The global beauty industry has increasingly thrived over the past 50 years. From 2005 to 2019, global beauty revenues grew steadily and the future was bright.
However, in 2020, revenue came to a halt and dropped 9.7% YoY. The pandemic stopped everyone in their tracks and derailed supply chains that had been running smoothly for decades.
The last few years have been a wild ride. The coronavirus destabilized the beauty industry, which is still recovering today. In the beginning, no one was leaving the house and beauty took a backseat. During this time, only essential businesses were in full operation.
Subsequently, another seismic shift occurred. As people remained at home, they became bored. Beauty audiences downloaded TikTok and other social media platforms at exponential rates. Users began to connect on all different types of channels, and the beauty game was back on!
That’s where influencers, micro-influencers and other creatives come in. This business sector is a great way to accomplish niche sales and marketing tasks—without straining your budget. However, when it comes time to square up and pay everyone, how well prepared are you?
In this article, we’ll take a deep dive into the current state of the beauty industry, what an influencer is, why they’re important, and the best ways to pay them. Consider this a 5-minute pocket guide to marketing your beauty brand in today’s economy.
Beauty Industry Stats and Market Fluctuations
The beauty industry generates over $100 billion in revenue worldwide and is expected to surpass $125 billion by the year 2025. Nevertheless, it still faces a variety of challenges that can hinder growth. This includes:
- A lack of regulation
- Greenwashing - spending more on marketing than green initiatives
- Idealized beauty standards
- Shifting retail landscape
Social media trends show that the beauty industry is moving toward smaller, community-based nano-influencers that can make a real impact. In fact, in 2022 alone, beauty companies are expected to spend $7.7 billion on advertising.
People trust influencers more than celebrities. A recent survey of teen consumers found that 70% trust influencers the most, while 49% depend on their recommendations while shopping for products. Meanwhile, 86% of women use social media for purchasing advice in general.
Although a little over 50% of brands working with influencers run an e-commerce store, that doesn’t have to be the case. Any type of beauty brand can benefit from a beauty creator. Take Charlotte Tillburry for instance. The British beauty brand recently recorded the highest growth in media impact value, up 20%.
What is a Beauty Influencer?
It's a role by many names, including creator, freelancer, contractor, consultant, marketing specialist…you get the idea. Influencers are people who develop a natural and authentic following on a social media channel (or several if they are good).
In a way, these people are geniuses at self-branding and are able to extend that energy to help other companies promote their products/services. hey create knowledgeable and articulate content, and can be paid in a variety of ways depending on the contract. Influencers typically have a large and engaged following who find them relatable and trustworthy. They can also fall into different categories depending on their reach. Influencers can range from nano to mega.
- Nano-influencers: 1,000–10,000 followers
- Micro-influencers: 10,000–50,000 followers
- Mid-tier influencers: 50,000–500,000 followers
- Macro-influencers: 500,000–1,000,000 followers
- Mega-influencers: 1,000,000+ followers
Currently, the influencer industry is worth over $15 billion and counting. That’s because it’s an effective strategy that’s worth the cost. During the pandemic, 96% of consumers in the United States and the UK engaged with influencers in some form or another.
Why Hire Influencers?
In this wildly fluctuating demand landscape, how should beauty brands approach marketing? By leaning on vetted influencers and micro-influencers, of course!
Hiring creatives is an agile option that can help your products go viral. It also works to drive down customer acquisition costs (CAC) and increase brand awareness. DECIEM brand The Ordinary saw an opportunity to take advantage of the beauty industry’s trends on TikTok after seeing organic user generated content cause an increase sales by a 426%.
What are some other reasons your beauty business needs an influencer right now?
Paid Ads Convert Faster
Social media algorithms love when you advertise and the more you do it, the higher up you place on people’s threads. Rather than starting a campaign of your own, asking an influencer to run your ads means you’re already starting ahead of the game.
Influencers have varied data points on performance benchmarks and optimal targeting. They do it all the time, so targeting is like second nature to these people.
Influencers have worked with a multitude of clients and are excellent problem solvers. Vetted creatives have experience with top brands and behind-the-scenes knowledge that a normal marketer may not.
Hires like this have worked on national campaigns and have a thorough understanding of the beauty landscape, both past, and future. They’ll help you refine positioning and focus your message until it resonates. Nano-influencers and micro-influencers bring a unique aspect into the discussion as well, with highly engaged audiences and strong relationships.
Creatives will drop in for one-off projects like product giveaways and contests. First-party data from quizzes and online surveys gets granular. It can be used to inform personalized emails, SMS retention campaigns, and other types of custom brand messaging. With the right architecture and influencer, a simple quiz can pay dividends for years.
Have a last-minute deadline? Or perhaps someone on your team is sick. Influencers can fill this space quickly. While hiring a full-time candidate can take months, hiring an influencer can take less than 24 hours. They are available on demand.
Micro-influencers can help a brand achieve continuous innovation, which is critical for beauty trends that move fast.
A Brief History of Influencer Payments
One of the biggest challenges when hiring creatives is working out how you will pay them. Affiliate marketing has its roots in a sort of “free t-shirt” culture—where people were happy to market for brands, accepting products or swag for payment.
Those days are gone…which is actually a good thing. People know their worth and they bring much more to the table when it comes to authentic and organic messaging.
To fully understand the market shifts today, you have to look at how influencers and micro-influencers have been paid thus far. Here’s a quick gander through the timeline of influencer relationships:
2004 - MySpace Creates the Concept of Influencer
This platform launched one of the first influencers to make some waves, Jeffree Star. He was the platform’s most followed user and is now a multi-million dollar brand. However, Jeffree started very humbly as an online creative with a dedicated following.
At this stage, brands began rewarding Jeffree with gifts, tickets to events, or a small monetary compensation to feature their products in his videos (which were then posted to MySpace). This essentially forged a new type of marketing relationship between a brand and a networking enigma, whose value was hard to pin down.
2006 - The Introduction of Influencer Marketplaces
At this point, it was obvious that creatives held the key to reaching niche audiences on social media. The pay-per-post model was developed and creativity was being rewarded on new levels.
Around this time, the very first freelancer marketplace was created. It facilitated freelancer jobs and payments for all types of workers, from bloggers to marketers, analysts, researchers, and more.
2009-2013 - Sponsored Posts
Influencers are starting to fully understand their worth, and many are asking for fees simply to “check in” to specific locations or venues. It’s a natural way to gain attention for a brand, when a beloved influencer is “hanging out” there.
This is when sponsored posts also began to take off. For many big brands, like Gawker, the majority of their advertising revenue is spent on sponsored posts. Forbes and the Associated Press were soon to follow, selling sponsored content to different enterprises.
Brands began sending gifts to influencers, just for them to open live. This spawns a whole new type of marketing that births popular platforms like TikTok.
2014-2019 - Sponsored Posts
An Advertising Standards Authority (ASA) ruling puts regulations on the influencer market. The government felt that users were being tricked into buying and began to tighten controls.
Thus, brands had to get creative. They began to offer payment in-store credit and rebating rewards as a means to avoid these laws and make posts more authentic.
The Federal Trade Commission (FTC) and the ASA (for the UK) now require clear labels for sponsored posts, ads, or gifted items. They must be marked by hashtags like #sponsored #ad or #gifted, respectively.
Beauty Influencer Payments Today
Today, pay-per-post dominates the way influencers are paid, with costs running from $100/post to as much as $1 million (think Kylie Jenner). Engagement is still the most common metric used to measure success. This is why influencers are typically paid a fixed rate with a performance bonus to facilitate a higher return.
In some cases, influencers are paid on performance only. This offsets issues companies face with influencers who pay followers or have low-quality engagement. This can be difficult for brands to detect in the beginning, and will lead to campaigns with a lower impact and return on investment.
How to Pay a Beauty Influencer
One study demonstrated that 86% of marketers don’t know how influencers calculate their fees and 1 in every 7 influencer campaigns have payment processing issues, including what influencer rates are and how to pay them.
To thrive during the rapid growth of influencer marketing, brands have to diversify the types of influencers they work with, and the different ways to pay them.
As we have seen, sometimes influencers are paid with a product, while other times, they partner with the brand entirely. In this arrangement, they may receive sales commissions that originate from their
Here’s a short list of ways to pay your influencers and micro-influencers:
- Gifts or rewards
- Comped event or trip attendance
- Store credit or rebates
- Content licensing fees
- Pay-per-post and sponsored posts
- Performance-based partnerships
- Fixed-rate and performance bonus
Choosing a Payment Structure
As influencers become more business savvy, gifts and store credit are no longer the most acceptable forms of payment.
Freelancer payments have evolved. Not only are there multiple ways to pay them, there’s a variety of factors that can change the rate you pay people, including:
- Number of followers
- Influencer expertise
- Quality of content
- Audience engagement
- Product value and brand size
- Length of partnership (short-term or long-term)
Your marketing budget will also determine exactly who you hire and how you pay influencers.
To ensure the efficacy of your influencer marketing campaigns, take the time to analyze the different factors in each freelancer relationship. Choose your payment structures wisely to optimize the partnership for both parties.
An Automated Solution
One of the top challenges for marketers has been the rising cost of influencers. Even though companies now diversify their influencer portfolio with more affordable talent (like micro and nano-influencers) many still lack the capability to customize payments and incentives. In other words, they’re still scratching their heads on how to pay creatives…especially when you have a lot of them.
The good news is there are tools out there to make the process of affiliate marketing much smoother. In addition to tracking tools and in-depth analytics, brands can now leverage dynamic software-as-a-service (SaaS) platforms that manage the entire influencer lifecycle. Platforms like this enable a full, 360-degree view of the customer journey from click to conversion.
When it comes to paying influencers, an automated system ensures people are paid on time, strengthens business relationships, and frees up your staff to focus on more value-based tasks.
DIME Beauty: A Case Study on Automating Influencer Payments
One prime example of how a beauty brand automated their influencer payment process is DIME Beauty. Scott Morris, Financial Planner at DIME Beauty Co, used to spend hours onboarding vendors, managing payments, processing invoices, etc. He recognized that their team needed a more efficient solution.
Even still, ACH, bank transfers, and PayPal all proved to be tedious processes. Their system needed a deeper automation solution that would facilitate growth, but was still cost-effective. Lumanu stepped in to help them automate influencer payments, manage the onboarding, and assist with tax compliance.
Since discovering the Lumanu solution, DIME Beauty Co. has been able to pay hundreds of creators with the click of a mouse. The intuitive dashboard allows the right people to delegate and approve transactions in the United States and 37 different countries. This makes it easy to send mass payments to hundreds of influencers, all working on the same campaign (without the need to collect information from them each time).
DIME calculated that inviting their influencer base to Lumanu has saved an average of 20 hours per week in the vendor setup process. All the tax and paperwork is managed automatically, relieving the team of 1099 headaches and chasing creatives.
As Scott shared, Lumanu has strengthened their relationship with influencers:
“Not only did it simplify the payments process for our busy team and provide measurable cost savings, but our creators are also happy to be able to withdraw money in their local currency automatically.”
Solutions like Lumanu even provide influencers with an EarlyPay option, which gives them the ability to collect early. Features like this work wonders for influencer satisfaction and retention.
The Future of Payments for Beauty Influencers
To get the best out of your influencer program today and tomorrow, you should expand the scope of freelancer payments and use the evolved technologies to help them partner at scale.
While paying influencers by their follower counts was once a common payment method, advanced technologies have allowed marketers to move past a “one-size-fits-all” solution.
After two decades, influencer marketing is moving more towards a “partnership” with a full lifecycle strategic approach. This includes customized contracts and payments. This also involves the use of automated payment tools like Lumanu to personalize the influencer payment experience across a segmented market and nurture the business relationship.
The best approach to influencer marketing is to research your influencers and create an effective program that is mutually beneficial. Then, employ smart payment automation tools to ensure everyone gets paid—on time, with a custom experience that entices future business.