In today's digital landscape, it's more challenging than ever for businesses to capture the attention of their audience. Traditional marketing methods are often perceived as inauthentic or intrusive, making it difficult for brands to build genuine connections with their customers.
However, by partnering with influential figures and social media stars, businesses can leverage the power of their reach and credibility to create authentic and engaging content that resonates with their audience. With the influencer marketing industry projected to grow to a staggering $21.1 billion by 2023, it's clear that this strategy is more than just a passing fad - it's a crucial part of any successful modern marketing strategy.
So, how do you know if your campaign was worth it? That's where influencer marketing ROI comes in.
Influencer Marketing ROI Explained
ROI, or return on investment, is a crucial metric in influencer marketing. It refers to the amount of money you make from your investment in an influencer marketing campaign. In essence, it's a way to measure the success of your campaign and determine whether it's worth the investment.
On average, businesses earn $5.20 for every dollar spent on influencer marketing campaigns, making it a lucrative strategy for many companies. So, measuring ROI is essential to determine the effectiveness of your influencer marketing campaign and ensure that you get the most out of your investment.
Imagine you're a marketer for a trendy athleisure brand, and you've just launched a new line of sustainable workout gear. You know that your audience is active, health-conscious millennials who care about the environment. So, you decide to partner with a famous fitness influencer who shares those same values and has a large following among your audience.
Together, you create a series of sponsored posts and stories on Instagram, YouTube, TikTok, and Twitter featuring the influencer wearing your brand's new sustainable line during workouts and promoting the benefits of eco-friendly fashion. The campaign is a hit, with high engagement rates, increased brand awareness, and a significant boost in sales.
By analyzing metrics such as website traffic, conversion rates, and social media engagement, you can calculate influencer marketing ROI and adjust your strategy accordingly for future influencer partnerships.
From Likes to Profit: Importance of Influencer Marketing ROI
Measuring the ROI of your influencer marketing program is crucial, regardless of whether you're working with mega influencers, micro influencers, or nano influencers.
Why, you may ask? Well, tracking the success of your influencer marketing campaign enables you to make informed decisions about how to allocate your marketing budget. Without a solid grasp of your ROI, you risk wasting valuable resources on campaigns that do not yield the desired outcomes.
Research reveals that an overwhelming 71% of brands are actively measuring the ROI of influencer marketing in 2023. This is a clear indication that businesses are starting to take influencer marketing seriously and are determined to understand the value it brings to the table.
Now, here's the good news. When you do measure the ROI of influencer marketing, you can use that information to optimize your future campaigns and improve your overall marketing strategy. By analyzing the data, you can identify the influencers driving the most significant impact and focus your efforts on working with them. This way, you can create more targeted and effective campaigns that generate real results for your business.
Return on Ignorance: Why You Can't Afford to Ignore ROI
Let's look at a couple of examples to drive home the importance of measuring influencer marketing ROI.
Example 1: Measuring ROI
Let's say you run an online store that sells beauty products. You decide to partner with an influencer with a large following in the beauty community to promote one of your new products on YouTube, Instagram, Twitter, and TikTok. You invest $5,000 in the campaign and track the results.
After the campaign, you find that you've made $10,000 in sales as a direct result of the marketing campaign. This means that you have a positive ROI of 100%, or in other words, you've made back your initial investment and then some.
Armed with this information, you can make informed decisions about future influencer campaigns. You might decide to work with this influencer again or look for other influencers with similar audiences to partner with. Either way, you know that influencer marketing ROI can be a valuable tool for your business.
Example 2: Not Measuring ROI
Now, let's say you run the same beauty products store and partner with the same influencer for promoting your products on social media channels, but this time you don't track the campaign results. Instead, you invest the same $5,000 and assume that the campaign is a success because the influencer's posts get a lot of likes and comments.
However, after the campaign is over, you find that your sales haven't increased at all. Without measuring ROI, you cannot know whether or not the campaign was a success. You might assume that influencer marketing doesn't work for your business when in reality, you didn't execute the campaign correctly.
From Data to Dollars: What Metrics Can You Track?
Now that we've established why it is important to measure influencer marketing ROI, let's discuss what metrics you can track to determine your ROI.
- Earned Media Value: EMV is a way to estimate the returns on an influencer's past posts for the brands they've worked with. It's a proxy for the cost of an equivalent advertising campaign that would generate the same impact. Essentially, EMV measures the value a brand receives from content an influencer shares.
- Sales Revenue: This is the most obvious metric to track. If you're running a campaign to increase sales, you need to track your sales revenue to determine whether or not the campaign is working.
- Website Traffic: Tracking web traffic is another critical metric for measuring the success of your campaign. By using tracking links or UTM parameters, you can determine how much traffic your social media influencers drive to your website. This is especially useful if your campaign is focused on driving website conversions or increasing overall website traffic.
- Engagement Metrics: Engagement metrics are a great way to determine whether or not your campaign is resonating with your target audience. You can track metrics such as likes, comments, shares, and overall engagement rate to see how your audience interacts with your content. Using an influencer marketing platform and google analytics can provide valuable metrics and analytics. Some popular influencer marketing platforms include AspireIQ, CreatorIQ, and Upfluence.
- Brand Mentions: Another way to track the success of your campaign is by monitoring brand mentions. You can use social listening tools to track mentions of your brand before, during, and after the campaign. If you see a significant increase in brand mentions during the campaign, it's a good indication that your campaign is having an impact.
- Cost per Acquisition: CPA is the money you spend to acquire a new customer. By tracking your CPA, you can determine how much it costs to acquire a customer through your campaign. This metric is handy if your goal is to increase customer acquisition.
The ROI Playbook: Best Practices for Measuring Your Success
Now that we've covered the importance of measuring ROI in influencer marketing and what metrics you can track, let's dive into some dos and don'ts of influencer marketing for higher ROI:
Set Clear Goals
Before launching an influencer campaign, setting clear goals for what you want to achieve is essential. Whether it's increasing brand awareness, driving website traffic, or generating sales, having specific goals in mind will make it easier to measure the success of your campaign.
Choose the Right Metrics
You can use several metrics to measure your campaign's success and optimize influencer marketing budgets, including sales revenue, engagement, brand mentions, CPA, and website traffic. However, choosing the right metrics based on your goals is important. For example, if your goal is to drive sales, tracking sales revenue would be a more relevant metric than tracking website traffic.
Use Tracking Links or UTM Parameters
Tracking links or UTM parameters are a great way to track the success of your influencer campaign and optimize marketing spend. By using unique links or parameters for each influencer or campaign, you can determine how much traffic, engagement, and sales revenue each influencer generates.
Monitor Brand Mentions
Monitoring brand mentions is another way to track the success of your influencer campaign. By using social listening tools, you can track mentions of your brand before, during, and after the campaign. This can help you determine whether or not your campaign is having a positive impact on brand awareness.
Don't Rely Solely on Follower Count
While choosing influencers with a sizable following is important, it's not the only metric you should consider. Instead, focus on engagement rate and audience demographics to measure influencer marketing KPIs, whether or not an influencer is a good fit for your brand.
Track ROI Over Time
Measuring ROI over time is essential for determining the long-term impact of your influencer campaign. By tracking ROI over several campaigns or a more extended period, you can determine whether or not your campaigns are driving sustained results.
Optimize for Long-Term Success
While it's easy to focus on short-term success, it's essential to think about the long-term impact of your influencer marketing efforts. This means choosing influencers who can help you build a lasting relationship with their audience and optimizing your campaign for long-term success.
Disclose Paid Promotions
It's important to disclose when a post is a paid promotion, as failure to disclose could result in penalties, fines, and damage to your brand's reputation. Make sure that you and the influencers you work with are transparent about sponsored content, whether it's a post, story, or video. Use clear and conspicuous language on marketing channels and social channels, such as #ad, #sponsored, or #paidpromotion to ensure that your audience knows that the content is sponsored.
Hit Your ROI Targets with InsightIQ's Solutions
As influencer marketing continues to play an increasingly vital role in modern business strategy, companies must carefully evaluate and optimize the effectiveness of their campaigns by calculating influencer marketing ROI.
To this end, granular creator data provides a critical foundation for successful ROI influencer marketing analysis. With this imperative in mind, InsightIQ offers a comprehensive solution, providing concrete influencer data from major social media platforms.
Ready to experience the benefits of InsightIQ for yourself? Book a demo and take the first step toward maximizing your influencer marketing ROI.