asia are used to soft-selling. But influencer marketing is competitive and if they want to earn well, like the influencers in China, even they can up their game and drive sales for the brands.
Few of the setbacks may keep the influencers away from Cost-Per-Sale (CPS) model. But as mentioned above, it has many benefits.
As the scale of influence changes, Cost-Per-Sale marketing may become more effective. For example, an influencer with 10,000 followers on Instagram may be earning through the post basis now. But it may change.
The actual trouble with the per-post model is there is no established data between the clicks, likes and actual sales. An influencer might be getting thousands of clicks or views on a post, but how much percentage of that actually got converted to sales increasing the sale volume? Their posts might increase traffic to the brand’s page, or the website, but it is still difficult to gauge how the influencer actually drove the sales. The brands lack a clear view of ROI in this model.
Looking at these statistics, it may not be farfetched to predict that the brands may start negotiating payments based on their performance. They can be flexible in their approach. For example, a brand may offer 15% of all sales or 10% of the first 50 purchases with a lower percentage margin for every sale after that.
The Cost-Per-Sale model works for brands as well. They don’t have to pay extra expenses. They are paying remuneration for the actual sale the influencer helped to generate. By following the CPS method, they can keep track of the sales volume, as they don’t have to reply to the soft selling methods like clicks or views or likes.
The way things are going, it is unlikely that influencer marketing is going to slow down in the nearby future. It is here to stay. However, there are plenty of accounts on social media with a high number of followers but a low number of clicks or likes. It is important to recognize the fake influencers from the real ones. Plenty of them look good on the surface but might not be what you think they are.
While Cost-per-click, Cost-per-post …etc. metrics are good to run any campaign, there is no denying that Cost-Per-Sale beats them all. As a brand the campaign may generate a frenzied response, earning an impressive number of likes and clicks, but if it fails to generate revenue, it is a failure. The Cost-Per-Sale technique is a clear measure of how much a brand has to pay to get a customer. it’s the essential metric for determining true ROI.
In case of a brand, you are not able to find influencers on a Cost-Per-Sale model, you can contact us at www.confirmpluschop.com.
* An article by Yuhwen Foong, ☆ ☆ ☆ Founder of SushiVid from LinkedIn *