Influencer marketing is one of the hottest and fastest-growing advertising channels. Last year, 86% of marketers reported utilizing influencer marketing, while 39% said they will increase their investment in the practice in 2018.
Still, one of the most daunting issues businesses face when adopting an influencer marketing strategy is how to measure their return on investment (ROI). There are valid concerns, but also a plethora of misconceptions, around influencer marketing ROI. This can cost brands unnecessary money, or even cause them to avoid influencer marketing altogether.
There are four categories that can be used to quantify influencer marketing ROI:
Below, we’ll take a look at these primary means of measuring influencer marketing returns, the details within each, and how to best engineer influencer campaigns for optimum ROI.
1. Conversions & Return On Ad Spend (ROAS)
Every digital marketer knows the importance of conversions. Since the early days of the internet, converting passive users into customers has been a staple for measuring marketing efficacy. Within an influencer marketing campaign, conversions are defined as any directed action a consumer takes outside the bounds of the original social post or campaign.
Conversion rate refers to the percentage of viewers that follow through with the intended action of a campaign. Brands can target a number of different metrics to achieve optimal conversion rates and ROAS. Examples include:
Click through – “Click through” or click through rate (CTR) describes the number of times consumers click on a suggested link in a promotional post. These links can lead to a myriad of destinations, including sites and social media accounts, where customers can partake in purchases, downloads, signups, and other forms of conversion.
Sales – Perhaps the most coveted conversion among businesses is when an online marketing prompt results in a purchase. Purchases can also be further analyzed by price point, new and existing customers, and other transactional characteristics that provide brands with important insights for campaign effectiveness and future sales.
Downloads – Downloads are digital product exchanges between a brand and its customers. These transactions are most common in the gaming and mobile industries and include items such as software, apps, and ebooks.
Signups – Signups create a direct relationship between brands and potential new customers. While signups are most often thought of as being related to newsletters and site memberships, turning social media users into “followers” on Instagram, Facebook, YouTube, etc. are also examples of valuable consumer subscriptions.
Traffic – When a consumer clicks through to a brand, they can peruse other areas of their site or account and find value beyond the initial social media prompt. These experiences can also lead to purchases, downloads, and signups, as well site bookmarking and future visits.
Cost per acquisition (CPA) – Acquisitions occur when a consumer targeted by a business becomes a customer. The cost of the acquisition will include all marketing efforts tied to the conversion.
Views – Views represent the number of impressions on a post and are the critical metric for determining a campaign’s reach. On Instagram, Facebook, and YouTube videos views are displayed, but on standard Instagram and Facebook posts views must be estimated in order to quantify campaign reach.
3. Engagement Rate
Engagement rate measures an audience’s activity in and around a social media post. It speaks to the post’s relevance, as well as its importance and “stickiness.” Efficacy is tracked through key performance indicators (KPIs) that showcase different levels of interactivity.
Likes and favorites – The “like” is a cultural digital phenomenon ubiquitous on most social media platforms that has become one of the most common and referenced social media metrics. A well-liked photo or video not only carries cache with users, but also factors positively into some social platform’s algorithms, increasing the post’s visibility.
Comments – Viewers who type out text, insert emojis, or reply to a post with stickers or GIFs are showing extra interest and willingness to interact with a post. This speaks to the popularity of the post, as well as the willingness of followers to continue a conversation around it.
Shares & mentions – When a user shares a post or mentions another individual/brand’s account, it’s a sign of approval or endorsement. Additionally, users transcribing a brand or campaign’s hashtag into their own post are indicating a kind of social alignment. Each of these things helps to expose the brand and content to audiences outside the reach of the original post.
4. Social Sentiment
The social sentiment derived from online marketing initiatives is incredibly valuable for brand awareness, reputation, and future conversions. The following items can be used to assess social sentiment:
Comments – Comments on branded posts in which users tag friends, include positive emojis, and voice intentions to purchase are all meaningful forms of social sentiment.
Likes vs dislikes – The like vs. dislike ratio of a post (as opposed to the aggregate number of likes) is indicative of overall social sentiment. The dislike feature is available on select platforms including Facebook and YouTube.
Tools – There are a variety of tools available for analyzing sentiment, which allow businesses to track things such as keyword and hashtag usage, as well as demographic and historical data.
To get conversions or engagements through influencer marketing, a business will have to first invest in a campaign. The cost of an influencer marketing campaign can depend on a variety of factors.
Time – Searching for the right influencer(s) to create and execute a campaign can be a significant time burden for businesses. Moreover, properly learning about, vetting, negotiating, and coordinating with influencers requires an investment in time and personnel to manage the relationship(s).
Influencer costs – Influencers charge for their popularity and impact with audiences (often based on the number of followers/reach), as well as the creative planning, production of content, and marketing expertise needed for them to execute a campaign.
Production costs – At a basic level, production costs generally cover the shooting and editing of content. However, fees for travel, props, additional talent, and other necessities particular to the content can add to overall cost of production.
Platform costs (if used) – Brands that choose to manage their influencers and campaigns through influencer marketing platforms are often subject to recurring monthly fees and/or a percentage fee of total campaign budget for using its database and tools.
Network costs (if used) – Influencers partnered with multi-channel networks may charge additional fees to cover any percentages due to their network.
Agency costs (if used) – Well-established influencer marketing agencies that execute campaigns from beginning to end also charge for their services. However, agencies with successful track records can often negotiate various fees and preferred rates associated with a campaign to help keep costs down.
ROI of an influencer marketing campaign isn’t always succinctly measurable. Several intangibles exist, including consumers who manually type in a URL (instead of clicking on a trackable link) after watching a video or reading a post.
Moreover, longtail effects of a campaign, including shares, can outlive an original campaign push and deliver results for a brand down the line.
Conversely, the quality of conversions and engagement also needs to be carefully scrutinized to ensure fake accounts, likes, comments, and sharing tactics were not utilized to artificially inflate the numbers of a campaign.
Qualified agencies can help lower costs and optimize the results of influencer marketing campaigns in a variety of ways, including:
Influencers – Agencies that have relationships with high-converting influencers can match brands with the right personality and audience for their campaign. Furthermore, agencies only work with influencers who use reputable business practices i.e. no fake followers or engagement, so the metrics achieved are accurate and dependable.
Costs – Based on their strong relationships, agencies can negotiate rates with many macro and micro-influencers. Moreover, with costs and fees bundled under a single campaign, agencies can offer an economy of scale for both large and small businesses.
Campaign – Throughout a campaign, a qualified agency maintains and manages relationships with influencers, plans and schedules various workflows, as well as ensures efficiency and effectiveness of the campaign. From content recommendations to brand messaging to calls to action (CTAs) to campaign timing, agencies know how to craft and execute campaigns for maximum reach and effect.
Metrics – Agencies can help brands determine what KPIs are appropriate, achievable, and measurable for a brand or specific campaign. Furthermore, by embedding the campaign with relevant tracking tools, as well as utilizing measurement formulas, agencies can calculate large scale metrics and subtle nuances around campaign performance to help give brands a more accurate picture of ROI.
Data – Influencer marketing agencies can leverage data before, during, and after a campaign to optimize results and increase ROI. Data can also be used to educate brands about consumers, as well as help in planning future campaigns.
Related Post: The Top 12 Things To Consider When Selecting Influencers