Here’s how much social media stars get paid to post ads

Actress Olivia Munn watches Christmas movies

Last November, actress Olivia Munn posted a video to her Instagram in preparation for the holidays: She wore green and red pajamas, she cooked a holiday turkey and she lounged on the couch with her two sweater-clad dogs.

She also watched her favorite Christmas movie — thanks to her cable setup from Xfinity. “Happy Holidays! From Olivia Munn + Xfinity,” the video’s tagline read.

Munn may actually love Xfinity, but in this case she was hawking the product for Comcast* to her 1.8 million followers. The video, which was clearly marked with the hashtag #ad, has more than 330,000 views. (A longer version of the video did more than a million views on YouTube.)

Social media posts like this from celebrities like Munn are big business. Social influencer marketing is more than a billion dollar industry, according to estimates from research firm eMarketer. Advertisers spent $570 million on Instagram influencers alone in 2016, eMarketer estimates, and half of them said they planned to increase their influencer budgets in 2017.

The question for advertisers, though, is how to distribute those budgets, and to which influencers.

One marketing agency, HelloSociety, said earlier this year that “micro influencers” — accounts with less than 30,000 followers, but a loyal following — were the way to go. Others have also jumped on the micro-influencer bandwagon.

But new data from another marketing firm, Whosay — which creates influencer ad campaigns for companies like McDonald’s, Hulu and Lexus — provides a different perspective. Micro-influencers weren’t the best bargain, according to Whosay, which looked at data from more than 130 influencer campaigns over the past 19 months.

Chart of how different tiers of social media stars compare in followers, company spending and CPMs

Whosay looked at influencers in five tiers based on an influencer’s total followers. Tier 1 celebrity endorsers like Munn, DJ Khaled or Jada Pinkett Smith weren’t the best bargain, despite boasting an average of 7.4 million followers. Posts shared by these mega celebrities generated a lot less organic engagement (likes, comments and shares) than influencers a few tiers down.

The sweet spot: Influencers in tiers 2 and 3 with fewer followers than the Olivia Munns of the world, but that are still much more popular than most everyone else on social media, including micro-influencers.

A few interesting findings from the research:

  • Tier 2 influencers, folks like actor Nick Cannon, average 2.8 million followers across social media and offer the highest engagement rate for branded content. Roughly 28 percent of people who see branded content from a tier 2 influencer will like, share or comment on the post. “Super-micro influencers,” or those with an average of 50,000 followers by Whosay’s standards, have an engagement rate of just 10.25 percent.
  • Tier 3 influencers, with an average of 850,000 followers, have the lowest organic CPM, or cost to an advertiser for every thousand ad impressions (without paying to promote a campaign). A tier 3 influencer will get an advertiser 1,000 organic impressions for $77.87. Tier 1 influencers, like Munn, have a CPM of $165.20, and super-micro influencers have a CPM of $168.82.
  • This doesn’t mean tier 2 and tier 3 influencers are cheaper — just more bang for your buck. A single post from a tier 2 influencer will cost more than $32,000. A post from a tier 1 influencer will cost just $21,500. The discrepancy? Tier 2 influencer posts not only perform better, but top influencers usually don’t need the money, so they tend to take deals from brands or campaigns they truly care about for less cash, Whosay CMO Paul Kontonis explained.

Whosay’s data is not exhaustive, of course. But Kontonis says Whosay has been banging this drum for a while, and the company has been trying to convince its clients to ignore the idea of micro influencers.

The wrong narrative gets people going into an influencer campaign predisposed to one way to do it,” “This [micro-influencer] narrative that’s in every conference — this is the narrative that’s in infographics and articles.”

“We’ve had to educate the agencies and brands that we work with,” he added.

Clearly, not all firms will agree. But given the money at stake, advertisers want to know what they’re getting.

* NBCUniversal, a subsidiary of Comcast, has invested in Vox Media, which owns this site.