Agency Commissions in Influencer Deals — Marketers' New Headache

Consultants warn — and offer to sell the cure

Consulting firms have already spoken out about the problem. They warn advertisers about the risks of such schemes. With one significant caveat, however: consultants also want to get paid for solving the problem.

This commercial interest does not invalidate their arguments. Quite the opposite: the very willingness of consultants to bring this topic to market shows how little marketers know about where exactly their influencer marketing money goes. The problem has come to a head precisely as advertisers are directing more and more budget into this channel.

Why this concerns every other marketer

The situation with creators repeats a classic scenario. While the channel occupied a niche share of the budget, few people cared about pricing — the absolute amounts were small. But as soon as influencer spending grew to a level comparable with traditional channels, CFOs and procurement departments started asking uncomfortable questions.

The questions are standard for any transparency audit:

• What share of the budget actually reaches the content creator?
• What is a fair agency commission for sourcing, negotiations, and execution oversight?
• Does the market value of a specific creator match what appears on the invoice?

With a combined line item, the client fundamentally cannot answer these questions. The agency, in turn, gains the ability to manipulate the fee-to-margin ratio from deal to deal without the client's knowledge.

What the programmatic story teaches

The precedent from a decade ago suggests how the situation will develop. Back then, the process went through several stages: first, industry associations and major advertisers publicly demanded cost-chain disclosure, then reporting standards emerged, and ultimately transparency became a condition for access to the budgets of the biggest clients.

There is no reason to believe influencer marketing will be any different. The channel has already outgrown the experimentation stage. Budgets are consolidating, and large advertisers are shifting their work with creators from one-off campaigns to ongoing contracts. And wherever multi-year contracts worth significant sums appear, demands for cost-structure disclosure inevitably follow.

Principal media deals, facing similar accusations today, show that pressure on the agency model's transparency is not weakening but intensifying. The influencer space is simply joining the general queue.

What's left for advertisers

The Digiday article is members-only, with the full version available only to subscribers, but the conclusions from the open excerpt are obvious. Marketers who are increasing the share of budget going to creators should already be demanding separate accounting from agencies: talent fees on one line, agency commission on another.

Otherwise, the programmatic story will repeat itself — just on a new channel. And the ones paying for the "cure" — which, as the consultants warn, is of course not free — will be the very same advertisers.