Influencer marketing is big business. In fact, brands are expected to spend up to $15 billion paying influencers to endorse their brands and products on social media by 2022.
It’s easy to see why: 84% of marketers say it’s effective, and consumers say the same. In a 2019 survey we did with 2,000 consumers, more than 25% said micro-influencers had helped them discover a new product in the last three months. In fact, in categories like beauty and CPG, that number rose to more than 35%.
But while consumers and marketers agree that influencer marketing is influential in driving sales, actually determining the return on investment (ROI) can be difficult.
Why is it so hard to measure? Largely because you don’t have complete visibility into influencer data. You have to do the best with what you have on your side. Engagement, traffic, revenue, and earned media value (EMV) are all starting points for measuring your own ROI.
Let’s take a look at why influencer marketing ROI can be difficult to measure and explore how to calculate it.
Influencer Marketing ROI: Why It’s Hard to Measure
When marketers are looking to find influencers for upcoming marketing campaigns, they’re often looking at metrics that don’t directly help them understand how that influencer is going to impact the campaign. And it’s doesn’t get much better after the fact. There are a few reasons for that. Let’s dig in.
There are many ways to calculate ROI
Marketers calculate influencer marketing ROI using a variety of metrics, including engagement, traffic, impressions, clicks, revenue, and EMV.
EMV is essentially the buzz created around your brand, which can include comments, mentions, and user-generated content. It’s often calculated by multiplying the reach of social content by a multiplier based on impressions. EMV is useful in measuring influencer marketing ROI because it provides a single numeric value to a variety of individual metrics.
Tracking Attribution is Challenging
Tracking attribution is challenging, particularly if your campaign isn’t set up to be easily measured.
For example, if multiple influencers use the same link or hashtag to post about your brand, such as in the Lay’s #DoUsAFlavor campaign illustrated below, it’s difficult to determine which individual is generating the most buzz or sending the most traffic to your website.
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It can also be tricky to attribute what percentage of e-commerce traction comes from influencers’ post versus your brand’s organic posts. This is especially challenging with Instagram because the social network provides users with only one clickable link, the link in bio, which isn’t much real estate to drive consumers to your site.
Influencers Must Self-Report
It’s tough to get the full picture of an influencer’s performance because marketers often rely on the influencer’s self-reported data.
While it’s evident how many likes or comments an influencer’s Instagram post received, brands aren’t readily able to determine how many clicks the influencer’s “link in bio” received, or how many engagements occurred on the influencer’s Instagram Story. The influencer must provide the data in these cases.
Influencers may also make mistakes when reporting on campaign results, or may even embellish to give the appearance that their posts have performed better than they actually have. The only way to confirm that data is correct is to either gain access to an influencer’s analytics or to request screenshots from them.
The problem with screenshots is that they provide only a (pun intended) snapshot of how a post performed. Studies show that influencer posts generate two times the impressions after a campaign has ended.
There’s also the fact that acquiring this data depends on a brand’s relationship with each influencer. Requesting screenshots or access to analytics may make some influencers uncomfortable.
It can also be cumbersome to aggregate all this data: The more influencers you’re working with, the more data you’re responsible for collecting. This means not only an overflowing inbox of self-reported influencer data but also the likelihood of error introduction when inputting numbers manually.
Qualitative data isn’t easy to calculate
More brands are asking influencers to report deeper-level information, such as the tone of user comments vs. regular measurements like clicks, according to influencer Vix Meldrew. This presents its own unique challenges.
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While brands can view the number of comments an Instagram post received, as in the sponsored post above, the tone and content of those comments can’t be quantified. It’s even more difficult to get the full picture on a social platform like Facebook, which allows for certain comments to be hidden from view.
How to Measure Influencer Marketing ROI
Let’s take a look at the steps you can take to simplify the process and easily determine an influencer’s ROI.
1. Set Campaign Goals
First, identify your campaign goals. This will determine what metrics you’ll measure against later.
Your campaign goal could be increasing brand awareness, growing your audience, driving sales, generating leads, or increasing engagement, just to name a few. Select a specific goal based on your brand’s needs and designate a clear timeline during which you’ll be measuring this goal.
For example, let’s say we set a campaign goal to increase store sales by 20% by the end of Q4.
2. Identify Metrics
Now you need to identify which metrics—such as EMV or engagement rate—will allow you to measure the campaign goals you’ve set.
Keep in mind that more than one metric can be used to measure your campaign objective. You may look at such metrics as website traffic and email collection if your campaign goal is lead generation, for example.
Let’s take a look at our hypothetical. If we want to increase sales by 20%, one metric we could track would be the revenue generated per influencer or average order value per influencer. This would provide us with the specific value each influencer is responsible for generating, and allow us to compare which influencers have the greatest ROI.
3. Select Tools to Track metrics
Determine which tools you’ll use to track these metrics and design the campaign with these in mind.
Look for ways to measure individual influencers’ results, such as unique URLs and hashtags, affiliate links, and coupon codes. “This will help you down the line when you’re trying to report exactly how much a specific influencer has given you and reflect on the ROI of your influencer budget,” Fein says.
In our hypothetical example, because we’ve identified our metrics, we could provide each participating influencer with their own unique coupon code to share with their audience in Instagram posts and stories. That way, when a customer places an order with a coupon code from the campaign, it’s easy to identify which influencer had a hand in the sale. Then we can calculate each influencer’s ROI and compare them.
Refer to the chart below to help identify the metrics and tools that’ll help you measure campaign goals.
4. Measure Campaign Results
The simplest way to determine your influencer marketing ROI is to take the metric you’re using, such as EMV, and divide it by your investment. (Your investment could be the amount you paid an influencer, or a dollar amount worth of products you provided the influencer.) Then, multiply that number by 100 to get your ROI.
For example, if you pay an influencer $1,000 to participate in a campaign and you know their EMV is $250, then your ROI is .25 or 25%.
Now let’s return to our hypothetical influencer campaign focused on driving sales. We know that one particular influencer is responsible for $3,000 in sales, thanks to the unique coupon code assigned to them. Now let’s say the brand paid that influencer $500 to make a sponsored Instagram post promoting that code. In this case, the influencer’s ROI is 600%.
You can also use an influencer marketing platform like Curalate (illustrated above) to help track performance and simplify this process.
ROI Continues Long After the Original Post
The ROI of your influencer marketing campaign can continue long after an influencer makes a post because it may continue to make traction even after you’ve quit measuring its success. Plus, you can continue to amass ROI by incorporating influencer-generated content into your brand’s overall marketing strategy.
Just because an influencer’s post has come and gone doesn’t mean there’s not still value in their content. Your brand can repurpose this content on social media, on product pages, in emails, and more.
You may find that an influencer provides only an average cost per engagement during a campaign. However, when your brand utilizes the influencer’s content in other places, it grows that influencer’s ROI.
Take beauty brand Glossier, for example. Its marketing team understands that Glossier’s audience responds more positively to content from real customers who use Glossier products. So the brand utilizes influencer-generated content throughout its marketing efforts, including billboards like the one below.
“As consumers spot the billboard, they feel compelled to photograph it and create and share content themselves, thus taking ownership of that conversation with the brand,” says Henry Davis, former president and COO of Glossier.
Assess Your Influencer Marketing Strategy
Measuring an influencer’s ROI can be challenging, and there’s no one-size-fits-all solution for how to do it.
While following the steps outlined above can certainly simplify the process of measuring influencer marketing ROI, savvy marketers must understand that these metrics may not always provide the full picture.
Therefore, it’s important to continuously analyze campaign data and assess the effectiveness of influencers, so your brand can make informed decisions and perfect its influencer marketing strategy.