Having a presence on social media and other online platforms is now common in the life sciences industry, and it has given rise to social media influencers — individuals with larger than average audiences on different social media platforms. In healthcare, influencers are found primarily among the ranks of healthcare professionals (HCPs) and patients. But they may also include lifestyle influencers that are not as directly connected to a specific disease state.
As might be expected, influencers maintain a robust online presence. Whether through personal experience or years of study and clinical practice, the power of an influencer’s reach and the trust they build with their followers is what sets them apart. Because of this, audiences are slightly more engaged and willing to put trust in the information provided by their preferred influencer.
Pharma and medical device companies see added value in partnering with HCP and patient influencers to tap into that engaged audience. However, when it comes to compensation for using an influencer’s platform or for consulting them, the jury is still out on how much an influencer’s online presence should affect the fair market value (FMV) of their services.
Why Traditional Compensation Methods May Not Work
Traditional methods for compensating an HCP or a patient for their services build off a base hourly rate that reflects fair market value. A typical engagement fee will multiply that hourly rate by the number of hours required to perform the service in question.
But for influencers, meeting the demands of social media and maintaining an online presence don’t necessarily align with this traditional compensation framework. Unless an engagement involves something intensive such as video creation and editing, social media posts often demand relatively little time from the influencers. Rather than focusing on the time involved, influencers request payment that reflects their reach and impact more than hours of effort. Existing compensation policies may not be able to handle the added complexity of influencer compensation and alternatives are required to get the job done.
Different Approaches to Influencer FMV
Based on Cutting Edge Information’s observations, methods for compensating influencers tend to fall into one of two general categories: the agency-centric model and the compliance-centric model.
- Agency-Centric Model – This is the existing influencer model inherited from other industries, built upon traditional marketing agency practices. These practices let influencers negotiate their desired rate against limitations in brand campaign budgets. While this model can be applied to HCP influencers, the difficulty lies in aligning compensation with established FMV rates and structures.
- Compliance-Centric Model – Although less common, compliance-centric frameworks pay influencers within a predetermined fee-for-service arrangement that has been developed for this purpose. This approach mirrors the conventional FMV-based remuneration developed for traditional HCP engagements. The challenge with this approach? Standard hourly rates may not add up to competitive fees, especially if social media engagements require less work and aren’t typical “hourly” arrangements. An influencer may not be as willing to provide their platform or expertise simply because the compensation is too low.
No single approach has emerged as the predominant compensation framework for social media engagements. Whether compliance-centric, agency-centric or something else, determining appropriate FMV for an influencer’s services is still up for debate. But even when FMV is clearly established, how do organizations measure an influencer’s reach? What metrics can companies use when selecting an influencer for an engagement? Cutting Edge Information takes a closer look at these questions in our next blog, Influencer Fair Market Value Part II: Four Metrics for Valuation.
Contact Cutting Edge Information today to learn more about HCP Fair Market Value rales and our annually updated FMV database.