As the influencer marketing industry continues to explode in 2022, more companies are turning to partnerships with social media creators as a winning strategy on the digital plane. The biggest challenge for many brands, however, is understanding how to measure influencer marketing ROI.
With the industry hitting $16.4 billion this year despite the last two years of business shutdowns and supply chain disruptions, companies can no longer ignore the power of influencer marketing.
Image via Influencer Marketing Hub
That said, getting value from an influencer marketing campaign requires strategy, goal setting, and KPIs that you can measure.
Does the popularity of an influencer directly translate into a high Return On Investment (ROI)? How do you measure whether partnering with an influencer brought value to your business?
The following quick guide answers these questions and provides you with useful metrics to help you measure influencer marketing ROI.
Let’s take a look:
How to Calculate Influencer Marketing ROI: The Prerequisites
Since all social media platforms use algorithms to operate, any change in a given algorithm can affect the organic reach of an influencer marketing campaign.
These constant algorithm updates and the ever-rising rates charged by influencers mean that it’s more important than ever to understand how to measure the ROI of influencer marketing.
Before we get to how exactly you can measure your ROI, it’s important to consider a few prerequisites.
Set Clear Goals
Before setting out to create an influencer marketing campaign, you’ll need to specifically identify the marketing goals you’re looking to achieve. Are you looking to grow brand awareness, build your online community, collect UGC, generate sales, or all of the above? Setting clear goals and prioritizing them will help you identify the right influencers for your brand.
Without clearly prioritizing your goals, it’s easy to get caught up in the act of trying to have your influencer marketing campaign accomplish everything at once. And if you try to prioritize too many goals in one campaign, it’s unlikely that you’ll make meaningful progress on any of them.
Determining the key performance indicators (KPIs) that will measure the campaign’s success is always necessary. Without them, you won’t be able to calculate your influencer marketing ROI. These indicators will vary depending on the goals of the campaign.
If the campaign’s goal is to grow brand awareness, for example, then the metrics of most importance to measure would be factors like reach and impressions.
Create an Influencer Marketing Strategy
Without a clear marketing strategy for your influencer campaign, you won’t get the desired results.
When creating an influencer strategy, you’ll want to consider the best social media channels to reach your target audience, best content formats for your goals, and more. All of these factors can make a big difference in your campaign’s results.
For example, if your brand needs UGC to repurpose for other marketing tactics like your website, you’ll want to focus on partnering with influencers to generate static in-feed content.
But if your brand awareness is already high and you’re looking to maximize conversions, you’ll want to focus on having influencers create high-impact video content that captures the audience’s attention and gets them engaged.
Have a Budget
Every influencer marketing campaign is an investment. Similar to other marketing methods, influencer marketing requires a budget that can include items such as the influencer’s fees, the cost of software for sourcing and analytics during the campaign, and labor for campaign strategy and management.
Ideally, you’ll want to estimate these expenses and assess the total campaign budget that you can afford. The cost of influencer marketing is a crucial step in maximizing the ROI of a particular campaign.
About 82% of organizations take their influencer marketing budget from their total marketing budget. Deciding what portion of your total marketing budget to spend on influencers will depend on the goals for your business and influencers specifically.
Image via Influencer Marketing Hub
Most brands have success with influencer marketing campaign budget planning by first determining the maximum budget they can afford to spend on influencers. Then, with the campaign budget established, they can work backwards by setting KPIs and calculating the estimated campaign results.
Important KPIs to Track in Influencer Marketing
To measure ROI for influencer marketing, you’ll need to look at both quantitative and qualitative data.
Combining the two provides a broader outlook into the campaign and will give you a comprehensive overall view.
Let’s look at the KPIs you need to keep an eye on to measure the ROI of your influencer marketing campaigns.
Reach and Impressions
What’s the difference between reach vs. impressions?
According to Sprout Social, reach is the total number of people who see your content. Impressions are the number of times your content is displayed, no matter if it was clicked or not.
So, for example, your campaign content may reach 1 million people, and your content may be displayed an average of two times to each of those people. This would result in a campaign reach of 1 million with 2 million total impressions.
It’s common for influencer marketing campaigns to gauge the level of brand awareness by tracking and measuring both reach and impressions.
The more your audience is exposed to your brand and products, the more likely they are to consider your brand for their next purchase.
The engagement that the influencer’s content generates on social media is extremely important. The level of an influencer’s engagement is a direct indication of how interested their audience is in their content.
The engagement rate of your influencer partners can make a big difference in helping you get your brand in front of your target audience and growing your reach.
That’s why engagement rate tends to be the single most important metric for influencer marketers.
Engagement can be broken down, depending on the social platform, into engagement rate and number of engagements. The number of engagements can include actions such as likes, comments, saves, and shares.
Make sure to track and measure it all, then compare the performance of your influencers and campaigns to determine what’s working best in your strategy and maximize your ROI.
The average influencer engagement rate on each social platform varies greatly. Consider the average engagement rates below when considering which social platforms to include in your campaign strategy.
Image via Influencer Marketing Hub
After all, posts that get higher engagement are likely to be seen by more people, which will boost the total campaign reach.
Revenue and Conversions
Ultimately, the goal of every brand is to grow its revenue and sales. Brand awareness and consideration comes first though.
But what if your brand already has a high awareness among your target audience? Then it should be a no-brainer that one of the most important KPIs that you’ll want to measure is the revenue generated directly from your influencer marketing campaign.
Be sure to track the conversion rate as well in addition to the number of conversions.
How can you do this?
You can track link clicks generated by influencers by providing each influencer with a UTM link at the start of the campaign. UTM links allow you to track the traffic each influencer generates individually.
With UTM links, it’s easy to measure and analyze the volume of traffic that influencers are driving and also figure out metrics like Cost Per Click (CPC). You can also use tools like Google Analytics to track the actions of the traffic driven to your site by the influencers in your campaign.
More Things to Keep in Mind
Now that you know all about the various KPIs that go into influencer marketing ROI, let’s take a look at a few other things you’ll want to be aware of.
Rise Above Standard Metrics
While the goal of any marketer is to maximize the campaign KPIs, it’s easy to get lost in the vanity metrics. Engaging an influencer can do way more for your brand’s strategic growth than what’s shown in the numbers.
Other than metrics like engagement and sales, you can measure things like brand sentiment to see if there are shifting perceptions about your brand. If your campaign had an impact on deepening customer relationships, you’ll see evidence of that in the conversations that happen in the comments on influencer’s posts.
Are the influencer’s comments all emojis or one-word responses? Or is the influencer’s comment sections filled with long and elaborate back-and-forth audience conversations around your brand and products? The latter is always the goal, and if your campaign can achieve this level of engagement, you’re bound to see a high ROI.
To achieve positive conversations and change in brand sentiment, you want to only partner with influencers who reflect your brand’s mission and goals.
Request Platform Analytics Reports
You can measure the influencer’s performance metrics only to a certain extent. To get access to all of the data, you’ll need access to the influencer’s platform analytics to fully understand how their content is performing.
You can request that influencers send a copy of their platform analytics to you after they post.
These reports help provide deeper metrics and insights about the campaign and tracking them will help you fully understand campaign performance.
Manually requesting analytics from the influencers in your campaign can get very time-consuming, especially if your campaign includes dozens of influencers.
This is why many brands choose to either purchase access to a 3rd party influencer marketing platform that tracks campaign analytics or hire an experienced influencer marketing agency to track analytics for them.
Other Factors Affecting ROI of Influencer Marketing
As you track your KPIs, it’s important to note that there are other factors that affect the ROI of your influencer marketing campaign too.
Duration of Endorsement
When partnering with an influencer, it’s important to consider the length of the contract with them. While a one-off transactional engagement may appear cheaper and business-friendly, it’s always the stronger long-term relationships that pay off and generate the most ROI.
Over time, the influencer will become familiar with your brand and its products. Additionally, they’ll see value in promoting your brand as a long-term partnership benefits them in the long run, as well.
Also, with a long-term influencer partnership, your audience will receive multiple touchpoints with your brand and products, raising brand awareness and consideration exponentially. The influencer’s audience will start associating the influencer with your brand as the influencer mentions your products consistently.
Additionally, you want to ensure that the influencer’s content isn’t short-lived. After a campaign ends, the content shouldn’t cease to generate impressions or attract an audience.
The quality of the content that the influencer creates is equally important in considering your influencer marketing ROI.
If you find the influencer’s content quality to be high-impact and high-converting (think scroll-stopping), you can agree with the influencer to obtain licensing rights to their content.
With content rights, your brand can use the influencer’s content in the form of paid promotions or repurpose it to other marketing tactics and drive up your overall marketing ROI even after the influencer campaign ends.
1. How do you measure the effectiveness of influencer marketing?
You can measure the effectiveness of your influencer marketing campaigns by defining and monitoring the KPIs related to your campaign’s goal. These include metrics like engagement rate, impressions, link clicks, etc.
2. What is ROI in influencer marketing?
This is the earned media value or revenue made by investing in an influencer marketing campaign as compared to the expenses incurred in the process. The ROI can be in the form of increased brand awareness, growth in sales, deepening of customer relationships, and more.
3. How do you calculate ROI for Instagram influencers?
To calculate ROI for Instagram influencers, first start by identifying the KPIs from Instagram related to your campaign goals. Next, check and sum up the performance metrics from the influencer’s posts and weigh them against the total campaign expenses to find and measure the earned media value or the ROI.
4. What’s an example of a good influencer ROI?
The average influencer marketing ROI is $5.20 for each dollar spent, but influencer marketing ROI varies greatly by brand and by niche.
Tracking and measuring the ROI from an influencer campaign can seem difficult and time-consuming. You can make it easier by identifying the right KPIs for your brand’s goals, determining how to track them, and then evaluating the campaign’s metrics against the total investment made.
Whether it’s tracking campaign ROI, finding the right influencers, or managing campaign execution, we can help you with it all! Get in touch with us and we can discuss your brand’s unique approach to influencer marketing.