How payments to 'influencers' confounded Klear
Social media has spawned thousands of ways for individuals to get paid by touting products in videos, photos and blogs, but the payments flow between companies and these so-called influencers can be rocky.
Influencers work for small companies up to large corporations, creating promotional content that’s quickly consumed in response to fleeting trends.
Bloggers can earn up to $500 per post for items generating more than 100,000 impressions, while YouTubers with a following of more than 100,000 can earn several thousand dollars for each video in an industry on track to exceed $15 billion by 2022.
Klear has been on a rapid growth track in the influencer arena since 2012, when the Israeli startup began developing a platform to measure a brand’s return on investment in sponsored online content developed mostly by individuals, versus traditional advertising and marketing agencies.What Klear underestimated was how the payouts from brands to influencers could potentially cripple its growth, according to Noam Avignor, one of Klear’s co-founders.
“We were focused on measuring influencer marketing campaigns and we left payments up to the brand marketers and their finance departments,” Avignor said.
Though some payments to influence marketers are high, the average payment Klear’s content creators receive is about $50, and Klear initially figured global consumer marketing firms could manage the invoices and payments.
But despite its steady growth in recent years, corporations saw influencers as a distinct category of payee apart from regular suppliers, and the steady stream of miscellaneous payments became a problem.
“Corporations often lacked influencer payment details and context or the ability to pay in a certain way or location,” Avignor said.
Klear was caught in the middle trying to help solve freelancer payment problems for its clients on a case-by-case basis, including untangling cross-border transactions and determining whether payments were sent or received, according to Avignor.
Last year Klear began working with Tipalti, a San Mateo, Calif.-based payment technology firm specializing in automated global payouts, to develop a more streamlined solution.
Klear needed to make it easy for global brand marketers to pay an ever-changing cast of influencers anywhere in the world, even if the person was getting just a single payment for the performance of a one-time blog post or photo.
Tipalti integrated its automated payment service into Klear’s platform so that new and one-time payees could more easily add payment details. Tipalti’s system then automatically ensured that payouts for all companies using Klear’s platform met international tax, fraud and regulatory requirements.
The solution Tipalti provided covers individuals who are working for one or multiple brand marketers, and enables brand marketers to expand and customize the way they’re measuring results from campaigns and paying influencers based on trends, Avignor said.
“The brand companies’ lives suddenly got much easier because they didn’t have to handle these payments manually through their finance departments, and it dramatically improved communications between brands and influencers,” he said.
The integration also clarified guidelines to getting paid, so influencers get reimbursed faster instead of waiting for weeks or even months for invoices to be processed, he said.
Budgets for influencers declined somewhat during the pandemic when marketers cut spending, according to eMarketer, but the industry is rebounding as corporations restart marketing, especially for national consumer brands.
Klear also sees more influencers joining the industry as it becomes more competitive.
“Influencer marketing serves very specific needs for both marketers and individuals and the long-term growth outlook is very strong,” Avignor said.