Pricing for the Creator Economy Is All Over the Map

In the rapidly growing creator economy space, even the creators themselves struggle to price their wares.

U.S. advertisers are anticipated to spend more than $6 billion on influencer marketing this year, per Insider Intelligence. But creators still aren’t sure how big a piece to claim from this pie, a new report from social media management platform Later and influencer marketing platform Mavrck finds.

The report found that 37% of creators initially set their rates by guessing, adjusting it over time, according to a survey of more than 500 creators collected in December 2022. The majority of the creators were microinfluencers, with 10,000 followers or less, and skewed toward Instagram.

The findings were not shocking to some in the social and creator industries, who said there is still a lack of standardization in what brands pay creators.

“There are a lot of brands doing predatory pricing and taking advantage of new creators,” said Daniel Goldstein, founder of agency Next Rep Marketing, who also is a TikTok creator with more than 30,000 followers.

“There is no standardization,” Goldstein added. “There are a huge amount of creators just making content just for free products. There is the same amount of audience just doing it for affiliate.”

This lack of consistency is also found in the upper echelons of influencer marketing, said Lindsay Nead, CEO of talent management firm Parker Management, where creators make no less than $250,000 a year from brand partnerships. Most creators, when they first come to the agency, are grossly undercharging, she said.

“There is no consistency,” Nead said. “It would take management companies like us to get together with every other management company. I don’t know when that will come.”

While billions may be spent on influencer marketing, it is still a relatively young industry: 72% of the respondents to Later’s survey only started monetizing in the past two years. Monique Thomas, editorial content marketing manager at Later, said this indicates that the industry is still in growth mode.

Creator economy sources shared with Adweek what trends are emerging as guideposts for paying creators.

Instagram remains more lucrative than TikTok

Despite TikTok’s growing popularity, creators can still generally make more money on Instagram, especially on Reels rather than in-feed posts, according to data from the report.

In fact, 44% of creators earned more than $200 per Reel compared to only 28% making a similar amount for a TikTok video. The report also draws on data from 29,000 Instagram posts and more than 2,200 TikToks from Mavrck’s platform.

A creator’s followers are worth more on Instagram because high follower counts are generally seen as harder to achieve on Instagram than on TikTok and therefore, could translate to a more attentive audience, Goldstein said.

“TikTok creators went through the boom of Covid where their audience grew quickly and significantly,” Goldstein said. “For a long time, it was harder to grow a loyal following on Instagram.”

Also, TikTok’s “For You” main feed is less likely to show users content from the people they follow than Instagram’s feed, meaning an Instagram creator’s post is more likely to actually be seen, said Lily Salley, director of account management at microinfluencer firm Social Studies.

As a result, Instagram is a more reliable place to drive conversions for brands, Nead said.

“We still see the most dollars going toward Instagram. It’s safer,” Nead said. “It converts the best for brands for whatever reason. TikTok is incredible for brand awareness.”

Complex criteria

Besides pricing based on platform, brands also look at criteria such as content consistency, cadence, brand safety, plus what percentage of a creator’s followers are interacting with their content and the particular niche or demographics of that creator, sources told Adweek.

Other important factors are how long a brand can use the content, whether the creator posts it on their own page, if the post can be used as paid media, how many sales the creator is driving, whether the brand can give feedback and exclusivity to prevent the creator from doing a deal with a competitor.

The complexities of setting a creator’s rate can help explain the lack of strict pay standards.

“It’s a negotiation and hopefully, we meet in the middle,” said Salley, who negotiates creator deals on behalf of brands and noted that typically what the firm has budgeted is typically close to what the creator is charging.

“We’re gathering all of that nuance in advance of winning business,” Salley added.

But while the status quo allows for flexibility, without any baseline standards, creators can miss out on significant earnings.

“The standardization won’t be one size fits all [but] it has to be a baseline,” said Thomas. “Where people don’t know how to start, that’s where people lowball themselves.”