Why Consider Performance-Based Compensation in Your Partnerships?

Influencer partnership marketing broke the boundaries of traditional affiliate marketing, leaving creators unconstrained by traditional compensation methods like good ol’ pay-per-post. But why look beyond the tried-and-true pay-per-post model, anyway?

An alternative to classic compensation methods

Sure, pay-per-post is a popular option for remuneration; it’s super easy to scale, and it’s fantastic for long-term relationship building. But while there’s nothing wrong with the model, brands and creators alike often find alternative compensation methods to better match their respective mix of goals.

Creators, freelancers by nature, earn their livelihood by collaborating with brands, and they need to balance their workload with their revenue streams, which could be coming from several different brands at once.

Take exclusivity, for instance. A contractual obligation to refuse other brand partnerships during a campaign could mean significant revenue loss for a creator. To make up for this potential loss, a brand would need to make its contract exceptionally irresistible to the creator. Meanwhile, the brand needs some kind of assurance that its creator partnership will perform as well as it hopes.

That’s where performance-based compensation comes in!

This type of compensation goes far beyond vanity metrics such as likes and comments. Rather, it’s tied to specific results, such as sales, leads, or website traffic, all of which are uniquely intertwined with a given brand’s goals and intended outcomes.

Why performance-based compensation?

Increased earnings potential

When a creator links their content to specific results (for instance, the successful purchase of an item sponsored in their Instagram post), they can earn more money from their sponsored content campaigns.

Long-term income

Performance-based compensation can provide creators with a long-term source of income… even after their sponsored content campaign has ended. That’s passive income!

More creative freedom in affiliate programs

It’s a given that sponsored content needs to meet the brand’s specifications, but without a more formal partnership in place, creators may have a little more freedom to tailor their content to their style and what their audience loves.

Assurance

Incentivizing high-quality content from creators means peace of mind for the brand because the creator knows that the harder they work, the more money they earn.

How and when are payouts made?

It’s all about cost per action (CPA)! One payment model with slightly different faces.

CPA can look like a flat fee paid out by the brand when a customer performs a specific action through the creator’s affiliate link, like downloading the brand’s app or signing up for its monthly newsletter.

Or it could take the form of commission: instead of a bulk payment, the creator earns a percentage of the sale price of individual products or services purchased through the creator’s unique link in their sponsored content. For example, the brand pays the creator 15% of the price of a sale they drove.

Finally, revenue share is similar to commission, but not quite.

While commission is a fixed amount paid to the creator per action, rev share is the payment of a percentage of the total revenue generated from the customers referred by the creator.

The bottom line

In the end, the choice of compensation type rests on the brand's strategic vision. Still, the evolving nature of influencer marketing means that tons of brands are open to negotiation, inviting creators to propose and explore hybrid compensation models.

Whether it's a flat fee for specific actions or a percentage of sales, CPA opens the door to a spectrum of possibilities, empowering both parties to tailor compensation structures to their objectives.

Read our article on hybrid compensation models and negotiation for creators for more insights.