Influencer marketing is a growing trend in modern-day social media marketing. Every day, both large and small brands are leveraging on this opportunity, engaging people as ambassadors of their brands to reach out to more customers that are loyal, improve brand awareness and extend the reach of their products or services. No doubt, influencer marketing gives your brand an authentic and unique voice.
However, if you have already launched an influencer marketing campaign, it is likely that you are wondering right now how to measure the influencer marketing ROI. The influencer promotes the values of your brand and generates tangible ROI. The good news is you can determine the success of your influencer marketing strategy!
Tracking and measuring this ROI is achieved by focusing on specific Key Performance Indicators (KPIs). In this post, you will learn how to measure and calculate the ROI of an Influencer marketing campaign.
Why is ROI Useful?
One key indicator of the performance of your influencer marketing campaign is the ROI. It is a measure of the result of the marketing campaign strategy in terms of profitability. The ROI gives a clearer picture of how much returns is generated on each dollar invested in the campaign.
In influencer marketing, it is important to evaluate the outcomes of each of the social media network to see if the result is positive or negative. By calculating the ROI on each of the social networks, you will be able to determine which investment was worth it, and which is best for campaigns in the future.
How to Measure Influencer ROI
1. Set Specific Goals Before the Campaign
Measuring ROI is only possible when there is a reference point and a measurable tactic before launching the campaign. So the first question is ‘what are your goals?’ Remember that the purpose of running the campaign in the first place is to reach a target. The knowledge of this goal, even before the campaign starts, makes it an effective influencer marketing campaign.
When you determine the end goal for the marketing campaign, then you can measure the result easily. Some of the common goals include brand awareness, lead generation, conversions/direct sales, and brand lift. This means that the returns can take diverse forms, and can be measured in terms of audience reached, sign-ups, subscriptions, followers, and more.
2. Determine the Total Assets You are Investing
Just like simple mathematics, if you must know the returns, then you have to define your total investment. That means that your investments must be measurable. Some measurable assets that will help you determine the influencer marketing ROI include:
- Discounts on Direct Sales: Giving influencers unique promo codes helps you track down and measure the returns from your influencer marketing campaign.
- Affiliate Links: By generating a unique affiliate link for your influencer, you will be able to keep track of all online sales through their social media handles, as the link stores data of total clicks and sales from the brand website.
3. Include the Cost of the Campaign
To effectively measure the performance of the campaign and determine the returns, you have to factor in the costs spent during the setup and running of the campaign. You should also factor in the costs of all free products and demos, as well as the cost of researches and content creation for the influencer campaign.
One easy way to evaluate your returns and determine the success of the campaign is to use a cost-per-action (CPA) formula. However, it works when there is an established benchmark.
4. Collect All Campaign Data
To measure the ROI, you need to compile all relevant data points. You can measure impressions, follower growth, engagements, and conversions. If you sell online, then measure direct sales.
- To determine the earnings from direct sales, sum up all sales amount generated from the influencer and divide the value by cost of the campaign.
- Next to determine the potential impressions per influencer’s post, multiply the total shares by the number of followers on the social platform.
- Lastly, to measure the conversion rates, focus on the actions of the readers after viewing the posts.
How to Calculate ROI
The essence of calculating the ROI is to determine if the return of the campaign is positive or negative and to determine whether the campaign generated the much-desired profit.
Calculate ROI using the formula:
ROI = (Profit – Investment)/Investment x 100
The investment is the total cost of the campaign
Let’s consider an example:
A company that sells sports wears intends to launch an influencer marketing campaign. Assuming their goal is to improve brand awareness and increase popularity to acquire a large audience or loyal customers with the following proposal:
- Campaign investment = €2,000
- Number of influencers = 3 (with a total audience reach of 50,000 followers)
- Social networks = Instagram and Twitter
- Contents = 5 posts per influencer, with special discount codes to attract more potential buyers (15 publications in total)
If at the end of the campaign, the data and value generated by the created contents amounted to a profit of €8,000, then applying the formula, we see that:
ROI = (8,000 – 2,000)/8000 x 100 = 75%
This implies that for every dollar, invested in the campaign, the company received a return of €0.75. This is a positive value (though not very impressive). Hence, the campaign can be considered a success.
What You Measure
Note that how you determine the ROI of your influencer marketing depends on the pre-set goals and objectives of the marketing campaign.
You must have set specific goals before going about the influencer marketing campaign. For example, popularity is more important than sales if your brand is new in the market. This implies that what you are to track depends on your marketing goals or objective. Some of the metrics you track and measure are:
- Target Audience Reached: If the goal is to bring your brand to as many people as possible, then this metric is worth tracking. While it may be a bit tricky to measure your ROI here, you will be able to measure the number of loyal followers and clicks from the influencer.
- Engagement: This measures how potential customers respond to your brand. This is a measure of the cost-per-engagement (CPE). And you can track how much dollar is spent per like, comment or click views and shares.
- Impressions: This is an indication of how people see the posts of your influencers, and the number of generated impressions is an important statistic to track.
- Visibility: You can track the online popularity of your brand, using social media listening to see how much organic conversions your brand generated during the campaign.
- Followers: One of the aims of launching an influencer marketing campaign is to attract organic followers. You can track the impact of the campaign by checking the number of social media followers before and after the campaign.
- Conversions: This is a measure of the rate at which followers respond to the influencer’s posts. And depending on your brand goal, tracking this metric can be used to measure the influencer marketing ROI.
- Sales: An effective influencer campaign should be able to drive a good amount of conversions. Compare post-campaign sales to previous sales to keep track of the sales increase.
- Website Traffic: This is a measure of how many persons your influencer can pull to a specific landing page, without much emphasis on their activities when they visit. However, you can use this to measure the ROI by assigning a speculative value to each visitor’s worth.
All the metrics mentioned above are dependent on which is relevant to your specific influencer marketing campaign based on your specific goal. Other areas of measurement include sign-ups and subscriptions, form completion and an increase in the number of users of your product.
Helpful Tips for Measuring ROI of Influencer Marketing
For you to be able to tell clearly if your influencer marketing campaign is a success and result oriented, here are some useful tips to help you when it comes to ROI measurement:
- Track and measure everything relevant
- Carryout real-time and up-to-date analysis
- Use links that can store traffic logs and are traceable
- Use revenue-driven campaign hashtags
- Provide incentives by using promo codes
- Always measure brand awareness level over time
Do you have further questions about how what ROI means and how to determine the ROI of influencer marketing, leave us a comment below. We would love to hear from you.