There’s a saying in the carpentry world, “Measure twice, cut once,” which underscores the importance of measurement in achieving the desired results. Just as a carpenter wouldn’t make random cuts in lumber, marketers can’t make random adjustments to campaigns without taking measurements into account. One of the important metrics that marketers must leverage for influencer marketing campaigns and overall marketing strategy is return on investment (ROI).
While you might think that marketing ROI is only calculated at the end of a campaign, times are changing. Influencer marketing ROI is a key performance indicator that’s arguably more important than ever. Marketers are keeping it top of mind from the outset of campaigns. It’s the key to getting the most out of your marketing strategy and justifying your marketing spend. More importantly, marketing ROI is critical to making insight-driven decisions to keep up with the fast pace of today’s marketing landscape and drive profitability.
Why Influencer Marketing ROI Matters
Despite naysayers warning that “influencer marketing was dead,” a few years ago, it’s not only alive, but thriving. Experts predict that the industry will increase by more than $13 billion by 2022. Those predicting its demise pointed to the difficulty of tracking influencer marketing ROI as part of the reason that this popular marketing strategy wouldn’t last. But all signs point to its rapid growth and smart evolution. And influencer marketing ROI is as strong as ever.
Not too long ago, TapInfluence was involved in creating and managing an influencer marketing program. The program was for Silk Almond Milk’s parent company, White Wave Foods. Research company, Nielsen Catalina Solutions, did a deep dive on the program. They found that the ROI was 11 times greater than that generated by banner ads. Those who were exposed to the influencer campaign bought 10 percent more Silk Almond Milk than control groups.
Not only did the study reveal an ROI that soared above that of display advertising, it also had other benefits. This included a huge surge in additional impressions, which generated additional sales beyond initial ROI calculations. Most importantly, by calculating the ROI, the marketing team could clearly determine that their marketing strategy was a success. If the calculation revealed that the ROI was low, it would be a clear indicator that the campaign was failing. The team could then adjust and rework the campaign to achieve the desired results.
That is the importance of influencer marketing ROI. It’s a KPI that you can use to pivot and make adjustments along the way to maximize success.
Calculating ROI: The Basics
Despite its importance, not all brands measure their influencer marketing ROI. According to data from Shopify, only 67 percent of brands are measuring ROI. For the other 33 percent, the time to get started is now.
The most basic formula for calculating ROI is to divide the profit by the amount spent on the campaign and multiply that by 100. So, if a brand spent $5,000 on its influencer marketing campaign, which generated $50,000 in profits, the formula would be:
50,000/5,000 x 100 = 1,000%
Although that seems like a neat and tidy calculation, it doesn’t give you the whole picture. That formula assumes that all profit is driven solely by the campaign. It also doesn’t account for key metrics that play into the true return on investment involved.
Tips for Calculating ROI: What Metrics Matter
Every brand and marketer might use a slightly different tactic. After all, how you measure ROI depends on your goals. There are several key metrics that can help. But first, it’s essential to start by setting campaign goals. This will help you best determine ROI based not just on profit, but also on whether you’re hitting the targets. Common goals include:
- Increasing brand awareness
- Reaching new audiences
- Improving brand advocacy
- Increasing sales/driving profits
- Managing/improving brand reputation
Once you’ve set campaign goals for your influencer marketing campaign, you can create a marketing strategy. This is also a jumping off point to determine the influencers you want to work with and the social media platforms you want to target. Once you’ve set campaign goals, you need to define the metrics you’ll use to measure the campaign’s success.
Keep Your Eye On Important Metrics
Well-defined campaign goals should be specific, provide a clear timeline and be achievable. You should then determine which metrics and key performance indicators are most relevant. Some of the key metrics to consider monitoring include:
- Product Sales
Measure Channel Performance
Were your goals to increase social traffic or to get more traffic on your website? If so, measuring channel performance as part of your strategy to measure influencer marketing ROI can be illuminating. Use promo codes and landing pages for effective tracking and an easy way to measure your return.
Measure Influencer Performance
Measuring the ROI of the whole campaign isn’t enough to get the whole picture. You need to measure each individual influencer to assess what they’re bringing to the table (or not). Providing each influencer with a unique URL they can use while sharing content makes it easy to measure the traffic they’re bringing in. Unique affiliate links, promo codes and discount codes are also helpful because they allow you to measure the sales each influencer’s content generates.
Develop Goals for Individual Influencers
Evaluating individual influencers based on the traffic and sales they’re bringing in is a start. Consider also watching performance metrics for each influencer involved on the campaign to assess what (and who) works and what doesn’t. If individual influencers aren’t performing and contributing to campaign goals, you’ll need to reassess their involvement. Metrics to watch include:
- The amount of content they’re creating
- Number of clicks to the website or landing page
- Average engagement rate
- Total impressions
Measure More than Just Vanity Metrics
Influencer marketing campaigns have wide-reaching effects, particularly at the top of the sales funnel. It helps to gauge how successful your campaign is or has been on shifting consumer perceptions, enriching customer relationships and increasing brand awareness. To measure these effects, consider conducting a brand lift study, which can provide insights on everything from the initial impression to the final conversion.
Leverage the Power of Analytics
Some influencer marketing platforms give you an extra edge. TapInfluence, for example, offers the tools you need to find the right influencers and track your results with essential analytics. The right platform makes it easy to translate the impact and results of your campaign to see how it’s measuring up to your campaign goals.
Check Out the Earned Media Value
Earned media value is a measurement that takes everything from daily visitors, likes, comments, shares and page views into account. This can help give you a dollar figure for the value of the impressions created by influencers.