Influencer marketing is all the rage.
That’s because audiences would much rather hear from personalities they know and love rather than a brand they’ve never heard of.
Collaborating with an influencer is a great way to fast-track your success, but how do you calculate the ROI of working with an influencer? And how can you measure one influencer against another?
Let’s walk through some of the key influencer ROI metrics.
Influencer Social Media Metrics
Determining what a successful influencer relationship looks like depends on your brand’s goals. Are you looking to increase brand awareness? Are you looking to drive sales?
What you consider a return on your investment will affect how you measure the success of an influencer.
Here are some key metrics to track:
- Visibility Metrics: Impressions, reach, new followers, website traffic
- Engagement Metrics: Likes, reactions, comments, shares
- Conversion & Sales Metrics: Form submissions, newsletter subscriptions, eCommerce sales, and revenue generated
How to Calculate the ROI of an Influencer
The influencer ROI calculation is simple:
ROI (Return on Investment) = Net Return / Total Investment x 100%
The “total investment” portion of the equation is relatively easy to calculate. This is the total cost of working with an influencer.
This includes direct costs like how much you paid the influencer and the cost of any merchandise given away, as well as hidden costs like the value of your own time and marketing agency expenses.
The “net return” is harder to calculate but represents the profit you earn from working with an influencer.
In some cases, profit is easily quantifiable in terms of dollars. For example, if your influencer is sharing a referral code or link that can be directly attributed to sales, the calculation is simple.
However, in other cases, if your goal is for your influencer to earn a certain number of impressions, you may need to translate those impressions into a dollar value, or express the result of the equation as a cost per impression.
Influencer ROI Examples
Example 1: For a dollars-to-dollars example, let’s assume you want your influencer to drive e-commerce sales. If you spent $5,000 working with this influencer and they generated $20,000 in sales, that’s a 300% return on your investment:
ROI = Net Return / Total Investment x 100%
= ($20,000 – $5,000) / $5,000 x 100%
= $15,000 / $5,000 x 100%
That means you profited by three times as much money as you spent. You could then compare one influencer to another to determine which influencer generates the most business for your company relative to their cost.
Example 2: If your goal is impressions, you can either express the equation in terms of a rate cost, or you can convert the value of impressions to dollars.
For example, you could calculate ROI as a rate:
ROI = Impressions / Total Investment
= 1,000,000 impressions / $5,000
= 200 impressions per dollar (or $0.50 per impression)
Or you can translate first translate impressions to a dollar value. For example, if you know your company receives $10,000 in sales on average per 1,000,000 impressions:
ROI = ($10,000 – $5,000) / $5,000 x 100%
= $5,000 / $5,000 x 100%
Note: An ROI of 100% means you doubled your investment.