Many pharma and biotech companies are in the dark when it comes to how influencer agencies are allocating the budget.
You should have full visibility to what portion of your budget is going to agency fees, influencer compensation, talent manager fees and paid amplification.
Let’s talk about the different line items that make up your budget and what the Voronyx team considers best practice.
Budget Breakdown
Agency Fees: This covers the work of the agency to build your strategy and creative brief, consult with your MLR teams, search for the right influencers for your campaign and build out contracts. It also covers the activation, which includes outreach, negotiation, contracting, training, content development oversight, managing approvals, ensuring content is published correctly, managing or coordinating paid amplification, monitoring and reporting.
In healthcare, the agency fees are considerably higher than in other industries. This is because of the strict regulatory environment, which requires significantly more planning in advance, training and communications with influencers, pre-approval of content and monitoring for compliance.
Influencer Payments: Many healthcare companies contract and pay influencers directly, so they have complete control over the budget. We always recommend this for partnering with healthcare providers, such as medical doctors. However, many rely on their agencies for this work, and that’s where things can get tricky.
It’s important to set an OOP budget in advance and the agency should:
- secure your approval of each influencer payment during negotiations, ensuring you sign off on individual payments.
- manage this line item as OOP, separate from fee. Don’t let these get lumped together in the SOW or budget reporting.
- credit you for any remaining OOP budget.
Keep in mind that it’s industry standard for agencies to invoice brands for the influencer payment OOP when kicking off the work. This is important so they have the funds in hand and can quickly pay influencers in a timely fashion. Unfortunately some agencies don’t pay influencers immediately and claim they don’t have the funds from the brand to do so. The influencers deserve to be paid quickly upon meeting their requirements.
RED FLAG: Some agencies hope they can get extra money if they can keep influencer payments low. If they aren’t getting your approval for individual payments in #1 above, you may not know this is happening. Also, agencies should never mark-up influencer costs.
Commissions: Some healthcare influencers have talent managers who represent them for brand partnerships. In this case, influencers typically pay ~20% commission of their earnings to the manager. It is fair to ask the manager and the influencer what the commission is so you know where your money is going.
RED FLAGS: Be aware that some agencies also represent individual creators and are “double dipping” – taking an agency fee AND earning commission from the creators. Many agencies who do both campaigns and rep talent do NOT do this and regard it as shady behavior.
Also, be mindful that sometimes there are multiple talent managers stacking commissions behind the scenes. One talent manager might hear of an opportunity for a creator, but they don’t manage them directly. In this case, they try to act like a broker and insert themselves into the process, giving themselves 20% commission for being the matchmaker. At this point, 40% of the budget is going to 3rd parties vs. the influencer.
Managing these situations effectively requires a savvy influencer agency who knows how to identify these situations and spends your money wisely, with your approval.
Paid Advertising: Most influencer programs in pharma and biotech have OOPs designated for amplifying the content to reach the target audience. This is typically paid directly to the platforms, such as Meta or TikTok. Ask where the paid strategy, management and reporting fees are being included in the budget. Some agencies designate a % of the OOP budget to manage the ads, while others include these costs in the fee portion. Like influencer payments, there should not be a mark up on advertising OOP.
Transaction Fees: If agencies are paying the influencers on behalf of the brand, it’s typical to include a processing fee, either per influencer or % of the budget. This covers the additional costs of onboarding the influencers as vendors, securely holding the funds, making payments and issuing 1099s at the end of the year. Some agencies partner with 3rd party payment companies that specialize in working with influencers, such as Lumanu. These costs may be baked into the overall budget, but sometimes it is called out as a separate expense.
Ask Questions and Demand Transparency
At Voronyx, we create clear, transparent budgets with our clients and never mark-up influencer payments. We pay close attention to how talent managers are representing themselves and ensure they only earn a commission if they have are already contracted with the influencer prior to initial outreach.
It’s important for everyone to be aligned and understand where the dollars are going.
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