How to Price Yourself For Sponsorship Deals

“How much should I charge?” is a common refrain among FameBit creators.  I can empathize: I’ve struggled with what to charge for ads on my niche’ website for the past five years.  And just as I thought I had a pretty firm grasp on it, along came video and social media campaigns which complicated things further.

So...how much should you charge?  Unfortunately there is no easy answer (though there are a few “rules of thumb” which can be helpful).  Let’s look at some of the variables involved and try to go through a process where you are neither overcharging and not getting clients, nor undercharging and leaving money on the table.

How Much Is A Customer Worth?  An Advertiser’s Mindset(s)

I’ve seen two general philosophies from advertisers.  One is a bottom-line, return-on-investment (ROI) mindset: they will pay “X” amount of money to get “Y” amount of sales within “Z” weeks.  These people are numbers-driven and usually new companies on tight budgets.

The other mindset is driven more by a long-term customer relationship.  They don’t want to waste money but they better understand the subtleties of getting and keeping customers.

Still, pretty much every company will consider a few metrics in any campaign proposal.  Some  are under your control while others are under their control. Here are the major variables:
 

Click Through Rate

When a potential customer views your campaign and decides to get more information by clicking a link to the advertiser, that click needs to be accounted for somehow.  The ratio of people viewing the campaign to those clicking the link is referred to as the click through rate (CTR).  This is where you are “selling the sizzle” (while the advertiser has to “sell the steak” with an actual sale).  The average CTR rate across all forms of internet advertising these days is very small--on the order of 0.05% (yes, that is 0.0005)!  However, some forms of advertising do better depending on media (like video) and industry or niche’.  Really well-designed campaigns can get about a 1% CTR.

How can you determine your CTR?  Most do this by using a URL shortener service and then determining the CTR through the service’s analytics.  You may want to use a URL shortener for a  period of time before you send a  proposal to a brand to get a general idea of your average CTR.

Another possible way to determine CTR-like metrics on your Youtube videos is by using Cards.  I created a card for a free ebook on all my Youtube videos (even the old ones) then reviewed the Card usage from Youtube analytics.

Once you have a campaign running through FameBit you can use the analytics in your Campaign Card to track CTR (see this help page) and better gauge your performance for future campaigns.
 

Conversion Rate

Once a potential customer arrives at an advertiser’s site, it’s up to the advertiser/brand to make that sale.  The ratio of potential customers to actual sales is the conversion rate.  You as the content creator have very little control at this point.  

There are a lot of variables on the brand’s end such as the layout of the landing page, the advertising copy, and the purchasing experience.  The average conversion rate for online retailers is about 3% but it varies widely: Amazon gets about 13% (partly because of customer loyalty--advertisers take note!) while “mom and pop” sites often get less than 1%.

You might ask the advertiser what their conversion rate is but most will not supply it.  You could try to get a rough idea by using your favorite search engine with queries like “average online conversion rate for [industry].”  HERE is a sample of marketing research with some general figures for different industry groups.

Intangibles

CTR and Conversion rates are useful but should not be used by themselves.  The best you can do is get average figures.

Consider that you may have some other variables that should be factored in to a proposal.  Are you a known authority in your niche’?  Do you have a very specific kind of subscriber or follower?  Are there seasonal or demographic factors involved?

Then there is the price of the actual product to consider.  If the advertiser is selling a $500 camera, each new customer is going to be worth “more” to them than an advertiser selling a $15 bottle of organic shampoo.

Estimates

With the information  you now have, you should be able to make some estimates on how much a campaign might be worth to you.  Let’s say that your videos have an average CTR of 0.75% and the industry you’re working for has a conversion rate of 5%.  That means for every 10,000 views there may be only 3 buying customers.  If the typical purchase is $50 that represents $150 to the advertiser.  If the advertiser is ROI-driven you may be in for a tough time with your campaign proposal.

So What Now?

What if you don’t feel comfortable making those estimates just yet but you still want to participate and send proposals?  Luckily there are some “rules of thumb” you can use to help determine a rate.  Try all of them and if one is way out of whack from the others you can give less weight to its value.

Adsense

The first “rule of thumb” is to simply take your monthly adsense revenue (assuming you are participating) and double it.  The number may be the most conservative compared to other estimates but might be a great place to start with.

Average Views

The next “rule of thumb” comes from FameBit’s own Adam Hendle: total the views for your last ten videos, divide by ten (e.g. take the average), and multiply by $0.05 to $0.10 (US).  The range you ultimately select should be based on how much work you as the creator plan to put into the content creation (will it be just a mention or a full-blown dedicated video?), and also think about the competition of other creators and brands in the niche’.

Social Blue Book

The final “rule of thumb” is to use Socialbluebook.com.  Social Blue Book can provide you with a rough value of your social presence, though they don’t explain how they arrive at that figure very clearly. Also note, FameBit is also not associated with SocialBlueBook in any way and can not backup any values provided as we unclear as to how these values are calculated.

These tools should give you the knowledge you need to confidently understand your work’s worth and how it can translate into a successful proposal.

 

Author Bio:

Mark, AKA “mantic59” has been a blogger and video creator for the past ten years, specializing in men’s shaving and grooming topics. You can view his site Sharpologist here.