Influencer marketing has become a hot topic. As a whole, the industry is worth an estimated $21.1 billion as of 2023 (Statista). This fast-growing acquisition channel can add strength and scope to the rest of your marketing strategy. But as with any type of marketing, there are no guarantees. The only way to know whether your efforts pay off is to track your progress.
Strong ROI is possibly one of the influencer marketing industry’s greatest advantages, yet many find this the hardest KPI to quantify. This might be because of the unique ways brands spend money on influencers or the “newness” of the industry.
Understanding Influencer Marketing ROI
To successfully navigate the realm of digital marketing, businesses must possess a comprehensive comprehension of influencer marketing ROI. This notion extends beyond mere numerical figures and percentages; it encompasses a holistic portrayal of the worth derived from influencer marketing endeavors. Consequently, a profound understanding of influencer marketing ROI is indispensable for the triumph of any campaign.
Defining Influencer Marketing ROI
Version 1: The essence of Influencer Marketing ROI lies in evaluating the profitability of your influencer campaigns. This evaluation is based on calculating the return on investment generated by these campaigns. The fundamental principle is simple: for every dollar invested in an influencer marketing campaign, what is the corresponding return?
Why Influencer Marketing ROI Matters
Investments are primarily focused on achieving a return, and influencer marketing is no different. Companies allocate resources to influencers with the aim of boosting brand visibility, attracting potential customers, and ultimately, boosting sales. Therefore, accurately measuring the return on investment from influencer marketing is essential for a company’s marketing plan.
By evaluating the ROI, you can:
- Justify your marketing spend: Demonstrating a substantial return on investment not only confirms the effectiveness of your current expenditure but also aids in securing additional funding for future campaigns.
- Measure campaign effectiveness: ROI is a valuable metric that allows you to assess the effectiveness of your influencer marketing campaign in achieving its objectives. For instance, if the aim was to boost sales, a positive ROI would signify a successful outcome.
- Inform future strategies: Having a clear understanding of the factors that contribute to a high ROI can provide valuable insights for making informed decisions regarding future influencer marketing campaigns. This knowledge allows for the identification of successful tactics as well as areas that may need improvement, ultimately leading to the ongoing refinement of strategies.
The Interplay of Cost, Revenue, and Profit
At its core, influencer marketing ROI revolves around three primary components: cost, revenue, and profit.
- Cost: This covers all the costs associated with an influencer marketing campaign. It comprises payments made to influencers, the expenses for products or services provided as gifts, and any other additional costs such as content production or platform fees.
- Revenue: This represents the revenue generated as a direct outcome of the influencer marketing initiative. It may stem from direct purchases, acquiring new customers, or boosting order values.
- Profit: This can be understood as the revenue subtracted by the cost. A profit that is positive signifies that the campaign has generated more revenue than it has cost, indicating a successful campaign.
How to Measure Influencer Marketing ROI for 4 Key Goals
Now, let’s get into the nitty gritty of measuring influencer marketing ROI across 4 key objectives:
1. Immediate Sales
By the close of business, the ultimate objective for every marketer is to generate sales. Regardless of the approach taken, all marketing endeavors play a role in achieving this goal. This could involve establishing a strong brand presence to drive long-term sales or implementing immediate strategies such as unique links and promo codes to track direct sales.
For that reason, your sales ROI covers all purchases that can be directly attributed back to influencer marketing. Most often, brands use promo codes, analytics, and tracking links like UTM or Bitly to track influencer-driven sales.
2. Brand Awareness
Brand awareness is an indicator of the level of familiarity your intended audience has with your brand and their ability to remember it when prompted. For instance, if you were prompted to mention a skincare brand, which one would immediately come to mind? It is highly likely that Neutrogena, Olay, or Glossier would be among the first brands that come to mind. This is primarily due to the exceptional visibility these companies have established for their brands.
Neutrogena has many brand partners, like @hydrationceo, that help it achieve this status of brand awareness.
It is crucial to understand that being a well-known brand is not a requirement for prioritizing brand awareness. Even smaller, specialized brands can concentrate on building awareness among a particular target demographic.
The return on investment (ROI) for a brand awareness campaign is determined by the quantity of fresh prospective customers who gain knowledge about your brand or product as a result of the ongoing campaign. This can be measured by various metrics such as the reach and impressions of posts, along with the growth of followers and the organic traffic on your owned channels.
Some brand awareness metrics to evaluate:
Impressions: the number of times social media users have been shown your content
Reach: the number of unique people who have seen your content
Branded search volume: The number of people who are searching for your brand’s name
Social media mentions: the number of people who are directly mentioning your brand on a social media platform
Traffic: The number of people overall who visit your website and how many visit from a social media influencer’s post
3. Brand Engagement
Your target audience must be aware of your brand’s presence, but it is equally important to encourage interaction from them. The individuals who interact with your brand today are the ones likely to make purchases from you in the future.
The number of individuals who interact with your brand on social media platforms or your website determines the return on investment (ROI) for your brand engagement campaign. This can be evaluated using a cost-per-engagement approach, considering metrics like likes, comments, retweets, post saves, clicks, and add-to-carts.
For example, Glossier partnered with @daniellemarcan to boost its engagement and received nearly 18k likes and 120 comments on its Instagram post.
It is crucial to emphasize that evaluating the engagement solely on your influencers’ posts is not sufficient. It is essential to track how their engagement influences the engagement rates on your various channels, including social media platforms and your website. A prosperous influencer marketing strategy will result in increased engagement across all platforms, such as TikTok, Instagram, and even LinkedIn. The goal is to generate conversations about your brand wherever transactions take place.
4. Influencer-Generated Content
Influencer-generated content (IGC) is an essential yet often overlooked way of measuring the ROI of influencer marketing. IGC refers to the images, videos, and other creative assets that influencers develop, usually in partnership with a brand.
Note: You can also get user-generated content (UGC) from brand fans. If you notice a creator making content about your brand, make sure to promote it, as Glossier did.
IGC can have an impact on your entire marketing funnel and is an incredibly powerful bonus on top of the ROI you see from visibility, engagement, and sales.
Strategies to Boost Influencer Marketing ROI
To achieve the highest possible returns on investment (ROI) from influencer marketing campaigns, it is essential to combine thorough planning, strategic implementation, and detailed analysis. In this article, we explore effective tactics aimed at enhancing your influencer marketing ROI and guaranteeing optimal results from your campaigns.
Cultivating Long-Term Relationships with Influencers
Establishing enduring partnerships with influencers, as opposed to short-term, transactional arrangements, can result in the creation of genuine content and increased audience engagement. By consistently promoting a brand, influencers can cultivate trust and familiarity among their followers.
Long-term relationships also provide other advantages:
- Consistent Messaging: Regular collaborations ensure that your brand message is consistently conveyed over time, solidifying your brand’s image among the audience.
- Better Engagement Rates: As the influencer’s audience gets accustomed to seeing your brand, they’re likely to engage more with the content, thus leading to better ROI.
Maximizing Use of Influencer-Generated Content
Influencer-generated content (IGC) is often authentic, creative, and well-received by the audience. Beyond the influencer’s social media channels, this content can be repurposed across various other platforms, like your brand’s social media profiles, website, or email newsletters.
The benefits of this approach include:
- Extended Reach: Using IGC on your platforms can expose your brand to a wider audience, extending the reach of your campaign.
- Cost-Effectiveness: Repurposing IGC is a cost-effective way to get high-quality content without incurring additional production costs.
- Increased Trust: Sharing content created by influencers on your channels can help leverage their credibility to boost your brand’s trustworthiness.
