🔖 Renowned author and thought leader Duane Forrester once said —
“It’s really hard to measure true influence.”
🔔 So, can you actually measure the Influencer Marketing ROI?
How can a business assess the ROI from influencer marketing?
How effective is influencer marketing anyway?
So many questions, right?
And also, “No” is not really an answer here, as modern-era influencer marketing is part of the digital marketing ecosystem. And is it even “digital” if we can’t measure the outcome?
The good news is, YES, you can definitely measure the ROI of influencer marketing campaigns!
But the question remains — how to measure influencer marketing ROI? 🤔
Before we dig into that, let’s go through some basics to lay the groundwork for the main discussion today. 👇
- 💡 What is the ROI of Influencer Marketing?
- 💡 The Importance of Measuring Influencer Marketing ROI
- 💡 Qualitative vs. Quantitative: How to Calculate ROI of Influencer Marketing?
- 💡 How to Measure Influencer Marketing ROI: The Steps to Follow
- 💡 Example of How to Measure Influencer Marketing Campaigns
- 💡 Wrapping up
💡 What is the ROI of Influencer Marketing?
In order to measure the ROI of your influencer marketing campaign, you need to understand what ROI is and how it applies to influencer marketing.
📢 ROI, or return on investment, is a way to measure the profitability of an investment. When calculating ROI, you need to know the total cost of the investment and the total return from the investment.
So, for influencer ROI, it would be the outcome of a campaign pitted against the overall cost behind it. That outcome can be anything ranging from revenue/sales to the number of views on TikTok — depending on your initial goal of the campaign!
You simply input the necessary figures into the above equation and voila! You have successfully quantified your influencer marketing campaign(s) and calculated the ROI for influencer marketing!
But, how to calculate the net profit? Or, even the cost of influencer marketing? Is there a catch when calculating the ROI of influencer marketing activities?
I’ll discuss and clarify all these in this blog post!
While it’s closely related to ROI, they’re not the same!
Take a quick look at 👉 ROI vs ROAS to learn their differences and
when to use which one effectively!
Now, it’s time to be on the same page while answering this question —
why do we even need to measure influencer marketing ROI? 🤔
💡 The Importance of Measuring Influencer Marketing ROI
The authoritative figures of modern-day marketing are almost equally divided on this matter. Some of them question the integrity of trying to calculate something that’s hardly quantifiable at times. 🚩
In opposition, some have also questioned why shouldn’t we measure such a trending marketing activity and why we shouldn’t try to calculate it for making future decisions. 🙌
Agreeing with the latter to some extent, here’re some of the importance of measuring the ROI of influencer marketing campaigns:
1. Helps to assess influencer marketing efforts
A solid no-nonsense metric like ROI puts things into perspective and gives a straight answer (only if someone needs it) to the question, “should we really be focusing on Influencer Marketing?” 🤔
Also, measuring the ROI helps gain insights into the effectiveness of a certain campaign with your brand as well as the influencer involved.
2. Keeps the stakeholders in the loop
It can be your boss, asking you if was it really worth it to launch an influencer campaign and asking questions like “what is the ROI of influencer marketing anyway?”
Or, it can be your client who needs numbers for everything that you do for him/her. 😰
Whoever the stakeholder may be, solid (and universally accepted) metrics like the ROI can always count on!
3. Draws a clear picture with values and results
For a 3rd party reliant marketing channel like influencer marketing, you must be aware of the outcomes. ROI can give you a clear idea of the actual results brought by the influencers you hired. 🎯
So, if your goal is not brand awareness or something, ROI will come useful to tag your influencer campaigns with numbers and quantifiable values.
4. Makes it easier to take future decisions
Decisions are always easier and safer when there’s some form of proof involved. For marketing, that proof is data.
When there are data such as the ROI available for your previous influencer campaigns, future decisions about such campaigns seem easier and the future results become more predictable. 💯
… and many more reasons!
Now that we got the “why” out of the way, we’ve got a “versus” to take care of (in light of the initial argument of this section) —
💡 Qualitative vs. Quantitative: How to Calculate ROI of Influencer Marketing?
When we discuss how to calculate influencer ROI, there’s an area we just can’t avoid. That is, how to approach this issue — qualitatively or quantitatively?
Qualitative methods involve looking at factors such as the trust built by the influencer for your brand, the buzz created among the target audience, or the quality of their content. This can give you an idea of how effective an influencer is at promoting your brand and reaching your target audience.
Quantitative methods involve measuring the sales or leads generated from an influencer’s campaign, or the total number of engagements. This can be done by using unique coupon codes, tracking links, or using a tool like Google Analytics. This way, you’ll get more straightforward results and solid numbers to see how effective influencer marketing is.
Depending on your campaign goals and your targets for taking the route of influencer marketing, you can choose either a qualitative or a quantitative approach to assessing the ROI.
But, if possible, a hybrid approach is the way to go. ☑️
Hybrid as in, using both qualitative and quantitative measures along with multiple metrics and benchmarks.
Relying on either one of the approaches or just one metric is a loose cannon simply waiting to backfire by giving you misleading results. You can’t risk compromising something important like the ROI with an inefficient benchmark or a wrong approach! ⚠️
For example, we’ll be combining both approaches below 👇 to measure the ROI of influencer marketing.
💡 How to Measure Influencer Marketing ROI: The Steps to Follow
The standard procedure to measure influencer campaigns is rather simple 👇
Step 1: Setting the Right KPIs
🗣️ According to CoSchedule, marketers who start planning their campaigns by setting goals are 377% more successful than the rest!
So, what does that tells us in terms of influencer marketing? 🤔
Setting the influencer marketing KPI is listed here as the first step in tracking influencer campaigns, but it’s actually the first step of planning. While designing a campaign, the end goal as well as the ways to measure that should be clear & concise.
For example, if your campaign goal is plain & simple sales, then the number of conversions directed by the influencer will be your KPI. Similarly, if your target is to increase exposure and brand awareness, engagement metrics might be a more suitable KPI to measure performance.
Here’s a list of potential KPIs to measure influencer campaigns 👇
- Engagement (clicks, comments, reactions, votes, etc.)
- New followers
- Referral traffic/user
- User-generated content (UGC)
Your influencer marketing KPI will change/customize depending upon multiple criteria like —
✅ Product/service type
✅ Business goal(s)
✅ Campaign goal(s)
✅ Business size
✅ Other marketing channels
🔔 There is no “one size fits all” solution here, you just have to find the suitable KPIs for your business and its influencer campaigns.
So, how do you measure influencer marketing ROI with KPI?
Well, once you set what to measure (the KPIs), it’s easier to assess the influencer marketing ROI with accurate numbers. You’ll assign monetary values to what you’re spending and what you’re getting in return, that’s it.
By comparing them, you’ll get an ROI to figure out whether it’s really worth it or not! 💡
Step 2: Adding up the Campaign Costs
Now that you know what you need to track, it’s time to add up the campaign costs. This includes anything you spend on the influencers themselves, as well as any other costs associated with the campaign, like advertising or promotion.
Need more detail on what costs are involved in influencer marketing? Here’s a list of examples 👇
i) Influencer Payment
This one is kind of obvious. When you seal a deal with an influencer, there’s a payout involved. Now, that cost may come in different forms, such as —
✅ One-time fee
✅ Referral/affiliate commission
✅ Revenue share, etc.
Whatever the deal is, this one is the most basic cost of an influencer campaign 👉 the influencer payment.
ii) Product Sample/Giveaway/Freebies
Depending on the type of agreement you make, sometimes there are product-related costs involved. The influencer may —
- Ask for product sample(s) to try out and/or use in promotional material
- Arrange freebies/giveaways as part of the campaign strategy
- Ask for the product for personal use aside from the regular fees
Whatever the case may be, the number of products used for influencer marketing campaigns will add to the cost involved. That means the production cost and the value of the product are considered a cost here. 💸
iii) Additional Resources
In an influencer marketing campaign, there are other resources involved alongside costs directly involving the influencer. The list of these extra resources will include human and non-human entities, such as —
- In-house employees who’ll be involved with the influencer marketing operations
- The marketing agency (if any) that’s facilitating the whole process
- Tools/software used to make the campaign a successful one
… and many more!
All of the resources mentioned above have costs involved — ranging from salaries/remuneration to subscription costs. They have to be carefully calculated and added to the cost tab of influencer campaigns. 🧮
Your influencer marketing cost will be a sum of all the above areas (and more, depending upon your business/brand)!
Step 3: Tracking & Calculating the Results
This one is heavily reliant on the first step, which tells you to set the KPIs from the very beginning.
The idea is quite simple 👉 you have to track and calculate the metrics you initially chose as your KPI so that you can get the ROI.
That means, if your KPI is simply conversion, you should track the number of sales/leads that your campaign generates. This is the most direct way to measure ROI, and it can be done easily with a tracking link or coupon code.
On the other hand, if your objective was engagement, that’s what you’ll be looking at! You should trace the engagement generated by your campaign, both on your own site and on social media. This can be done by looking at metrics like pageviews, time on site, social shares, and comments.
By tracking these metrics over time, you’ll be able to get a good sense of whether or not your influencer marketing campaign is delivering ROI.
Here’s your answer 👇
Influencer Psychology: 13+ Reasons Why & How Influencer Marketing Works!
Step 4: Evaluating the Returns
Put monetary values to EVERYTHING! 🔔
Jokes apart 😅, that’s kind of the only way to get a conventional ROI figure from influencer marketing campaigns.
Just think about it, ROI is basically a ratio, right? So, if the cost/investment is measured in monetary terms, the return should be too! 💯
Otherwise, 1k impressions or 500 video views don’t really resonate much with a $1000 campaign cost. These are different metrics and thus, can’t be expressed as a ratio such as ROI.
But what about other KPIs without $ signs beside them? 🤔
Well, you have to convert them into monetary terms.
Here’s how —
- Using historical data:
Results or returns from the past can help conclude here. Say, for example, you’ve got $0.5 from each engagement in the past. You can use this data to roughly predict the return from future ones.
Simply multiply the previous figure by the number of engagements of the current campaign to get the estimated return this time.
- Relying on other channels:
Haven’t got any data on influencer marketing? How about other channels?
Influencer marketing revenue calculations using other channels’ data is actually more mainstream than you might assume!
For example, if you are running an influencer campaign with a KPI of landing page views and one/multiple other campaigns (email/social/paid media) landed you $0.8 revenue per landing page view before, you can make use of that.
Multiply the revenue by the number of views, like before, to get an approximate idea of the return from the influencer marketing campaign.
🔼 These are the basics of putting a figure on the revenue generated or the results accumulated by a certain influencer marketing campaign.
Step 5: Calculating the ROI
If you’ve followed through all four of the previous steps, the last one will be as easy as pie 🥧 for you!
Using the influencer ROI formula discussed earlier,
we’ll subtract the total cost (step 2) from the amount of return (step 4) to get the net profit. Then, we’ll divide this profit by the cost.
Finally, we’ll multiply the result by 100 to turn it into a percentage, and voila!
The influencer marketing ROI is ready. 🎯
Easy-peasy, isn’t it? 😃
Let’s go through the process once more with an example for further clarification:
💡 Example of How to Measure Influencer Marketing Campaigns
Let’s say, ABC is a brand that’s running an influencer campaign designed to generate leads for its business. 📈
Now, all they need is to learn how to track influencer marketing campaigns.
For that, they’ll need to follow the simple steps.
Step 1 ➡️ Fixing the KPI ➡️ Lead Generation.
If they spend a total of $200 after running it for a week,
Step 2 ➡️ Campaign Cost ➡️ $200.
By tracking the campaign they find out that the total leads generated after a week is 30. So,
Step 3 ➡️ Tracking Results ➡️ 30 leads.
They’ve run this type of campaign before, so they have previous data to rely on. After analyzing, they find out that they’ve generated $21.5 from each lead they got in their past campaigns.
So, 30 leads multiplied by 21.5 USD would be 645 USD.
Step 4 ➡️ Evaluating Results ➡️ $645.
Here, the net profit is $(645-200)= $445.
So, the final estimated ROI of the ongoing influencer marketing campaign after running it for a week would be —
(445/200)*100% = 222.5%
So, the ROI of the influencer marketing campaign (approx.) is 222.5%.
That wasn’t too hard, was it? 😀
You can follow the same steps to calculate the ROI yourself!
Take a look 👉 at the basics and also some solid examples of moment marketing to get inspired!
💡 Wrapping up
Measuring influencer marketing ROI doesn’t have to be complicated. Just follow the five 🖐 simple steps discussed above and you’ll be on your way to success with influencer marketing!
I hope, by now, you know how to calculate ROI of influencer marketing.
Also, thanks for reading till the end! 🌻
If you have any further questions, feel free to comment below.
I’ll be eagerly waiting to reply 😃