Influencer marketing is one of the fastest-growing marketing techniques. Brands face one of the biggest challenges when it comes to strategizing around these types of campaigns: how to measure influencer marketing ROI.
These are legitimate concerns. However, there are many myths about how to calculate influencer marketing ROI.
These obstacles can sometimes prevent companies from fully adopting influencer marketing strategies.
Companies must allocate funds to support successful influencer marketing strategies.
When it comes to sponsored posts, social media influencers will charge a fee for working with a brand.
Each side will negotiate the cost of the partnership based upon a variety of factors including the social reach and type of sponsored content that they produce, as well as how long they plan to promote the brand.
How can marketers determine their influencer marketing ROI for their campaigns?
Before setting the budget, marketers need to be aware of all costs associated with influencer marketing.
As with all things, there will be hidden costs. These can impact both the return on investment and sponsorship fees.
We’ll be discussing hidden costs that could impact your Influencer marketing ROI in this article. So you can determine the budget that is appropriate for your next influencer marketing campaign.
The Formula for Influencer Marketing ROI
The return on investment is usually expressed as a percentage.
For example, let’s say a company spends $10,000 on an influencer marketing campaign that continues to generate $20,000 in revenue.
This will lead to a 200% ROI.
This is a clear indication that the influencer campaign had a positive return on investments and can be considered a major success.
Calculating influencer marketing ROI can be difficult, but it is possible. This example is simple.
Brand Awareness or Direct Response?
When launching an influencer marketing campaign, one of the most important things you can do is to set your goals.
How you measure your success will depend on what goals you have. Campaign results are an important part of measuring your return on investment.
Your general goal will determine the KPIs of your influencer marketing strategy. In general, the goals of influencer marketing fall under two categories: brand awareness and direct response.
Your company’s brand awareness is the degree to which customers recognize your company. This can be harder to measure than direct response campaigns.
Because company sentiment and company lift can be difficult to quantify, this is why. Many companies require costly branding surveys or agencies to establish brand awareness.
Brand awareness can be measured by many factors, including social reach, engagement, and website traffic.
Your social reach will be determined by the number of followers and subscribers you have on your social media channels.
To determine the influencer’s total followers and YouTube subscribers, you will need to add their Instagram followers and YouTube subscribers to your sponsored post.
Social media impressions are the number of people who have viewed the post. Impressions are a useful metric to determine the reach of a campaign and are preferred over the following.
You will be able to view impressions through authentic analytics platforms specific to each social media channel. You can view Instagram insights, for example.
The engagement rate will measure how active the audience is in interacting with the post on social media. This is how many people have seen your content.
For social media engagement, the KPIs are likes and dislikes, comments, shares, and shares. These KPIs can include mentions and hashtags, follower growth, direct messages, and mentions.
Direct response refers to a specific action taken by a user in response to your influencer marketing campaign. Your sponsored post should contain a call to action to encourage users to take action in influencer marketing.
Your KPIs could be signups or downloads or sales depending on what service or product you are using.
When it comes to measuring return, the best indicator is how many people buy your product from the social media ads.
It is possible to analyze product sales in detail. You can examine things such as average order value, revenue, and cost per acquisition.
Sign-ups are when someone submits their personal information to create a profile or become a member or subscribe to your newsletter.
The click-through rate refers to the percentage of people who click on the link suggested in the promotion post. The user will be redirected to a URL by clicking this link. They’ll then be encouraged to sign-up for something or to purchase your product.
Downloads are important if your service requires that someone downloads it to their computer or phone.
What is the Cost of Influencer marketing?
To calculate your influencer marketing ROI with confidence, You’ll need to calculate the cost of your influencer marketing campaign.
Staffing and time
It can be time-consuming to do the right research and vet potential influencers you may want to work with.
Also, you will need to gather influencer contact information and write your campaign brief. Finally, reach out to potential influencers.
There are many influencers that get caught up in brand requests so your message must be clear and polished to stand out.
The next step is to coordinate and negotiate with influencers, which takes additional time. These steps are time-consuming and require people to successfully manage them.
Depending on the size of your influencer marketing campaign, this could include investing in a training program or creating a role for influencer management.
Also read: Top 10 PPC Tools for Advertising Campaigns
Brands can manage their campaigns with specialized software for influencer marketing. Software that allows companies to search for influencers on multiple social media platforms is called an influencer platform.
These platforms provide a lot of data about influencers. However, it’s a two-way street. Influencers can also join these platforms if they are looking to collaborate with brands.
These platforms may cost you a monthly subscription, but most of the time they will only charge a flat fee or a percentage based on your campaign budget.
Marketing Agency Fees
An established influencer marketing agency will charge a fee to execute a campaign from start to finish.
Marketing agencies often require a higher investment but can reduce costs in certain areas. Let’s look at the benefits of working with an influencer marketing agency.
It can be a time-saver to outsource the task of finding influencers and working with them. This reduces the need for your brand to have people on the ground managing your influencer campaign.
Lower Influencer Rates
When you are able to really work with influencers via a marketing agency on an ongoing basis, You can lower influencer fees and not have to pay as much
Influencer marketing agencies have built long-lasting relationships with influencers. This is why they can negotiate influencer fees to ensure you don’t pay as much.
Marketing agencies can use data from previous campaigns to inform influencer selection.
This will help brands identify the best influencers for their products and determine the return on investment.
This will help you avoid spending money on influencers that aren’t going to help your company achieve its goals. Agencies only work with professional influencers, which means that the metrics they achieve are reliable.
Influencers will charge companies a fee for creating sponsored posts. This payment can be made almost always in cash. Sometimes, influencers who aren’t yet there are willing to create sponsored content in return for high-quality products or travel accommodations.
Trade agreements aren’t as common these days, but they are becoming less common as the influencer marketing market grows and creators have more ways to leverage their followers.
Professional influencers are required to create branded content as their full-time occupation. This means they have a main source of income.
Sponsored posts are charged by nano influencers at a fraction of the cost of macro-influencers, who can charge thousands of dollars for each sponsored post.
How Influencers Decide on Their Fees
Influencers make their money first and foremost on popularity. This is their total number of followers on all social media channels.
Next is engagement. This is the number of likes and comments that they receive on their content, production, and niche skills like baking and crafting, past campaigns, and the ‘It” factor.
This last factor can be difficult to pinpoint and not everyone has it. Sometimes you will just find an influencer with the ‘X’ factor, which is highly desirable as a brand ambassador.
Get Product Samples
If you sell a product, you will need to share the product with your creator by providing a sample. Your brand may sell a service or experience, so the influencer will need to test it before creating their sponsored post.
The influencer’s fee includes almost all production costs, such as editing and photographing content. If the campaign is large, a brand may be responsible for producing costs, such as travel and makeup artists.
After the influencer shares a post on their feed, your company can choose to boost it. This means you can also use paid marketing to increase the number of people who see your post.
You should also consider developing influencer agreements around ownership, terms, and licensing. Legal fees can be costly, regardless of whether you hire a contract attorney or an attorney who works full-time.
It is important to use a foolproof contract for influencers and follow the FTC guidelines. You can avoid any legal problems down the road by being aware of sponsored posts
Monitoring and measurement
Tracking results is essential once your influencer marketing campaign has been sent out. This is an important component of calculating influencer marketing ROI.
Cost-wise, you should consider the cost of data measurement. This includes the time it takes to use analytics software and the time it takes to collect screenshots and quantify your results.
Social Media Channel Influencer Marketing ROI
Not all social media channels offer the same return on investment when it comes to ROI. Some social media platforms have higher engagement rates, better measurement and analysis capabilities, and greater return on investment.
YouTube is a great example of this. They can track their response and get a tangible return on investment.
You should consider the engagement levels of the target channel and how your content will be produced. It can be either an Instagram story or the influencer’s Instagram account.
Next, determine how easy it will be to monitor the performance of this method.
You can get a lot of engagement from Instagram stories and YouTube videos, while Instagram feed posts and Instagram stories are less likely to return you money.
You should consider the engagement levels of the target channel and how your content will be produced when creating your campaign.
Tools to Track Influencer Marketing ROI
You will need the best measurement tools to measure the ROI of influencer marketing and the success rate of your campaign.
Google Analytics will help you monitor your website’s performance. It is also free and customizable. This means you can track unique visitors and traffic.
You can use the native analytics of most social media platforms to find out things like views, likes, comments, and hashtags.
Qualitative research is required to determine your company’s affinity or sentiment. Analytics tools can be used to analyze comments and provide this type of data.
We recommend a manual approach if your influencer marketing campaign has a small budget.
When you are creating an influencer campaign, we recommend that you create a unique promo code that requires a sign-up or purchase.
Promo codes may offer a percentage discount on product purchases or a redemption offer if they sign-up for something. You will be able to link conversions with a particular influencer via their promotional code. Discounts are going to encourage people to buy impulsively.
A URL can be included in sponsored posts to track influencer marketing ROI. This could send the client to a landing page where they may see a message tailored to their audience. You can track conversions and visits to the landing page that resulted in the branded post.
Analyze your Results
When analyzing your results, the first thing you need to do is add up your expenses. Hard costs such as agency fees, influencer fees, and production costs must be accounted for.
Next, you’ll need to figure out how to measure the tools you’ve used in multiple campaigns. Add up the costs of tools that you have used in multiple campaigns.
You can now look at recurring expenses, such as a subscription to the software. This is more difficult because it is often spread over multiple campaigns.
You will also need to add up your return. Start by adding up your direct response KPIs, such as subscribers and purchases.
These types of returns are easy to quantify. This can be done by looking at site visits, social media followers, and the number of new subscribers that you have received through your newsletter.
This is where you can calculate your influencer market ROI. The formula we discussed at the beginning can be used.
How to Get a Positive Influencer Marketing Return on Investment
There is no guarantee that paid media will produce a positive outcome. You can increase your chances for success if you partner with an experienced influencer agency or hire an expert in influencer management.
The last tip we have for you is to focus on one call to action for your campaign. If you ask your audience for too many things, it will either result in confusion or no action.
Second, be clear about your message and limit the number of talking points you use when referring to influencers. Make sure you do your research before choosing an influencer to ensure you don’t get sucked in by a bunch of fake followers.
Your influencer marketing campaign should allow the influencer creative freedom. This will make your content more engaging and authentic.
Make your campaign interactive Sponsoring giveaways, hosting events, or offering exclusive promotions are all options.
We’re confident that you’ll be able, after reading this article to create the most impactful influencer marketing campaign you have ever created for your brand. We wish you the best with your influencer marketing ROI.