Introduction
According to Gigapay’s report, brands are implementing performance-based models; however, cross-border compliance concerns continue to impede sector growth. A new industry report from Gigapay indicates that complex cross-border compliance requirements and payment delays impede a transition to performance-based compensation models in influencer marketing. According to the 2024 benchmark report from the Influencer Marketing Hub, 49.6% of influencer payments are determined by sales performance metrics rather than fixed fees, as indicated by the research that interviewed 13 executives at influencer marketing agencies and brands.
This represents a significant shift in the compensation of creators, who are individuals who generate content for social media platforms. Currently, traditional flat-rate payments account for 24.1% of compensation arrangements. Agency specializing in influencer marketing According to the Influencer Marketing Factory, regulatory requirements and banking system constraints frequently result in delays of up to 30 days when processing payments to international creators. Both micro-influencer partnerships and large-scale campaigns impact these delays.
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Due to compliance checks and payment infrastructure constraints, international payments outside the EU may require up to 30 days to be processed by Stylink, a creator payment platform that provides next-day settlements to European creators. These delays are further complicated because creators are not registered as businesses, complicating tax documentation and VAT compliance.
Nestle Nordics has reported that it has been compelled to exclude specific creators from campaigns due to tax compliance issues. The research suggests a transition from flat-fee payments to compensation that is linked to measurable outcomes, such as sales conversions and engagement metrics. This change is indicative of more extensive modifications in the manner in which brands evaluate the return on their digital marketing investments. Wild is a social media marketing agency that is in the process of creating systems to monitor the efficacy of sales.
Growth continues to be substantially hindered by payment delays. According to NewGen, an influencer marketing agency, payment processing frequently exceeds 60 days due to client-side budget release delays. According to the Digital Platform Economy Payments report by Deloitte, payment terms for significant brand partnerships may extend to 120 days. To attract talent, Pepper Agency has prioritized the provision of swift payments. The organization processes approximately 80% of payments ahead of schedule through a bi-weekly payroll system.
Industry Comments
“We’ve noticed that influencers are much more likely to prioritise a collaboration with us when they know they’ll get paid early,” says Joe Friend at Pepper Agency.
The integration of automated payment systems could reduce these delays. “As this industry grows exponentially, we will push toward more streamlined, automated payment systems – but also better compliance tools – so agencies and brands waste less time worrying about compliance risks,” says Thomas Walters at Billion Dollar Boy, an influencer marketing agency.
SoSquared, an influencer marketing agency, implements hybrid payment models that combine upfront fees with performance incentives. “We use a hybrid compensation model, mixing flat fees with performance-based incentives,” says Sam Royle, an executive at the firm.
“It’s not just about making payments anymore, but ensuring we are on the right side of evolving laws in each country,” says Nicla Bartoli, an Executive at The Influencer Marketing Factory.
“We avoid situations where we’re paying influencers who aren’t registered businesses, because of tax compliance and that is unfortunate. There is much talent out there that would be worth investing in,” says Amalie Norstef at Nestlé Nordics.
“Influencers feel like they’re losing part of the payment to fluctuating rates or high transfer fees,” says Harri Brown at Antler Social.
“Right now, we mostly follow commission-based or flat-fee models, but we are actively looking to build more hybrid systems. Performance-based structures allow us to push toward real results like sales, rather than just impressions,” says Laura Donadio at Wild.
FAQs
1. Why is performance-based compensation gaining popularity in influencer marketing?
Performance-based compensation models are gaining popularity because they align payments with measurable outcomes like sales conversions and engagement metrics. This ensures brands get a better return on their digital marketing investments and motivates influencers to deliver higher-quality, impactful content.
2. What are the main challenges in processing payments for international influencers?
The main challenges include complex cross-border compliance requirements, delays caused by regulatory checks, banking system constraints, and fluctuating exchange rates. Additionally, creators who are not registered businesses face difficulties with tax documentation and VAT compliance.
3. How can automated payment systems help reduce delays?
Automated payment systems streamline the process by minimizing manual intervention, reducing errors, and ensuring timely compliance with international regulations. This can significantly cut down payment delays and improve the agency and influencers’ experience.
4. What strategies are brands adopting to attract and retain influencer talent?
To attract and retain influencer talent, brands are implementing faster payment systems like bi-weekly payrolls, hybrid compensation models (combining flat fees and performance incentives), and prioritizing compliance to reduce tax and regulatory challenges. These approaches enhance trust and collaboration between brands and influencers.
Conclusion
The influencer marketing industry is transforming significantly as brands shift from traditional flat-fee payments to performance-based compensation models. This evolution reflects a growing emphasis on measurable outcomes and ROI-driven strategies. However, cross-border compliance, payment delays, and regulatory challenges remain critical roadblocks to sector growth.
Agencies are exploring hybrid models and investing in automated payment systems to address these issues, while some brands like Pepper Agency and SoSquared are leading the way with innovative practices. Resolving these challenges is essential for creating a more seamless, efficient, and inclusive influencer ecosystem, ensuring sustainable growth for all stakeholders involved.
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