Influencer marketing is one of the fastest-growing advertising channels. 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 host of misconceptions, around determining influencer marketing ROI. This prevents from brands from adopting influencer marketing altogether.
Successful influencer marketing programs require brands to allocate a budget. Social media influencers charge a fee for partnering with a brand on a sponsored post. Both parties negotiate the cost of a partnership based on many factors, especially:
How can marketers measure their return on investment for influencer marketing campaigns? Marketers must think critically about all the costs associated with an influencer marketing campaign before setting a budget. There can be hidden costs that impact ROI in running an influencer campaign in addition to the sponsorships fees.
This article aims to point out potential hidden costs that impact ROI but aren’t initially obvious. Ultimately, marketers must decide how they will measure campaign success in order to judge effectiveness.
Return on investment is generally reflected as a percentage (i.e. the percentage of each dollar invested that will yield a profit).
The simple formula for calculating influencer marketing ROI is:
For example, a brand spends $10,000 in total for an influencer marketing campaign which goes on to generate $20,000 in profit. The ROI for that campaign can be calculated as follows:
That means this campaign generated a positive ROI and can be considered a resounding success. This hypothetical example is simple, but calculating influencer marketing ROI gets more complicated in practice.
One of the most crucial steps to launching an influencer marketing campaign is deciding on your goals. Your goals will inform how you measure results. Campaign results are a critical component of measuring the “return” of ROI.
The KPIs for your influencer marketing campaign are determined by your overall goal. Influencer marketing campaign goals generally fall into two broad categories: brand awareness or direct response.
Brand awareness reflects how recognizable your brand is to customers. Brand awareness reflects how recognizable your brand is to customers. Brand awareness can be more difficult to measure than direct response campaigns. This is because brand sentiment and brand lift are difficult to quantify. Many companies require expensive branding agencies and surveys to attempt to capture “brand awareness.”
Metrics for Measuring Brand Awareness: Influencer Marketing KPIs
Followers & Subscribers
Social media following is the tally of followers an influencer has across all their social media channels. If an influencer shares sponsored posts on their Instagram and YouTube channels, then add up their Instagram followers and YouTube subscribers to calculate total following.
Social media impressions are defined as the number of users that have viewed a social post. Impressions are a critical metric for determining a campaign’s reach and a preferred way to measure social reach compared to “following.” You’ll be able to view impressions using the native analytics platforms for each social media channel (i.e. review Instagram Insights).
Engagement rate measures the audience’s interactivity in relation to a social media post. Engagement speaks to how well an audience receives a post. The key performance indicators (KPIs) that are tracked for social media engagement are:
A “like” is the virtual thumbs up that’s ubiquitous across social media platforms. A well-liked photo or video not only signifies esteem with users, but also factors positively into some social platform’s algorithms, increasing the post’s visibility. For example, the more likes an Instagram photo receives, the more prominently it will be featured on users’ Instagram feeds.
Slightly different terminology is used for “Likes” on certain channels, for example, Instagram likes are reflected as a double-tap heart and YouTube likes are tallied as a “thumbs up.”
On YouTube & Facebook, users have the option of disliking posts. YouTube viewers can “thumbs down” videos and Facebook users can react with anger or sadness to posts. The ratio between Likes and Dislikes will indicate which posts resonate with users.
Comments & Social Sentiment
Comments are written responses to a social media post.
Users who leave a comment are showing exceptional interest in a post. Comments speak to the post’s popularity, particularly when commenters start a dialogue about its content.
Comments are a useful qualitative metric and an excellent way to understand user response to social media content. Gauge social media sentiment by reading the actual content of comments.
Signs of positive social sentiment are:
When a user shares a social media post, they are explicitly endorsing that content.
Shares help to expose the content to new audiences outside the reach of the original post. Each social media platform has its own set of Share options:
Shares aren’t recommended KPIs for YouTube and Twitch, because the Share options are off the platform and difficult to track.
Your brand may base an influencer marketing campaign around growing your own social media following.
Track the average follower growth in the months leading up to an influencer activation as a benchmark, so that you can distinguish organic follower growth from followers who discovered your brand via an influencer.
Mentions & Hashtags
Social media mentions happen when a user mentions your brand by name using an @ tag (e.g. @Mediakix). Users will also integrate brand hashtags into their posts. Both hashtags and mentions show a high level of brand affinity and social alignment. Generally, mentions expand your brand’s exposure while hashtags help disseminate buzz about a specific marketing campaign.
Dark Social AKA DMs
“Dark social” refers to social media actions taken that are private, meaning the interaction is only visible to the account holder and user. For example, direct messaging is private, thus only the sender and recipient can view the contents of a message. Dark social metrics will show you when a user:
Press coverage around your influencer marketing campaign helps to spread your message even further. Media mentions and links to your website boost brand awareness. You’ll find that increased media coverage produces a “halo effect” around your website, increasing the overall traffic from all sources: organic, referral, social, and direct.
Direct response is an attributable, specific action that a user takes in response to a campaign. For influencer marketing, a sponsored social media post contains a clear call-to-action prompting the user to take action.
Metrics for Measuring Direct Response Awareness: Influencer Marketing KPIs
If the goal is direct response, KPIs might include sales, downloads, or signups, depending on the product or service.
Product purchases are a gold standard of measuring return. Product sales can be analyzed with greater nuance by honing in on specific metrics like revenue, average order value, or cost-per-acquisition.
A signup occurs when a customer submits their information to:
Click-Through Rate (CTR)
“Click-through” or click-through rate (CTR) describes the number of times consumers click on a suggested link in a promotional post. These clicks will lead the user to a dedicated URL (like a landing page or product page) where they are prompted to convert.
Downloads are digital products, like apps, software, ebooks, or whitepapers. Download transactions are common KPIs for mobile games and B2B companies.
In order to calculate ROI, you’ll need to tally the costs that go into an influencer marketing campaign. Possible costs include:
Properly researching and vetting potential influencer partners requires many hours scouring social media channels and the internet. Next, you’ll need to track down influencer contact information, write a campaign brief, and reach out to the influencers.
As many influencers are inundated with brand requests, your message must be carefully polished to cut through the noise. After, there’s negotiation and coordination with influencers which requires time to manage the relationships.
These steps are time-consuming and require personnel to manage. Depending on the size of your influencer marketing program, this might mean investing in training programs or creating a dedicated role for influencer management.
Brands can manage their campaigns through specialized influencer marketing software. An influencer platform is a software-based directory where companies can search for influencers across social media platforms. These searchable online directories with a wealth of data about influencers (e.g. gender, audience demographics, engagement rate).
It’s a two-way street—influencers themselves can also join a platform to seek out brand sponsorship opportunities.
Platforms are subject to recurring monthly fees to access the platform. Many platforms will charge a flat fee or percentage fee of total campaign budget for activations that result from platform use.
Well-established influencer marketing agencies that execute campaigns from beginning to end charge a fee for their services. Although marketing agencies tend to require a sizable investment, they can reduce costs in other areas. The major financial benefits of working with an influencer marketing agency are:
1. Time Saved: Outsourcing the major time investment needed to manage an influencer marketing program.
Partnering with an influencer marketing agency greatly reduces your brand’s need for manpower to run a successful influencer program. Agencies can own the work that your brand’s internal staff would otherwise manage.
2. Lower Influencer Rates: Securing lower influencer fees by leveraging established relationships.
Influencer marketing agencies have cultivated relationships with influencers and possess records of their performance. Agencies also have the ability to negotiate influencer fees. This allows agencies to secure preferred influencer rates to help keep costs down. Agencies can offer an economy of scale by bundling costs across multiple campaigns.
3. Data-Driven Campaigns: Applying data from past campaign performance to inform influencer selection.
Agencies can leverage experience and data to guide brands towards choosing the influencers who will likely provide the best ROI. Their industry expertise can help your company avoid wasting money on influencer activations that won’t achieve your desired goals. Agencies only work with influencers who use reputable business practices (i.e. no fake followers or fishy engagement stats), so the metrics achieved are reliable.
Influencers charge brands payment in exchange for creating sponsored content. That payment is nearly always in the form of cash. Up-and-coming influencers are sometimes willing to create branded content in exchange for high-ticket products (e.g. furniture, fine jewelry, watches) or travel accommodations. Trade agreements are becoming less common as the influencer marketing industry grows and creators have more opportunities to monetize their following.
For professional influencers, creating branded content is their full-time job and primary source of income. Nano-influencers (influencers with <1,000 followers) charge a few hundred dollars per post, while macro-influencers (influencers with >1,000,000 followers) can charge tens of thousands of dollars for sponsored posts.
Influencers are able to set fees based on their:
If your brand sells a product, you’ll need to provide creators with product samples. If your brand sells a service or experience, the influencer will need to try it out before creating branded content.
Production costs like photographing and editing content are almost always included in the influencer’s fee. A brand may be responsible for production costs if the campaign is especially elaborate, requiring:
Your brand can opt to boost a social post after an influencer has shared it on their feed, using paid advertising to acquire even more impressions.
Developing influencer contracts around terms, ownership, licensing, and disclosure needs to be factored into any influencer marketing budget. Whether you have an in-house attorney or a contract lawyer, legal fees can be substantial. This belies the importance of using an airtight influencer contract and adhering to FTC guidelines around sponsored content to protect yourself from a costly legal hassle down the line.
Tracking results is a crucial component of measuring influencer marketing ROI. In terms of data measurement, costs to take into account include:
All social media channels are not created equal when it comes to measuring ROI. Some social media channels and content formats offer relatively stronger engagement levels, more extensive analytics, and greater capabilities for measuring and achieving ROI. For example, YouTube’s long-form video format attracts a highly engaged audience, and their robust tracking capabilities enable more demonstrable ROI.
When planning a campaign, marketers should consider the engagement levels on their targeted channel (e.g. Instagram) and desired post type (e.g. Instagram Story), and how easy it will be to track performance in this medium.
Channels with a strong correlation to direct measurable ROI:
Channels with weaker correlation to direct measurable ROI:
You’ll need to lock down appropriate measurement tools to track KPIs before launching influencer marketing campaigns.
Recommended tracking methods include:
Google Analytics (GA), the ubiquitous platform for tracking website performance, is a powerhouse of data. GA is completely free and extremely customizable; you’ll be able to track traffic, unique visitors, and more. Other data analytics platforms can be used instead of, or in tandem with, GA including Adobe Analytics, Tableau, and Salesforce.
Social Platform Native Analytics
Social platforms have native analytics to track platform-specific metrics like impressions, views, likes, hashtags, and comments. Specific data will vary by social media platform.
Third Party Analytics
Use a third party analytics tool that’s able to synthesize social media metrics to provide deeper insights. Some tools can pull in data from other data sources (like Google Analytics or your company’s CRM), which greatly boosts their power in providing detailed data. Using a social media suite can be especially helpful for complicated influencer marketing campaigns that involve multiple influencers and social channels. Popular social analytics tools include Hootsuite, Sprout Social, and HypeAuditor.
Measurement of brand sentiment and brand affinity will require qualitative research. Third party analytics tools can use algorithms to review the language used in comments and provide this qualitative data. For smaller campaigns, a manual approach might be the most practical.
Create a unique promotional code for influencer campaigns involving signups or purchases. Promo codes could offer a percentage discount from a purchase or a special redemption offer for signing up. You’ll be able to attribute conversions to a specific influencer through their unique promo code. Discounts provide an incentive for audiences to make an impulsive purchase.
Trackable links are the ideal way to measure CTR. Common ways to track links include:
Companies using GA to track will most often use specific UTM codes for each influencer and social media channel. The UTM codes are generated by Google, allowing for tracking the tracking of metrics including clicks, sales, and conversions.
Develop a dedicated landing page with messaging tailored specifically to an influencer’s audience. Through that landing page entry point, you can track visits and conversions resulting from the influencer’s branded post.
A conversion pixel is a tiny 1x1px image which is placed on the destination page linked to a sponsored social media post. Whenever a user reaches the destination page, the image loads counting as a visit. Conversion pixels are used exclusively in conjunction with paid social media campaigns, like Facebook Ads.
Start by adding up every expense that went into your influencer marketing campaign.
Account for Hard Costs
Account for hard costs, like the influencer fee, agency fee, and production costs first.
Decide How To Measure Tools Used For Multiple Campaigns
Next, you’ll want to add up costs for tools used for multiple activations, like influencer platforms or social media analytics software.
Recurring expenses, like subscription to a software, are slightly more complicated because they often span across multiple campaigns. The key is to replicate the same formula for each influencer campaign so you can compare results between campaigns.
Say, for example, you use an influencer marketing platform for five different influencer activations over the span of a month. You would count 1/5th of the monthly subscription fee as a cost for each individual influencer activation.
Direct Response Benchmarks
Start by adding up direct response KPIs like purchases and subscribers. These types of returns are the most straightforward to quantify.There are many ways to determine a value for direct response KPIs, for example:
There are no universal industry standards for measuring the return of an influencer marketing campaign. Most businesses rely on existing sales funnel data to establish their own benchmarks to assign value to each KPI.
Brand Awareness Benchmarks
Establish values for each KPI (i.e. a social impression is worth $0.08, a site visit is worth $1.06).
Brand awareness KPIs are not associated with a standard dollar amount because the value varies tremendously based on industry and business model.
Once you establish a standard method of exactly how you’re calculating costs, use the formula to calculate your influencer marketing ROI.
As with any type of paid media, it’s not possible to guarantee a positive outcome. Working with an experienced influencer marketing agency or hiring a seasoned influencer manager will help.
Some guidelines for achieving a positive ROI on your influencer marketing campaign: