Have you jumped on the influencer marketing bandwagon yet? As a social media marketing consultant with over a decade‘s experience advising brands on digital strategy, I’ve seen influencer marketing evolve from an experiment to an essential channel today.
But are you measuring performance and optimizing these partnerships for growth? That’s what we’ll explore in this comprehensive guide to tracking influencer marketing return-on-investment (ROI).
Let’s dig in to the specifics.
A Quick Primer: What is Influencer Marketing ROI?
In a nutshell, influencer marketing ROI calculates how much value you derived in relation to the money invested with influencers.
It helps answer key questions like:
- Growth: How much did my business grow thanks to this influencer campaign?
- Profitability: How much profit did I make for every $1 spent on influencers?
- Effectiveness: Did my campaign hit the desired marketing objectives?
Tracking this metric is the only way to quantify success, pinpoint what’s working and maximize future returns. This is why ROI should be the TRUE north of any marketing initiative.
Why Care About Measuring Marketing ROI At All?
“Half my advertising budget is wasted; I just don’t know which half.”
This quote, attributed to marketing pioneer John Wanamaker, sums up how many companies still run influencer campaigns even today.
But consider these knock-on benefits of tracking campaign ROI:
1. Justify Marketing Spend
Influencer marketing budgets can run pretty high with 73% of brands spending over $10,000 a month according to Influencer Marketing Hub.
Measuring tangible ROI and growth driven by influencers makes it easier to validate these expenses across key stakeholders in your organization.
2. Double Down on What Converts
Detailed ROI reveals best performing partnerships, content styles, channels and influencer tiers. You can use these insights to optimize for the highest conversions.
3. Spot Issues Early
Data indicating poor campaign performance due to bad targeting, messaging etc. allows you to course correct before wasting additional dollars.
4. Benchmark & Improve Over Time
Rich performance data aids comparison across campaigns to highlight successes and failures. Tracking ROI over years will surface clear patterns allowing strategy refinement.
In summary, a focus on ROI lends INFLUENCER MARKETING the same rigor and accountability expected of other marketing channels.
But keep in mind…
Not All Influencer Marketing Goals Tie to Direct ROI
While revenue and ROI should ultimately matter for sustainability, influencer marketing can also achieve intermediary objectives crucial for brand growth:
Awareness Building with influencers expanding your reach to new audiences
Engagement Boosts via creative and relevant content
Trust Enhancement by affiliating with subject experts your niche looks up to
So make sure broader metrics beyond ROI also enter your decision framework based on where you are in the marketing funnel.
Now let’s move onto measurement best practices.
Step-by-Step: How Should You Calculate Influencer Marketing ROI?
Walk through this quick 3-step process to determine campaign ROI:
Step 1: Add Up Influencer Investment
Tally ALL costs associated with the influencer activation covering:
- Influencer & talent fees
- Production costs for video shoots etc.
- Amplification spend to boost influencer posts through ads
- Any misc. expenses like travel, equipment rentals
Let‘s say for a campaign involving 5 influencers with the following spend:
|Influencer fees for 3 posts each
|Video production charges
|Facebook and Instagram amplification
|Total Campaign Cost
Step 2: Calculate Revenue Derived
Then determine value the campaign drove across metrics like:
- Sales revenue
- Email sign-ups
- Event registrations
- App installs
Assign an average value per conversion based on your analytics data.
For our example campaign, returns across objectives were:
|450 online course sales at $300 average value per sale
|1,250 $10 sign up incentives given
|Total Campaign Revenue
Step 3: Compute ROI
Finally, apply this formula:
Influencer Marketing ROI = (Revenue – Cost) ÷ Cost x 100
Plugging in our numbers:
Revenue = $147,500
Costs = $11,700
ROI = ($147,500 – $11,700) ÷ $11,700 x 100 = 1167%
For every $1 invested, the campaign generated $11.67 in returns for an ROI of 1167%!
Benchmarking against averages also indicates anything above 100% is solid for influencer marketing.
So this was clearly a HIGHLY effective partnership. Now let’s explore some best practices to replicate success.
Key Strategies to Boost Influencer Marketing ROI
Even well executed campaigns can swing wildly in ROI based on small optimization tweaks.
Apply these tips to magnify returns:
1. Make Predictive Choices Between Macro & Micro Influencers
Leverage social listening tools to analyse the right match between influencer tier and campaign goals:
Macro Influencers with over 100k followers drive awareness. Micro Influencers with <30k followers boost engagement and conversions. Choose based on objective.
Data also suggests Micro influencers have the best ROI.
2. Structure Incentives to Reward Actual Performance
Typical influencer contracts contain guaranteed payouts or upfront fees regardless of results. Instead, bake in performance indicators like sales targets that trigger bigger cuts.
Incentivization clauses for measurable impact ensure the interests of creators and brands align driving higher ROI.
3. Promote Top Content More Aggressively
Double down on boosting posts, videos and stories already gaining organic traction through paid amplification. The momentum indicates your audience finds this content relevant allowing you to stretch value further through ads.
4. Redirect Traffic from Multiple Touchpoints
Place trackable links, offer codes and UTM tags across the influencer’s bio, posts and videos to attribute impact accurately. Create customized landing pages to capture data on site visits originating from creators.
Such deeper tracking helps quantify TRUE attribution. Else you might miss counting conversions that don’t happen instantly but via longer consideration funnels.
5. Maintain Open Communication with Clear Expectations
Continuous feedback loops with influencers ensures better content that moves the revenue needle. Share performance data transparently and guide creators on topics, angles and calls to action that drive actual ROI.
Let’s now analyze how ROI might differ across core social platforms.
Comparing Influencer Marketing ROI Potential by Platform
Strategize channel selection clearly accounting for benchmark performance:
|Average Influencer Marketing ROI
|Use Case Focus
|Brand building & conversions
|Sales via educational content
So opt for Instagram and YouTube when chasing direct sales. Twitter and TikTok influencer content builds brand equity over time eventually contributing to revenue.
Overcoming Common Challenges in Calculating ROI
Despite best efforts, accurately quantifying returns from influencers has its share of hurdles:
Difficulty with Direct Attribution: Marketers struggle to connect the dots between influencer posts and metrics like site clicks and purchases. Sophisticated tagging and analytics setups are needed to address this issue.
Longer Diffusion Effects: Influencer impact has ripple effects beyond initial views. Content keeps surfacing via shares slowly converting fencesitters. But brands desire instant campaign ROI analysis.
Isolating the Influencer Factor: As most brands run multi-channel campaigns, separating value derived purely from influencers isn’t straightforward. Control groups monitoring non-influencer factors are ideal but difficult to implement for ongoing programs.
Invisible Brand Lifts: Sentiment shifts thanks to influencers are crucial brand health metrics but tougher to size up numerically. Surveys and interviews then need to enter the ROI mix.
For addressing attribution challenges, I recommend integrating campaign management platforms like AINFLUENCER into your stack providing holistic ROI tracking capabilities out-of-the-box.
Key Takeaways from Our In-depth Influencer Marketing ROI Guide
Let‘s recap the key points:
- Set up attribution tracking across website, social platforms and landing pages to quantify conversions
- Analyze historical performance to guide future decisions on partnerships and channel selection
- Structure win-win contracts with clearly defined success metrics and payouts
- Promote high performing pieces of content more aggressively through ads
- Maintain consistent communication with influencers on ideal messaging and content that drives ROI
While challenges exist in measurement, steps like adopting the right tools and processes will help showcase the tangible business value delivered by influencers.
What else would you like to know about extracting more value from influencers? Looking forward to helping with any other questions in the comments section below!