By
Paul Johnson
Jun 18, 2024
How money flows in the world of Influencer Marketing Payments: Evaluating the Complexity and Challenges of Different Approaches
How money flows in the world of Influencer Marketing Payments: Evaluating the Complexity and Challenges of Different Approaches
Influencer, affiliate and UCG marketing has exploded. As this ecosystem has grown, brands and agencies have had to figure out how to manage lots of payments across all their creators, affiliates, and other partners. We’ve narrowed down all solutions created into 6 buckets. Each comes with its own set of challenges, impacting time, support costs, visibility, control, and fees - some hidden. Let’s dive into the complexities of the six approaches to influencer payments…
1) Brand pays talent directly
The marketing team works with the Finance team via the companies internal procurement process and accounts payable system and sends payments directly to the talent. While this may seem like a straightforward approach, it can quickly become cumbersome as the number of influencers grows. Setting up each influencer as a vendor requires significant administrative work, and every invoice needs to be processed individually. This includes using systems like SAP, Oracle, Coupa, Netsuite, Quickbooks, BILL, Tipalti.
Significant time and support cost:
When brands pay talent directly, the time and support cost falls on the Marketing and Finance team’s shoulders. The brand's finance and accounting teams must handle the entire process, from onboarding and tax compliance to invoice processing and payments. As the number of influencers grows so do the direct support costs.
Lack of visibility and control:
In theory brands have high visibility and control over the payment process when paying talent directly. However the reality is Marketing does not have access to Finance systems in order to track payment status and ensure payments were correct and on time. Because Finance is essentially a middle man between Marketing and talent, there is increased administrative burden and potential delays in payments.
As a procurement specialist at a large brand said “after factoring in everyone’s time it often costs us more to set up and pay a creator than it does to actually pay the creator”.
2) Brand uses an influencer platform to pay talent
Influencer platforms are great for discovering talent, and can sometimes be useful for campaign management. All influencer platforms rely on a third-party payment provider to handle compliance and influencer payouts. This introduces complexity and fees into the equation. Funds are often pooled and Brands also have less control over the timing and terms of payments, as they are subject to the platform's policies.
Surprisingly high support needed:
Using an influencer platform reduces the need to onboard creators and the back and forth between Marketing and Finance. However, any time there are questions from talent and talent management the brand needs to play a game of telephone between the platform and the third party payment processor. This is magnified with talent management as platforms are notorious for providing very little information when issuing payouts, talent managers need to reach out for more information to reconcile and a game of telephone ensues.
Payment delays:
Most platforms receive funds into a shared account. When payments are made, they batch up requests from all brands on the platform and run payout cycles on a set cadency - usually once per week. This leads to more questions and concerns from talent over on-time payments as payments are often days to weeks late.
Lack of coverage:
The influencer platform works for the influencer marketing team, if they use the platform for all influencers and talent managers they partner with. Not all talent managers will agree to get setup via a platform and the process typically does not work for other marketing freelancers - production talent, live event staff, affiliates, etc.
High fees:
Influencer platforms typically charge a 3%-5% fee for payouts, which adds up quickly. Brands should be aware of any transaction fees, monthly subscriptions, or percentage cuts taken by the platform.
3) Brand Works with an Agency, Who Pays Talent
Agencies provide valuable expertise and relationships in the influencer space, but they also add another layer of complexity to the payment process. In this case, the brand pays the agency through their procurement system, and the agency is responsible for paying the talent. This can lead to delays and a lack of transparency, as the brand may not have direct visibility into when and how much the influencers are being paid.
Prevents direct relationships:
When an agency manages the entire process, brands miss out on the opportunity to build direct relationships with talent. These relationships are valuable, as they allow brands to continue partnering with high-performing creators even if they switch agencies or decide to bring their influencer program in-house. Direct relationships also enable brands to provide personalized support and feedback to their influencers, fostering long-term partnerships and loyalty.
Lack of visibility and control:
Brands have no visibility or control over payments when an agency manages payment to talent directly. They rely on the agency to provide payment data and may have limited insight into the payment process.
Fees and hidden costs:
Agencies typically charge a percentage of the influencer campaign budget as their fee. This can be a significant cost for brands, especially for larger campaigns.
4) Brand works with an agency who uses an influencer platform
This approach combines the challenges of working with agencies and influencer platforms. The brand pays the agency, who in turn pays the influencer platform, who then uses a payment provider to pay the talent. Each step in this chain introduces more complexity, fees, and potential delays. The brand has little visibility into the process and may struggle to get timely reporting on campaign spend. When things are working they work, when there are issues it can lead to really bad press across TikTok, Instagram and even LinkedIn along with legal action.
Even more fees and hidden costs:
Brands face double fees in this scenario, paying both the agency's percentage fee and the platform's fees. These costs can add up quickly and eat into the campaign budget.
5) Brand Works with an agency but pays talent directly
In an effort to maintain more control over relationships and payments, some brands choose to work with an agency for campaign management but pay the influencers directly. This brings back the challenges of a brand paying talent directly. Additionally, this hybrid approach can create confusion and administrative headaches, as the brand and agency need to coordinate closely to ensure that payments align with the agreed-upon terms and deliverables.
6) Brand uses a master vendor
Working with a master vendor like Lumanu can simplify and streamline the payment process for brands working with influencers. A master vendor sits between a brand's procurement process and talent, handling all aspects of vendor management, compliance, and payments. This gives brands full visibility and control over their influencer spend while reducing administrative overhead as the master vendor goes through setup once.
By giving Marketing better visibility and control over the payment process, a master vendor significantly reduces the time and support cost for brands. Lumanu handles front line support with vendors, increases payment speed and gives better visibility to talent regarding the status of their payment. This reduces back and forth between marketing, finance and accounting teams so they can focus on more important work.
Stay up to date on the latest goings-on in the influencer space by following along on our blog. And if you are looking to learn more about how Lumanu can help streamline the onboarding and payment process for paying influencers, set-up some time to chat with our team here.
How money flows in the world of Influencer Marketing Payments: Evaluating the Complexity and Challenges of Different Approaches
Influencer, affiliate and UCG marketing has exploded. As this ecosystem has grown, brands and agencies have had to figure out how to manage lots of payments across all their creators, affiliates, and other partners. We’ve narrowed down all solutions created into 6 buckets. Each comes with its own set of challenges, impacting time, support costs, visibility, control, and fees - some hidden. Let’s dive into the complexities of the six approaches to influencer payments…
1) Brand pays talent directly
The marketing team works with the Finance team via the companies internal procurement process and accounts payable system and sends payments directly to the talent. While this may seem like a straightforward approach, it can quickly become cumbersome as the number of influencers grows. Setting up each influencer as a vendor requires significant administrative work, and every invoice needs to be processed individually. This includes using systems like SAP, Oracle, Coupa, Netsuite, Quickbooks, BILL, Tipalti.
Significant time and support cost:
When brands pay talent directly, the time and support cost falls on the Marketing and Finance team’s shoulders. The brand's finance and accounting teams must handle the entire process, from onboarding and tax compliance to invoice processing and payments. As the number of influencers grows so do the direct support costs.
Lack of visibility and control:
In theory brands have high visibility and control over the payment process when paying talent directly. However the reality is Marketing does not have access to Finance systems in order to track payment status and ensure payments were correct and on time. Because Finance is essentially a middle man between Marketing and talent, there is increased administrative burden and potential delays in payments.
As a procurement specialist at a large brand said “after factoring in everyone’s time it often costs us more to set up and pay a creator than it does to actually pay the creator”.
2) Brand uses an influencer platform to pay talent
Influencer platforms are great for discovering talent, and can sometimes be useful for campaign management. All influencer platforms rely on a third-party payment provider to handle compliance and influencer payouts. This introduces complexity and fees into the equation. Funds are often pooled and Brands also have less control over the timing and terms of payments, as they are subject to the platform's policies.
Surprisingly high support needed:
Using an influencer platform reduces the need to onboard creators and the back and forth between Marketing and Finance. However, any time there are questions from talent and talent management the brand needs to play a game of telephone between the platform and the third party payment processor. This is magnified with talent management as platforms are notorious for providing very little information when issuing payouts, talent managers need to reach out for more information to reconcile and a game of telephone ensues.
Payment delays:
Most platforms receive funds into a shared account. When payments are made, they batch up requests from all brands on the platform and run payout cycles on a set cadency - usually once per week. This leads to more questions and concerns from talent over on-time payments as payments are often days to weeks late.
Lack of coverage:
The influencer platform works for the influencer marketing team, if they use the platform for all influencers and talent managers they partner with. Not all talent managers will agree to get setup via a platform and the process typically does not work for other marketing freelancers - production talent, live event staff, affiliates, etc.
High fees:
Influencer platforms typically charge a 3%-5% fee for payouts, which adds up quickly. Brands should be aware of any transaction fees, monthly subscriptions, or percentage cuts taken by the platform.
3) Brand Works with an Agency, Who Pays Talent
Agencies provide valuable expertise and relationships in the influencer space, but they also add another layer of complexity to the payment process. In this case, the brand pays the agency through their procurement system, and the agency is responsible for paying the talent. This can lead to delays and a lack of transparency, as the brand may not have direct visibility into when and how much the influencers are being paid.
Prevents direct relationships:
When an agency manages the entire process, brands miss out on the opportunity to build direct relationships with talent. These relationships are valuable, as they allow brands to continue partnering with high-performing creators even if they switch agencies or decide to bring their influencer program in-house. Direct relationships also enable brands to provide personalized support and feedback to their influencers, fostering long-term partnerships and loyalty.
Lack of visibility and control:
Brands have no visibility or control over payments when an agency manages payment to talent directly. They rely on the agency to provide payment data and may have limited insight into the payment process.
Fees and hidden costs:
Agencies typically charge a percentage of the influencer campaign budget as their fee. This can be a significant cost for brands, especially for larger campaigns.
4) Brand works with an agency who uses an influencer platform
This approach combines the challenges of working with agencies and influencer platforms. The brand pays the agency, who in turn pays the influencer platform, who then uses a payment provider to pay the talent. Each step in this chain introduces more complexity, fees, and potential delays. The brand has little visibility into the process and may struggle to get timely reporting on campaign spend. When things are working they work, when there are issues it can lead to really bad press across TikTok, Instagram and even LinkedIn along with legal action.
Even more fees and hidden costs:
Brands face double fees in this scenario, paying both the agency's percentage fee and the platform's fees. These costs can add up quickly and eat into the campaign budget.
5) Brand Works with an agency but pays talent directly
In an effort to maintain more control over relationships and payments, some brands choose to work with an agency for campaign management but pay the influencers directly. This brings back the challenges of a brand paying talent directly. Additionally, this hybrid approach can create confusion and administrative headaches, as the brand and agency need to coordinate closely to ensure that payments align with the agreed-upon terms and deliverables.
6) Brand uses a master vendor
Working with a master vendor like Lumanu can simplify and streamline the payment process for brands working with influencers. A master vendor sits between a brand's procurement process and talent, handling all aspects of vendor management, compliance, and payments. This gives brands full visibility and control over their influencer spend while reducing administrative overhead as the master vendor goes through setup once.
By giving Marketing better visibility and control over the payment process, a master vendor significantly reduces the time and support cost for brands. Lumanu handles front line support with vendors, increases payment speed and gives better visibility to talent regarding the status of their payment. This reduces back and forth between marketing, finance and accounting teams so they can focus on more important work.
Stay up to date on the latest goings-on in the influencer space by following along on our blog. And if you are looking to learn more about how Lumanu can help streamline the onboarding and payment process for paying influencers, set-up some time to chat with our team here.
How money flows in the world of Influencer Marketing Payments: Evaluating the Complexity and Challenges of Different Approaches
Influencer, affiliate and UCG marketing has exploded. As this ecosystem has grown, brands and agencies have had to figure out how to manage lots of payments across all their creators, affiliates, and other partners. We’ve narrowed down all solutions created into 6 buckets. Each comes with its own set of challenges, impacting time, support costs, visibility, control, and fees - some hidden. Let’s dive into the complexities of the six approaches to influencer payments…
1) Brand pays talent directly
The marketing team works with the Finance team via the companies internal procurement process and accounts payable system and sends payments directly to the talent. While this may seem like a straightforward approach, it can quickly become cumbersome as the number of influencers grows. Setting up each influencer as a vendor requires significant administrative work, and every invoice needs to be processed individually. This includes using systems like SAP, Oracle, Coupa, Netsuite, Quickbooks, BILL, Tipalti.
Significant time and support cost:
When brands pay talent directly, the time and support cost falls on the Marketing and Finance team’s shoulders. The brand's finance and accounting teams must handle the entire process, from onboarding and tax compliance to invoice processing and payments. As the number of influencers grows so do the direct support costs.
Lack of visibility and control:
In theory brands have high visibility and control over the payment process when paying talent directly. However the reality is Marketing does not have access to Finance systems in order to track payment status and ensure payments were correct and on time. Because Finance is essentially a middle man between Marketing and talent, there is increased administrative burden and potential delays in payments.
As a procurement specialist at a large brand said “after factoring in everyone’s time it often costs us more to set up and pay a creator than it does to actually pay the creator”.
2) Brand uses an influencer platform to pay talent
Influencer platforms are great for discovering talent, and can sometimes be useful for campaign management. All influencer platforms rely on a third-party payment provider to handle compliance and influencer payouts. This introduces complexity and fees into the equation. Funds are often pooled and Brands also have less control over the timing and terms of payments, as they are subject to the platform's policies.
Surprisingly high support needed:
Using an influencer platform reduces the need to onboard creators and the back and forth between Marketing and Finance. However, any time there are questions from talent and talent management the brand needs to play a game of telephone between the platform and the third party payment processor. This is magnified with talent management as platforms are notorious for providing very little information when issuing payouts, talent managers need to reach out for more information to reconcile and a game of telephone ensues.
Payment delays:
Most platforms receive funds into a shared account. When payments are made, they batch up requests from all brands on the platform and run payout cycles on a set cadency - usually once per week. This leads to more questions and concerns from talent over on-time payments as payments are often days to weeks late.
Lack of coverage:
The influencer platform works for the influencer marketing team, if they use the platform for all influencers and talent managers they partner with. Not all talent managers will agree to get setup via a platform and the process typically does not work for other marketing freelancers - production talent, live event staff, affiliates, etc.
High fees:
Influencer platforms typically charge a 3%-5% fee for payouts, which adds up quickly. Brands should be aware of any transaction fees, monthly subscriptions, or percentage cuts taken by the platform.
3) Brand Works with an Agency, Who Pays Talent
Agencies provide valuable expertise and relationships in the influencer space, but they also add another layer of complexity to the payment process. In this case, the brand pays the agency through their procurement system, and the agency is responsible for paying the talent. This can lead to delays and a lack of transparency, as the brand may not have direct visibility into when and how much the influencers are being paid.
Prevents direct relationships:
When an agency manages the entire process, brands miss out on the opportunity to build direct relationships with talent. These relationships are valuable, as they allow brands to continue partnering with high-performing creators even if they switch agencies or decide to bring their influencer program in-house. Direct relationships also enable brands to provide personalized support and feedback to their influencers, fostering long-term partnerships and loyalty.
Lack of visibility and control:
Brands have no visibility or control over payments when an agency manages payment to talent directly. They rely on the agency to provide payment data and may have limited insight into the payment process.
Fees and hidden costs:
Agencies typically charge a percentage of the influencer campaign budget as their fee. This can be a significant cost for brands, especially for larger campaigns.
4) Brand works with an agency who uses an influencer platform
This approach combines the challenges of working with agencies and influencer platforms. The brand pays the agency, who in turn pays the influencer platform, who then uses a payment provider to pay the talent. Each step in this chain introduces more complexity, fees, and potential delays. The brand has little visibility into the process and may struggle to get timely reporting on campaign spend. When things are working they work, when there are issues it can lead to really bad press across TikTok, Instagram and even LinkedIn along with legal action.
Even more fees and hidden costs:
Brands face double fees in this scenario, paying both the agency's percentage fee and the platform's fees. These costs can add up quickly and eat into the campaign budget.
5) Brand Works with an agency but pays talent directly
In an effort to maintain more control over relationships and payments, some brands choose to work with an agency for campaign management but pay the influencers directly. This brings back the challenges of a brand paying talent directly. Additionally, this hybrid approach can create confusion and administrative headaches, as the brand and agency need to coordinate closely to ensure that payments align with the agreed-upon terms and deliverables.
6) Brand uses a master vendor
Working with a master vendor like Lumanu can simplify and streamline the payment process for brands working with influencers. A master vendor sits between a brand's procurement process and talent, handling all aspects of vendor management, compliance, and payments. This gives brands full visibility and control over their influencer spend while reducing administrative overhead as the master vendor goes through setup once.
By giving Marketing better visibility and control over the payment process, a master vendor significantly reduces the time and support cost for brands. Lumanu handles front line support with vendors, increases payment speed and gives better visibility to talent regarding the status of their payment. This reduces back and forth between marketing, finance and accounting teams so they can focus on more important work.
Stay up to date on the latest goings-on in the influencer space by following along on our blog. And if you are looking to learn more about how Lumanu can help streamline the onboarding and payment process for paying influencers, set-up some time to chat with our team here.
How money flows in the world of Influencer Marketing Payments: Evaluating the Complexity and Challenges of Different Approaches
Influencer, affiliate and UCG marketing has exploded. As this ecosystem has grown, brands and agencies have had to figure out how to manage lots of payments across all their creators, affiliates, and other partners. We’ve narrowed down all solutions created into 6 buckets. Each comes with its own set of challenges, impacting time, support costs, visibility, control, and fees - some hidden. Let’s dive into the complexities of the six approaches to influencer payments…
1) Brand pays talent directly
The marketing team works with the Finance team via the companies internal procurement process and accounts payable system and sends payments directly to the talent. While this may seem like a straightforward approach, it can quickly become cumbersome as the number of influencers grows. Setting up each influencer as a vendor requires significant administrative work, and every invoice needs to be processed individually. This includes using systems like SAP, Oracle, Coupa, Netsuite, Quickbooks, BILL, Tipalti.
Significant time and support cost:
When brands pay talent directly, the time and support cost falls on the Marketing and Finance team’s shoulders. The brand's finance and accounting teams must handle the entire process, from onboarding and tax compliance to invoice processing and payments. As the number of influencers grows so do the direct support costs.
Lack of visibility and control:
In theory brands have high visibility and control over the payment process when paying talent directly. However the reality is Marketing does not have access to Finance systems in order to track payment status and ensure payments were correct and on time. Because Finance is essentially a middle man between Marketing and talent, there is increased administrative burden and potential delays in payments.
As a procurement specialist at a large brand said “after factoring in everyone’s time it often costs us more to set up and pay a creator than it does to actually pay the creator”.
2) Brand uses an influencer platform to pay talent
Influencer platforms are great for discovering talent, and can sometimes be useful for campaign management. All influencer platforms rely on a third-party payment provider to handle compliance and influencer payouts. This introduces complexity and fees into the equation. Funds are often pooled and Brands also have less control over the timing and terms of payments, as they are subject to the platform's policies.
Surprisingly high support needed:
Using an influencer platform reduces the need to onboard creators and the back and forth between Marketing and Finance. However, any time there are questions from talent and talent management the brand needs to play a game of telephone between the platform and the third party payment processor. This is magnified with talent management as platforms are notorious for providing very little information when issuing payouts, talent managers need to reach out for more information to reconcile and a game of telephone ensues.
Payment delays:
Most platforms receive funds into a shared account. When payments are made, they batch up requests from all brands on the platform and run payout cycles on a set cadency - usually once per week. This leads to more questions and concerns from talent over on-time payments as payments are often days to weeks late.
Lack of coverage:
The influencer platform works for the influencer marketing team, if they use the platform for all influencers and talent managers they partner with. Not all talent managers will agree to get setup via a platform and the process typically does not work for other marketing freelancers - production talent, live event staff, affiliates, etc.
High fees:
Influencer platforms typically charge a 3%-5% fee for payouts, which adds up quickly. Brands should be aware of any transaction fees, monthly subscriptions, or percentage cuts taken by the platform.
3) Brand Works with an Agency, Who Pays Talent
Agencies provide valuable expertise and relationships in the influencer space, but they also add another layer of complexity to the payment process. In this case, the brand pays the agency through their procurement system, and the agency is responsible for paying the talent. This can lead to delays and a lack of transparency, as the brand may not have direct visibility into when and how much the influencers are being paid.
Prevents direct relationships:
When an agency manages the entire process, brands miss out on the opportunity to build direct relationships with talent. These relationships are valuable, as they allow brands to continue partnering with high-performing creators even if they switch agencies or decide to bring their influencer program in-house. Direct relationships also enable brands to provide personalized support and feedback to their influencers, fostering long-term partnerships and loyalty.
Lack of visibility and control:
Brands have no visibility or control over payments when an agency manages payment to talent directly. They rely on the agency to provide payment data and may have limited insight into the payment process.
Fees and hidden costs:
Agencies typically charge a percentage of the influencer campaign budget as their fee. This can be a significant cost for brands, especially for larger campaigns.
4) Brand works with an agency who uses an influencer platform
This approach combines the challenges of working with agencies and influencer platforms. The brand pays the agency, who in turn pays the influencer platform, who then uses a payment provider to pay the talent. Each step in this chain introduces more complexity, fees, and potential delays. The brand has little visibility into the process and may struggle to get timely reporting on campaign spend. When things are working they work, when there are issues it can lead to really bad press across TikTok, Instagram and even LinkedIn along with legal action.
Even more fees and hidden costs:
Brands face double fees in this scenario, paying both the agency's percentage fee and the platform's fees. These costs can add up quickly and eat into the campaign budget.
5) Brand Works with an agency but pays talent directly
In an effort to maintain more control over relationships and payments, some brands choose to work with an agency for campaign management but pay the influencers directly. This brings back the challenges of a brand paying talent directly. Additionally, this hybrid approach can create confusion and administrative headaches, as the brand and agency need to coordinate closely to ensure that payments align with the agreed-upon terms and deliverables.
6) Brand uses a master vendor
Working with a master vendor like Lumanu can simplify and streamline the payment process for brands working with influencers. A master vendor sits between a brand's procurement process and talent, handling all aspects of vendor management, compliance, and payments. This gives brands full visibility and control over their influencer spend while reducing administrative overhead as the master vendor goes through setup once.
By giving Marketing better visibility and control over the payment process, a master vendor significantly reduces the time and support cost for brands. Lumanu handles front line support with vendors, increases payment speed and gives better visibility to talent regarding the status of their payment. This reduces back and forth between marketing, finance and accounting teams so they can focus on more important work.
Stay up to date on the latest goings-on in the influencer space by following along on our blog. And if you are looking to learn more about how Lumanu can help streamline the onboarding and payment process for paying influencers, set-up some time to chat with our team here.
How money flows in the world of Influencer Marketing Payments: Evaluating the Complexity and Challenges of Different Approaches
Influencer, affiliate and UCG marketing has exploded. As this ecosystem has grown, brands and agencies have had to figure out how to manage lots of payments across all their creators, affiliates, and other partners. We’ve narrowed down all solutions created into 6 buckets. Each comes with its own set of challenges, impacting time, support costs, visibility, control, and fees - some hidden. Let’s dive into the complexities of the six approaches to influencer payments…
1) Brand pays talent directly
The marketing team works with the Finance team via the companies internal procurement process and accounts payable system and sends payments directly to the talent. While this may seem like a straightforward approach, it can quickly become cumbersome as the number of influencers grows. Setting up each influencer as a vendor requires significant administrative work, and every invoice needs to be processed individually. This includes using systems like SAP, Oracle, Coupa, Netsuite, Quickbooks, BILL, Tipalti.
Significant time and support cost:
When brands pay talent directly, the time and support cost falls on the Marketing and Finance team’s shoulders. The brand's finance and accounting teams must handle the entire process, from onboarding and tax compliance to invoice processing and payments. As the number of influencers grows so do the direct support costs.
Lack of visibility and control:
In theory brands have high visibility and control over the payment process when paying talent directly. However the reality is Marketing does not have access to Finance systems in order to track payment status and ensure payments were correct and on time. Because Finance is essentially a middle man between Marketing and talent, there is increased administrative burden and potential delays in payments.
As a procurement specialist at a large brand said “after factoring in everyone’s time it often costs us more to set up and pay a creator than it does to actually pay the creator”.
2) Brand uses an influencer platform to pay talent
Influencer platforms are great for discovering talent, and can sometimes be useful for campaign management. All influencer platforms rely on a third-party payment provider to handle compliance and influencer payouts. This introduces complexity and fees into the equation. Funds are often pooled and Brands also have less control over the timing and terms of payments, as they are subject to the platform's policies.
Surprisingly high support needed:
Using an influencer platform reduces the need to onboard creators and the back and forth between Marketing and Finance. However, any time there are questions from talent and talent management the brand needs to play a game of telephone between the platform and the third party payment processor. This is magnified with talent management as platforms are notorious for providing very little information when issuing payouts, talent managers need to reach out for more information to reconcile and a game of telephone ensues.
Payment delays:
Most platforms receive funds into a shared account. When payments are made, they batch up requests from all brands on the platform and run payout cycles on a set cadency - usually once per week. This leads to more questions and concerns from talent over on-time payments as payments are often days to weeks late.
Lack of coverage:
The influencer platform works for the influencer marketing team, if they use the platform for all influencers and talent managers they partner with. Not all talent managers will agree to get setup via a platform and the process typically does not work for other marketing freelancers - production talent, live event staff, affiliates, etc.
High fees:
Influencer platforms typically charge a 3%-5% fee for payouts, which adds up quickly. Brands should be aware of any transaction fees, monthly subscriptions, or percentage cuts taken by the platform.
3) Brand Works with an Agency, Who Pays Talent
Agencies provide valuable expertise and relationships in the influencer space, but they also add another layer of complexity to the payment process. In this case, the brand pays the agency through their procurement system, and the agency is responsible for paying the talent. This can lead to delays and a lack of transparency, as the brand may not have direct visibility into when and how much the influencers are being paid.
Prevents direct relationships:
When an agency manages the entire process, brands miss out on the opportunity to build direct relationships with talent. These relationships are valuable, as they allow brands to continue partnering with high-performing creators even if they switch agencies or decide to bring their influencer program in-house. Direct relationships also enable brands to provide personalized support and feedback to their influencers, fostering long-term partnerships and loyalty.
Lack of visibility and control:
Brands have no visibility or control over payments when an agency manages payment to talent directly. They rely on the agency to provide payment data and may have limited insight into the payment process.
Fees and hidden costs:
Agencies typically charge a percentage of the influencer campaign budget as their fee. This can be a significant cost for brands, especially for larger campaigns.
4) Brand works with an agency who uses an influencer platform
This approach combines the challenges of working with agencies and influencer platforms. The brand pays the agency, who in turn pays the influencer platform, who then uses a payment provider to pay the talent. Each step in this chain introduces more complexity, fees, and potential delays. The brand has little visibility into the process and may struggle to get timely reporting on campaign spend. When things are working they work, when there are issues it can lead to really bad press across TikTok, Instagram and even LinkedIn along with legal action.
Even more fees and hidden costs:
Brands face double fees in this scenario, paying both the agency's percentage fee and the platform's fees. These costs can add up quickly and eat into the campaign budget.
5) Brand Works with an agency but pays talent directly
In an effort to maintain more control over relationships and payments, some brands choose to work with an agency for campaign management but pay the influencers directly. This brings back the challenges of a brand paying talent directly. Additionally, this hybrid approach can create confusion and administrative headaches, as the brand and agency need to coordinate closely to ensure that payments align with the agreed-upon terms and deliverables.
6) Brand uses a master vendor
Working with a master vendor like Lumanu can simplify and streamline the payment process for brands working with influencers. A master vendor sits between a brand's procurement process and talent, handling all aspects of vendor management, compliance, and payments. This gives brands full visibility and control over their influencer spend while reducing administrative overhead as the master vendor goes through setup once.
By giving Marketing better visibility and control over the payment process, a master vendor significantly reduces the time and support cost for brands. Lumanu handles front line support with vendors, increases payment speed and gives better visibility to talent regarding the status of their payment. This reduces back and forth between marketing, finance and accounting teams so they can focus on more important work.
Stay up to date on the latest goings-on in the influencer space by following along on our blog. And if you are looking to learn more about how Lumanu can help streamline the onboarding and payment process for paying influencers, set-up some time to chat with our team here.
By
Paul Johnson
Jun 18, 2024
© 2024 Lumanu, Inc. All Rights Reserved.
Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.
© 2024 Lumanu, Inc. All Rights Reserved.
Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.
© 2024 Lumanu, Inc. All Rights Reserved.
Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.
© 2024 Lumanu, Inc. All Rights Reserved.
Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.
© 2024 Lumanu, Inc. All Rights Reserved.
Lumanu, Inc. is a financial technology company and not a bank. Lumanu accounts are provided by i3 Bank, Member FDIC.