With the youth spending much of their time online and on mobile devices, paying celebrities to post about products on their personal accounts is an increasingly popular advertising tool. Those celebrities aren't necessarily "traditional" movie stars, TV stars, or athletes. They could be people who just have a large following online.
Those digital media influencers are likely to be more trusted by their followers because they see them as friends who they interact with on a daily basis. Influencer marketing company Collective Bias surveyed 14,000 adults in March 2016 and found that one-third of consumers were more likely to purchase a product from an online influencer than a "traditional" celebrity. Seven out of 10 18-to-34-year-olds preferred these "peer" spokespeople.
But the amount someone is paid depends on more than just the number of followers, said Ryan Schram, chief operating officer of online social media marketplace IZEA. The problem with relying on the number of followers is that the figure can be faked, he said.
"I could get you 1 million followers by tomorrow, but certainly it's not legitimate," he said. "It could be bots or strangers you haven't met from Kazakhstan. It's probably not real people."
More important is the number of engagements — including favorites, comments or likes a person is able to get, Schram said. It also matters to look at how likely that paid post will be seen after it publishes, for example how many times a YouTube video would be viewed over the course of two years.
A "screen-famous" celebrity with 500,000 followers who has people constantly commenting and liking their content could bring in up to $10,000 for a single post, Schram said. IZEA been able to secure six figure deals for single posts for celebrities with the highest social media followings, with multi-year agreements in the low seven figure ranges. Their deals tend not to have exclusivity agreements, allowing these spokespeople to have multiple paydays in the same category. But, Schram admitted these high paycheck "unicorn deals" are rare.
Subramanian agreed that follower counts aren't everything. Someone like Mario Lopez, who has a strong Hispanic following, may be able to command a high paycheck because of the demographic he reaches despite not having as many followers online as the top accounts, he said.
One of the top groups brands want to reach right now is millennial moms, Subramanian said. Fitness influencers are also in demand thanks to different exercise and diet trends. While the beauty category has always been interesting to brands, Subramanian said there are a lot of influencers in the space already, which can dilute payment.
Young women who now have children grew up on digital media, Subramanian pointed out. They are used to going online to find and shop for the best products
"The other thing is moms just typically take recommendations from other moms," he said. "It's also who you see controlling spending power."