It can be difficult to link your marketing spend back to calculating influencer marketing ROI.
Unless you’ve been living under a rock or haven’t been actively participating in the digital world, you have no excuse whatsoever to not be familiarized with one of the most effective and accessible marketing strategies to date.
Put simply, influencer marketing is a form of marketing where a content creator with a sizeable follower base endorses a product or a brand in exchange for some form of compensation.
Yet, influencer marketing is so much more than teaming up with an influencer, sealing a deal, and promoting your brand.
In reality, it’s a marketing strategy that requires detailed planning and proper implementation.
And while you may be great at crafting a goal-driven influencer campaign, you might struggle with calculating your influencer marketing ROI just like many others.
The Significance of Influencer Marketing
While calculating your influencer marketing ROI may seem like a daunting task (and we don’t deny that it can be!), and this discourages you from using influencer marketing in your marketing strategy, allow us to change your mind.
Well, influencer marketing can be one of the best digital strategies that has ever happened to your brand – if done correctly.
But if you want to understand influencer marketing and influencer marketing ROI, you have to understand influencer marketing statistics first.
Let’s take a look at some of the key findings from the “Influencer Marketing 2020” report:
- The majority of consumers express a preference for influencers who create authentic, engaging content.
- 90% of marketers say proving authenticity is critical to the future of influencer marketing.
- 85% of marketers say engagement data is the biggest metric of success for influencer marketing.
- ‘Fake followers’ ranks as number one concern within influencer marketing.
- 100% of marketers agree that ‘relevance’ is the most sought-after attribute in influencers.
- Proving the ROI of individual influencers is a big challenge for 84% of marketers.
Indeed, influencer marketing can be one of your most valuable tools – a social media post or a video by an influencer can boost your brand’s sales in the wink of an eye.
In turn, this affects your social media ROI, as well as your overall brand image and reception.
What Metrics Can You Track?
What makes influencer marketing so versatile is its ability to suit the needs of both new and well-known brands.
A successful influencer campaign not only leaves the influencer and its target group happy, but it generates a satisfactory ROI for the brand too.
So, how can you make sure that you’re getting the influencer marketing ROI you aim to capture? What metrics can assist you in getting there?
Determining Campaign Goals
An influencer marketing campaign without predefined campaign goals is a campaign not worth pursuing.
Measuring your campaign’s success along with your influencer marketing ROI is impossible if you don’t outline your campaign goals first.
Here are a couple of KPIs you can set while planning your influencer marketing campaign:
Influencer marketing is an amazing way to promote your brand and increase its visibility. And what better way to do so if not by collaborating with an influencer suitable for your brand’s niche?
No one can create more buzz around your brand and products than an influencer can.
Want to get people talking about your brand?
All it takes is for an influencer to post an image of your product, or mention it in an Insta story!
Influencers have the power to both turn new brands into overnight success and strengthen the power well-known ones already have.
It might sound too good to be true, but practice shows that influencers are able to help a brand boost awareness and deliver tangible business value.
Don’t take our word for it – check out this list of 5 brands that became famous thanks to influencers.
Noticing the impact an influencer campaign has had in terms of brand visibility is easy: all you need to do is monitor your traffic, engagement, and follower count 24 hours after an influencer has published new content (about your brand, obviously).
Collaborating with influencers can drastically boost your social media following. This in turn may very well impact your social media ROI as well.
Let’s say you’re selling notebooks and planners, it’s December 2019, and one of your key upcoming products is a 2020 planner. You partner up with an influencer who might organize a planner giveaway on Instagram, for example.
The influencer will most probably link your Instagram profile too or even your official website, so that you get extra exposure and website traffic.
The increase in social engagement will get your brand on the radar of people who haven’t heard about you before, and show you how your potential audience perceives your product.
To see the actual value an influencer provides in terms of audience engagement, divide the total compensation an influencer receives for a campaign by the number of interactions generated by a specific piece of content.
However, you must be really careful when choosing your influencers. While many influencers boast large followings, it doesn’t necessarily mean that their following is engaged – or even real! Use influencer tracking techniques to vet and understand the true reach of your influencers.
Conversions & Sales
One of the most important aspects of any digital campaign is its ability to drive sales.
Influencers are authority figures in the digital world, so when a particular influencer promotes a specific brand, the brand gains greater importance and validation.
If a well-known influencer wears a specific hat – the followers want to have the very same hat; if the influencer eats at a newly-opened place, the followers want to visit the same place; if the influencer promotes a new face cream, the followers want to have it as well.
You get the point.
It goes without saying that an influencer’s endorsement is highly valued, and getting one is one of the fastest ways to 1. get more people interested in your products, and 2. get more people to buy.
There are a couple of ways you can track the effect an influencer has on your sales:
- Provide them with a custom discount code.
The influencer will share this code with their followers, offering them extra discount if they use it when making a purchase. Usually, these codes last for a certain amount of time (a week, two or a month), and allow you to see exactly how many people bought a product after learning about it from an influencer.
- Create a unique affiliate link.
Usually, when buying through an affiliate link, the buyer doesn’t get any discount, but the influencer will receive a commission for every purchase made through their link.
- Set up a landing page unique to the influencer.
This works similarly to affiliate links – you set up a unique landing page for the influencer that the audience uses to make their purchases.
It goes without saying that understanding the impact an influencer has on your engagement and conversions is the only way you can determine if the campaign costs are justified.
It’s also the only way you can compare between influencers and choose a partner that makes you more money than you spend…
… which takes us to our next point: the costs of running an influencer marketing campaign.
Initial Investment Costs
Influencer marketing campaigns are some of the most time-consuming campaigns you can undertake.
Not only does the actual planning take a lot of time (and a lot of nerves too!), but what comes after the actual campaign is over (calculating your social media ROI, for example) can be an equally daunting task.
Figuring out how much you should pay an influencer can be quite a challenge, especially because the expected monetary sum seems to constantly be changing.
On the one hand, you might want to be generous to those promoting your brand, but on the other hand you also don’t want to break the bank now, do you?
If you’re not sure how much of your budget you should allocate to influencer marketing, take a look at the following blog that gives a brief overview of influencer rates on different platforms: Influencer Marketing Pricing: How Much Does It Cost in 2020?
Besides paying influencers for promoting your brand, you might also give them a free sample product.
What a lot of brands usually do is they give influencers a fixed budget and they’re allowed to choose products up to that amount.
So, if you’re selling sports leggings, for example, you might allow the influencer(s) you’re collaborating with to choose leggings (of their own preference) up to a certain sum of money.
Marketing Agency Expenses
If you’ve contacted a marketing agency to help you find adequate influencers for your campaign, you also have to pay them for the service.
This puts off many people from actually contacting a marketing agency. However, partnering up with a marketing agency could prove to be useful in the long run – marketing agencies already have prior experience with certain influencers, and they might even offer you package deals.
Tools to Calculate Influencer Marketing ROI
If you’re running an influencer marketing campaign, chances are sooner or later you’ll realize you need extra tools to assist you in the process.
Indeed, human communication is key when it comes to influencer marketing campaigns, however, human planning is simply not enough.
Luckily, there are more than enough tools to assist you, and while some may be better than others, there’s something for everyone’s needs.
Here are our top three picks:
1. Google Analytics:
A great tool to have even when you’re not running an influencer marketing campaign.
What makes Google Analytics so amazing is that it gives you absolutely free tools that allow you to closely analyze your business data – you can do so in one place, which makes it a super user-friendly tool.
Besides, tracking your social media ROI using Google Analytics is now easier than ever.
You can use it to track your referral traffic along with track lead and sales conversions. Tracking your referral traffic is especially significant, as that’s the component that shows you which influencer is responsible for driving the most traffic to your site.
What’s more, Google Analytics has five standard campaign parameters you can use in each social post’s URL:
A fun fact: did you know that there are at least 29,134,826 live websites using Google
Yes, we’re also a great asset to your influencer marketing campaign!
Influence your influencers is our motto, and we can help you fully understand how much each influencer you’re collaborating with impacts your campaign on the whole.
More specifically, we focus on calculating how much each influencer contributes to the engagement, reach, as well as the impressions that your brand and the overall campaign are receiving.
Our user-friendly dashboard outlines each aspect, and you’ll know where you stand at any given moment.
Plus, making use of our Influencer Tracking feature will help you gain valuable insights into your influencers social media accounts. What’s more, we help you discover not only new, but highly relevant influencers for your niche.
A fun fact: we even offer a free trial! Try it here.
One of the most useful tools in finding contacts you need, but don’t have.
It allows you to be in complete control over your lead generation process by offering the following features:
- Domain Email Search
- Email Verifier
- Email Drip Campaigns
- Email Tracker for Gmail
- Professional Email Search
- Technology Checker
A fun fact: Snovio currently has more than 370,000 active users on board!
Influencer Marketing ROI Formula
Okay, now that we’ve established what the costs of influencer marketing are and some of the KPIs you can track, let’s talk about calculating the overall ROI of your campaign.
Calculating ROI is by no means simple.
In fact, it’s the most challenging aspect of the whole influencer campaign. However, there are simplified ways to approach it and measure it.
You can calculate your ROI using the following formula:
ROI (Return on Investment) = Profit Return /Investment x 100
Let’s say you’re running an eCommerce platform selling cosmetics and you decide to invest $5,000 in an influencer marketing campaign.
You make the plan, you find a proper influencer to partner with, you decide on the social media platform you’re going to go for, and eventually you generate $10,000, which looks like this:
ROI = $10,000/ $5,000 x 100 = 200% ROI
We’re aware that this is a rather simple example, and in practice measuring your ROI can pose a real challenge.
However, each new influencer campaign will demand a new ROI approach anyway, and while it gets easier with experience, you’ll always have to adjust to the current situation.
Final Thoughts on Influencer Marketing ROI
Whether you’re supporting it or not, influencer marketing is here to stay.
And while calculating your influencer marketing ROI may be tough, it’s absolutely worth it.
Most influencer campaigns transcend the traditional social marketing strategies that deliver more or less expected results – with influencer campaigns all it takes is to forget the digital rules and simply have a leap of marketing faith.
It’s been alleged that 17% of companies spend over half their marketing budget on influencers.
What about you? How are you spending your marketing budget this year?
Keyhole is a real-time influencer marketing and social listening tool that provides keyword and hashtag analytics for Twitter and Instagram. Get started for free and search your brand.