Making Pennies Stretch Like Dollars: The Guide to Budget-Savvy Influencer Marketing

Influencer marketing has been all the rage in recent years, but let's be real here - it's not always sunshine and rainbows. More often than not, brands are left feeling like they got duped by an influencer they sponsored.

Our inboxes are filled with messages from brands whose campaigns often end up leaving them stranded with a burning hole in their pocket.

We spoke to a founder of a 5-year-old supplement brand about her experience with influencer marketing. Here’s what she said:
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"We've struggled with influencers who make promises yet fail to deliver. We've spent thousands of dollars on marketing "specialists," PR firms, and influencers who use and claim to love our products (what we give them) but don't follow through on their part of influencing."

It's easy to blame the idea of influencer marketing as a whole when results are not as expected, but the truth is that it's often the execution that falls short. Sometimes, it's the brands themselves who set the campaign up for failure. They get swept up in the hype and want a piece of the action without any clear strategy.

But it doesn't have to be this way.

In this blog, we'll discuss the exact strategy that successful brands use for a positive return on influencer marketing investment, with a budget that even a small brand can afford… and run it almost on auto-pilot. We will talk about tips and tools you can use to succeed in influencer marketing on a shoestring budget, so you can stop wasting money and start seeing real results.

Before we dive into the strategies, let's explore some of the common mistakes that brands make in influencer marketing and what to avoid if you want to achieve a positive ROI

Why do brands lose money doing influencer marketing?

1.  Paying upfront

One of the biggest mistakes that brands make in influencer marketing is paying upfront to creators before any sales have been made. This creates a situation where there is no incentive for the creator to put in the effort to promote the product and drive sales as they've already been paid.

2.  The trap of seeking popularity over influence

Brands often fall into the trap of seeking popularity over influence when it comes to influencer marketing. They believe that working with creators who have the largest number of followers will translate into the greatest reach and engagement. However, this is not always the case.

• An influencer with a large following may not necessarily have a strong influence over their audience, meaning their reach and engagement may not be as high as expected.

• They may also be less niche-focused and, therefore, less effective at reaching and engaging with your brand's target audience.

• Not only that but working with these creators may also be more expensive for brands, as they may command higher fees for their services and may not be as open to negotiation.

Most importantly, if they don't have the audience that you want to target, it doesn't matter if they have a million or a billion followers.

If your brand sells baby products and wants to target new parents, an influencer who has a large following of teenagers or young adults may not be the best choice, even if they have a large following. On the other hand, an influencer who has a smaller following of new parents and families would be a better fit and more likely to reach and engage with the brand's target audience.

3.  Sending free products to hundreds of creators (without building relationships with them first!)

Brands hear about product seeding and then start blindly sending products to hundreds of creators without building relationships with them first. It's like trying to make friends with everyone at a party. You will not end up with any real connections in the end.

Not only do they lose money on the cost of goods, shipping, and packaging but also their precious time following up with all these creators.

You should send free products to creators in exchange for a shoutout or review, but there's a method to the madness. We'll discuss it later in the blog.

4.  Inflated numbers and poor engagement

Brands often fall for the trap of paying influencers based on their reach or number of followers, not realizing that these numbers may not be real. Influencers may have bought fake followers or have a large following that's not active on the platform, making it essentially money down the drain for the brand.

Filter by authenticity when you find creators in SARAL to mitigate this.

The Antidote to high-cost influencer marketing: Ambassador Programs

We’ve seen that ambassador programs are the only way to mitigate this when you get started.

Ambassador program is when you engage with a creator to promote your products on long-term basis and compensate them by sharing a percentage of the sale they made, exclusive perks, discounts, invites to launch events, etc. Ambassadors are often provided with a unique discount code or referral link to share with their followers. Checkout Pura Vida's Ambassador program here to dive deeper into how it works at scale.

Here's how ambassador programs mitigates the problem of ‘high risk, low return’ you face in traditional influencer marketing model or pay-per-post campaigns.

1. You only pay a percentage of the sale you make

The key benefit of commission-only ambassador program is that you only pay a commission on the sales made by the ambassadors, rather than paying them a fixed fee upfront. This eliminates the risk of paying for a marketing campaign that does not generate any sales or leads.

It aligns the incentives of the ambassadors, as they only benefit when the campaign is successful. So they promote the product more authentically, often without any push from you end.

This arrangement also allows you to work with a larger number of ambassadors, and to scale up or down their marketing efforts based on the results.

This eliminates the risk of paying for a campaign that does not generate any sales or leads.

2. Only loss is COGS if no sale is made

In ambassador program, the investment is limited to the cost of goods sold, packaging, and shipping, which means that even if the campaign is not successful, the financial loss is relatively small. Your only loss is the cost of goods, packaging and shipping. This is particularly beneficial when working with influencers who may have inflated numbers in terms of followers and likes, but lack real engagement or influence over their audience.

This allows you to drop the creator and move on to the next campaign without incurring a significant financial loss. This flexibility allows you to test different influencers and campaigns, and adjust your strategy based on the results. It also allows you to focus on finding the right influencers who can generate real engagement and influence over their audience, which increases the chances of making sales.

This reduces the risk of incurring losses due to poor creator-audience engagement.

3. No gifts to uninterested creators  

When you onboard influencers as ambassadors, you are able to establish a relationship with them and gain their buy-in to promote your brand. Now when you send them your product for review/as a gift, there is a higher chance that they will talk about your product with their audience. It increases the chances of getting shoutouts and ultimately making sales.

Even if you don't make a sale, your cost is still relatively low (as the only expenses are the cost of goods and shipping), and the relationship you've built with the influencer can be valuable in future campaigns.

This solves the problem of hit-and-miss approach of “seeding” gifts to hundreds of influencers often results in a low return on investment.

4. No more chasing popular creators

Ambassador program  aligns the interests of the brand and the creators, and ensures that both parties benefit when the campaign is successful as creators are paid only for the sales made.

This means that the influencers who are most likely to join your program are those who are genuinely interested in your brand and who have a real influence over their audience. You are also mindful of choosing people who align with the goal — getting sales, rather than just getting more eyeballs to your brand.

The ambassador program helps you avoid the competition for the most popular influencers, who are often already working with other brands and have contracts in place that pay them upfront. This allows you to focus on finding the right influencers for your brand, rather than competing for the attention of the most popular creators.

To show you real-world examples, we've profiled some of the most successful brands that have made influencer marketing work on a budget because they tapped into ambassador programs. By following their lead and utilizing their strategies, you can avoid the common mistakes that many brands make and achieve real results with your influencer marketing campaigns

Real-World examples of brands making it work on a budget

Pura Vida

Pura Vida runs a successful ambassador program with a network of 126,000 micro-influencers (as of 2021). But note that the reason Pura Vida's influencer network has proven to be so successful is because of these relationships. Building a brand is much more than quantifiable, transactional, and deliverable. It's how you make others feel when they connect to your brand. Read the full breakdown of Pura Vida's ambassador program here.

Revolve

Revolve has built a great reputation for maintaining good relationships with creators, built technology to support its ambassador program, and attracted people to become cheerleaders for the brand. So much so that 70% of Revolve's revenue comes via its ambassadors.

Checkout 6 things that Revolve does to build a successful ambassador program.

Sephora

In 2019, Sephora Ambassador Program amassed over 70,000 Instagram Stories and more than 10,000 in-feed posts. How does Sephora create such viral loops?

In this post we've broken down how Sephora runs its brand ambassador program, where it could have done better, and what you can take away for your brand.

Conclusion

Starting an ambassador program is a cost-effective and low-risk approach to influencer marketing. It allows you to work with a select group of ambassadors who are a good fit for your brand, and to minimize the financial risks associated with working with influencers. It also allows you to test different campaigns and adjust your strategy based on the results, in order to increase the chances of making sales

But it is not a one-hit-wonder. It's a marathon, not a sprint. So don't lose hope if you have not seen the best results in the past.

Start with the ambassador strategy outlined above and move on to more risk-averse strategies like the Barbell strategy of influencer marketing over time.

Our main tip would be to maintain consistency and build relationships with influencers. That way, you'll achieve greater results and be ahead of the game against your competitors.

Remember, the influencer marketing landscape is always changing, so it's essential to stay on top of the latest trends and best practices. That's why we're inviting you to join our newsletter, 'The No BS Influencer Letter.' It's packed with insider tips, case studies, and expert advice on influencer marketing delivered straight to your inbox. Don't miss out on this chance to level up your influencer marketing. Sign up now!"

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