Influencer marketing is having a moment right now.
According to The State of Influencer Marketing Benchmark Report, the industry will grow a whopping $16.4 billion in 2022.
In 2021 alone, influencer marketing platforms have raised $800 million in funding. That’s some big bucks. Nay, huge bucks.
Given the number of dollars businesses are spending on their influencer marketing strategy, you’d think every single one of those brands would want to know how effective their campaigns are. But you’d be wrong.
The Benchmark Report found 30% of brands still don’t measure the return on investment (ROI) from their influencer marketing efforts.
If you’re one of those businesses mulling over how to measure your influencer marketing KPI, here’s what you need to get started.
In this article, we’ll cover:
- How can you calculate the ROI of influencer marketing
- How can you maximize the returns from your influencer marketing campaigns
How to Calculate the ROI of Influencer Marketing: 4 Steps
Few topics entice as many raised eyebrows from marketers as ROI. It’s hard to know what to measure and tie an influencer marketing strategy to business results.
But you can’t dodge the return on investment question if you want your Chief Financial Officers (CFOs) to take your influencer marketing efforts seriously.
Note: If you’re expecting sales ROI to come from the pay-per-post model, you might be waiting a long, long time (or forever). Influencer organic posting is impersonal, maps out a tiresome customer journey, and has limited reach. It’s advisable to reallocate the organic spending on paid sources instead.
Does this mean influencer organic posting is useless? No. You can still build brand awareness, get people talking about your brand, and receive engagement.
Just don’t expect direct, tangible sales from it.
With that out of the way, here’s your step-by-step guide to take stock of the results from your influencer marketing campaigns:
#1: Get Specific With Your Brand’s Goal
How would you know what to track if you don’t know what you want to achieve?
Get specific with what you want to accomplish from influencer marketing campaigns. It might be increasing brand awareness. Or perhaps you’re looking to build a community. Maybe it’s growing sales.
Although 42.3% of brands use conversions (aka sales) as a metric to calculate ROI from influencer marketing, money is not the only thing that measures the success of an influencer marketing strategy.
People like to mock brand awareness, but customers have to know you exist and who you are before they buy from you.
Similarly, content creation is also a viable goal for influencer marketing campaigns. 85% of respondents in The State of Branding Report 2021 say they have seen increased demand for content due to the pandemic.
In essence, whatever your goals are, your metrics should help you evaluate if your influencer marketing efforts are worth the time and money spent.
#2: Form KPIs Based on Your Goals
Key performance indicators (KPIs) are metrics that will help you determine if you’ve achieved your campaign goals.
Form KPIs based on the goals you set in step one. For example, if your goal was to build an audience, you’ll track your engagement rate and not your conversion rate.
Since each brand has different goals with its influencer marketing strategy, remember KPIs will differ from business to business.
Here are some potential KPIs you could track:
- Conversions: You can track the sales generated via influencer marketing by giving unique promo codes to every individual influencer or a custom URL.
- Reach: If you’re a newly launched business, you care more about brand visibility than about sales. You can evaluate the reach of your influencer marketing program by tracking impressions built in on most social media platforms like TikTok, Instagram, and even LinkedIn. Or you can examine traffic to your landing page through Google Analytics.
- Earned media value: Earned media value (EMV) calculates the dollar amount for the reach an influencer post(s) provides through their social channels. You can track likes, shares, comments, page views, daily unique visitors — all under one EMV metric. The problem? It can be messy to calculate. Luckily, Influencer Marketing Hub has a calculator to make your job easier.
- Number of followers: If your goal was to reach new audiences and build a community, you could track how many social media followers you have gained. CRMs often list where the lead originated, giving you the exact traffic source.
- Backlinks: Tracking backlinks is relevant if your campaign goal is to increase website traffic. Backlinks enhance your SEO and content reach. Compare your backlinks before and after your influencer marketing program.
But outside of return on ad spend (ROAS), how can you set KPIs for the performance of your influencer-generated content (IGC) in Facebook ads manager?
Enter: The AIDA model.
The Attention, Interest, Desire, Action (AIDA) model represents the series of behaviors you want a customer to take before they make a purchase. First, you want to capture their attention. Then, you’d wish their interest in your product. Next, trigger the desire to purchase from you before you finally get them to complete an action. It’s one of the classic hierarchy of effects models — one that’s been around for more than a century.
Here are the KPIs you can form using the AIDA model:
- 3-second video views / total impressions (attention): Maybe your goal with influencer marketing is creating thumb-stopping ads. You can calculate if your IGC can capture consumers’ attention by dividing your total impressions with 3-second video views. This number will help you answer what percentage of users have their attention captured by the content your influencers create.
- Video average watch time (interest): Want to get more people talking about your product? Form an interest-based KPI. Calculate the average video watch time to track how long viewers are staying to consume your IGC.
- Outbound click-through rate (desire): Perhaps you want more people to visit your website and check out your products through influencer marketing. In such a case, you can decipher potential buyers’ desire to visit your website by calculating the outbound click-through rate. You’ll get data for how many people are clicking the call-to-action button of “shop now” or “browse the store.”
- Sales/ signed up for your email list (action): Finally, you can have a KPI of whether or not someone made a purchase (or any other “action” of your choice) by coming to your website through influencer-generated content. But remember, there are several factors — like your website’s speed, price of the product, copywriting of the landing page — that influence whether someone will practice the desired action or not. It’s not all reliant on the success of your influencer marketing strategy.
You might partner with different influencers for different goals. You might form a collaboration with a blogger to increase daily unique visitors to your website. But you might partner with social media influencers to generate video content for your social channels. In such a scenario, track the appropriate metric for individual influencers.
KPIs ensure your goals go from “I want more sales!” to “I want to see a 20% increase in year-over-year revenue by April 30.”
Quite a difference, huh?
#3: Build a Strategy and Marketing Budget Around Your Goal
Now that you have your specific KPIs ready, you know exactly what your influencer marketing strategy looks like. Strategic influencer marketing won’t involve discounts if your goal is to build a community, and it won’t focus on conducting free giveaways on social media if you want to increase sales.
Build an influencer campaign and marketing strategy that aligns with your goals. Don’t opt for Instagram influencer marketing if most of your target audience hangs out on Twitter. Deciding where you host your influencer marketing campaigns is a part of building a marketing strategy.
This step is also when you should add up the costs and check if the total cost aligns with your marketing budget. Depending on your campaign, the prices would include time spent, influencer rates, product samples, software, and more.
With a cost structure in place, you can narrow down the influencer category (nano-influencer, micro-influencer, or macro-influencer) and start your influencer outreach. Thanks to your KPIs, you can also explain to influencers precisely how the success of the influencer marketing campaign is measured.
#4: Calculate ROI and Analyze Results
Now comes the fun part.
You have your KPIs in place to know what you should look for to determine the success of an influencer marketing program.
Calculate your returns on a per-influencer basis for different types of ROI. For example, average order value can determine hard sales ROI. Engagement return on investment, on the other hand, can be calculated by using a social listening tool to catch brand mentions or campaign hashtags.
The only thing you need to ensure is the dollars earned from influencer marketing stay separate from your other digital marketing initiatives.
And now, with a simple formula, you can calculate the exact ROI based on your cost:
(Return/Cost) * 100 = ROI
For example, if you spent $50,000 on influencer marketing and generated $90,000 in profits, the ROI can be calculated as follows:
($90,000/$50,000) * 100 = 180% ROI
But remember: There’s also a qualitative ROI of influencer marketing.
For example, you might get a boost in daily unique website visitors, but are they all necessarily your target customers? Maybe you haven’t chosen an influencer who’s the right fit for your brand, and thus, much of the traffic you generate is useless. In such a scenario, it’s crucial not just to evaluate the quantity of website traffic, but also the quality — you don’t just want new visitors, you want new customers.
You can do a qualitative analysis of the data manually for small campaigns and use third-party analytical software for more extensive influencer marketing programs.
Now you know exactly how to calculate the return on investment on your influencer marketing strategy. Here are some tips to maximize your returns.
3 Tips for Maximizing the Returns on Your Influencer Marketing Campaigns
Let’s be fair: Measuring the ROI of influencer marketing isn’t an exact science. There are plenty of variables affecting your success — your industry, the social channels, whether or not you have partnered with the right influencer, and so on.
But there are some things you can do to make the most of your influencer marketing efforts.
#1: Product Seeding Your Way to Organic Winning
As we talked before, the pay-per-post model is dead because:
- It is over-priced
- It lacks authenticity
- It’s a partnership built on asking, not giving
- It makes your relationship with the influencer transactional, not relational
So what do you do instead?
Product seeding (also called influencer seeding) is when brands send influencers their products — no strings attached. The key here is “no strings attached,” meaning no obligation to post about the product in return, no sponsorship, no compensation, no endorsement, nothing.
For example, if you are an ecommerce beauty brand selling luxury body lotions, you’ll aim to reach out to 300 relevant skincare influencers who can test your product. Ask for their address after letting them know why they’d love your product and have your lotions ship to them right away.
Across all the brands at Kynship, we see an average of 30% opt-in for product seeding — that’s around 90 influencers if we carry on the example above. And from those 90, typically 20-40 influencers post on their social handles (for free!).
So after 300 influencer outreach and 90 product seeding opt-in, you receive free organic social posts for your brand to use across your distribution channels. Not to mention the personal and long-lasting relationship you build with the influencer.
Instead of a massive $$ investment on a studio shoot or paying 20-25 influencers for a sponsored post, you’re able to generate a ton of free influencer content from people who are genuine product adopters — all due to product seeding.
#2: Choose Influencer Whitelisting Over Influencer Organic Post
Influencer whitelisting is when your brand gets full access to an influencer’s social media account — including ads. On the other hand, an influencer organic post is when you pay an influencer to post about your product or service at their own discretion.
So, what makes influencer whitelisting better than influencer organic posts?
- Influencer whitelisting ads are created through Facebook ad manager and offer far better customizations. You can go beyond the brand awareness objective by setting your goals to store traffic, conversion, lead generation, etc. This also means your ads are more likely to show to your target audience, who are more likely to become new customers.
- Social media algorithms today offer limited organic reach. The entire audience doesn’t see organic social posts of an influencer. Instead, it reaches only a teeny-tiny proportion of their followers. Influencer whitelisting helps you reduce your reliance on faulty algorithms.
In short, you’re able to maximize your return on ad spend (ROAS) by influencer whitelisting compared to organic posts.
It’s how one of the students at Kynship’s Marketing Blueprint Course tripled their ROAS over just 14 days.
#3: Take the Time to Vet Influencers and Build Influencer Relationships
There’s nothing worse than an excellent influencer partnering with a solid brand … when they are the wrong fit for each other.
Influencer compatibility is a real thing:
- 87% of influencers in the Influencer Survey 2020 state the core factor for choosing a campaign is that the product fits into the type of content they share with their community.
- The 2020 Influencer Marketing Report by SocialPubli highlights that 39.6% of marketers say their biggest struggle with influencer marketing is finding the most compatible influencers.
Finding the right influencer is the cornerstone for running a successful influencer marketing campaign. Take the time to ask the following questions:
- Does the influencer serve your target audience?
- Are an influencer’s followers engaged and real?
- Is the influencer collaborative and easy to work with?
Vetting influencers can be extremely time-consuming if you’re evaluating multiple influencers or looking at influencers with large audiences. In such a case, working with an influencer marketing agency can streamline the process as they ensure you connect to the right influencers.
But finding the right influencers is only half the puzzle. How do you maintain lasting, successful influencer relationships?
- Build a partnership based on giving, not asking
- Don’t keep it strictly a transactional relationship
- Pay the influencer fairly
- Allow for creative freedom
Remember, influencer marketing is a human-to-human interaction — value influencers as creators and not merely distributors.
Calculating ROI = Calculating Success
And there you have it! The ultimate guide to calculating your influencer marketing campaigns’ ROI and three solid tips to increase your return.
After each campaign, take the time to figure out what worked well and what didn’t go according to plan. Learn, test, experiment, and improve as you go.
Don’t have the time (and the budget) to make mistakes? Book a call with us! We ensure businesses get the best ROI from their influencer marketing efforts — whether it’s brand awareness or revenue.