“I Cannot Pay Taxes With A Bag”: The Power Struggle Between Brands & Influencers

“I cannot pay taxes with a bag,” says Veronika Heilbrunner.

Heilbrunner is an influencer as well as the co-founder of Hey Woman! magazine and holds an Instagram following of over 150,000.

Heilbrunner has also collaborated with various high-end brands and is a true believer that the days of influencers accepting gifts as payment are over.

…..

Today, marketing agency Mediakix, values the influencer economy via Instagram to be $1 billion.

Before the estimated $1 billion industry, there were personal style blogs and with those style blogs, came some occasional gifting from brands.

But today, there is an entire economy dedicated to these style blogs or influencers, where brands are now required to cough up real dollars in order to make a collaboration happen.

Think about this, in order to get an ad placement on a page of British Vogue, one can expect to pay around $39,000 to start, while influencers with over 1 million + followers, who have a measurable ROI and a more engaged fan base, are charging around $15,000 per Instagram post.

With that, according to Tribe Dynamics, in the past five years, 90 percent of brands have decided to increase their earned media budget, which allows them to put more dollars towards influencer marketing.

Opting to go the influencer route essentially allows brands to tap into “Generation Next” – the new young demographic, who tend to find their inspiration via scrolling on their mobile devices instead of flipping through the traditional magazine.

Pernille Teisbaek, co-founder of influencer marketing agency Social Zoo tells BoF:

“It’s a natural path that all brands are taking.”

And notes:

“They are looking at their marketing budgets and seeing where the youth is going.”

On that note, many are following the influencer path to increase brand value as traditional advertising no longer provides a true ROI.

Even the most elite of luxury brands like Chanel, Louis Vuitton, Dior and Gucci, are starting to pay influencers for collaborations. No longer are they solely supply gifts and trips.

Stylist and consultant Leaf Greener says: 

“A brand giving me a bag is not the same return on investment for the creative work I produce for them.” 

But note, that not every influencer-brand interaction is compensated.

Influencer Doina Ciobanu says:

“Luxury brands will try to balance out the payments with event attendance and similar events.”

And notes:

“They will pay once in a while for a commercial project, but for the rest of the time will want you to support the brand [through smaller projects like dinners, fashion shows, and gifting].”

According to Tribe Dynamics, the top quartile of EMV (earned media value)-generating brands did the following:

  • conducted product sends
  • hosted influencer events
  • planned getaways

And as just a general rule of thumb, commercial collaborations typically come with a set budget, while the trips, fashion shows, and dinners are all really considered relationship-building.

For influencer marketing and talent agents, creating a sense of balance is key.

Jennifer Powell, the founder of Jennifer Powell, Inc, which provides brand management and strategy for influencers, says:

“Of course there is money.”

But emphasizes the need for integrity:

“But the talent I represent need to do things unpaid, and engage daily with things that are unpaid, to [support] the integrity of their feed.”

For example, micro-influencers (who tend bring in thousands, not millions, of Instagram followers) trend to work with brands mostly on an unpaid basis.

The reason being that if a micro-influencer were to place a luxury heritage brand on their account, it will only really elevate his or her image and standing.

With that, it’s only after an influencer reaches a certain point in his/her career, or a number of followers and engagement, that the paid collaborations start coming in.

But no matter what, two things hold true:

  1. authenticity is key and
  2. long-term relationships are essential and necessary.

 

Danielle Bernstein, who currently holds 1.7 million Instagram followers says:

“I’m specifically looking for long-term partnerships where I essentially marry a brand.”

And notes:

“One-off posting is a thing of the past.”

So when an influencer and brand have a similar aesthetic, collaborating becomes easier and allows for various projects to become possible. With that, the collaboration seems much more authentic to the consumer.

 

 

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