Are You A Good Enough Investment? Understanding Influencer Marketing ROI
Brands and marketers are investing more and more in influencer marketing. In fact this year 48% of marketers are significantly increasing their influencer marketing budgets. So making sure that influencer campaigns are actually effective and that a brand’s investment is worthwhile, is quite a big deal. This is exaclty what we mean when we talk about return on investment (ROI). And though influencer marketing is estimated to return as much as 11 times the amount that is invested over all other forms of digital marketing, an entire 69% of marketers find estimating ROI for influencer campaigns quite the challenge.
So we will try to make things a little clearer, helping you understand how brands attempt to measure their return, and how you could get an inkling into whether you were a good investment after all.
What is ROI
ROI is ultimately measured in the relative increase in income or revenue. That’s the additional profit (value of sales), generated compared to the campaign’s cost. It’s simple formula having only two parts:
ROI = (return – investment)/ investment
Influencer Marketing ROI
In influencer marketing however, ROI is how the brand benefits, from all your social media efforts, in relation to their investment. So “return” or the campaign’s success could be measured not only by the increase in sales of a particular product, or in sales over a particular season but also by the increased exposure leading to greater brand awareness.
Typically, an influencer marketing campaign aims to raise awareness for the brand with a view to generate future sales, rather than just pushing for immediate sales. So depending on whether the campaigns’ target is sales, the brands general kudos (exposure) or both; an influencer marketing campaigns’ ROI is tracked, measured and estimated accordingly.
As an influencer it’s difficult for you to determine the number or sum of sales your promotional posts have led to, given that you don’t have access to the brand’s sales figures. Evaluating your own success in assisting with the brand awareness however is something you can measure. The number of new potential customers who become aware of the brand through a campaign is a good measure of increased exposure.
The total number of likes, comments, shares and re-tweets, indicates to brands how many users have not only seen the product, but also gives an insight as to how users feel about the product.
With engagement, brands can easily trace which content, from which influencer and on which platform was most successful. This is done by ascertaining cost per engagement (CPE), by simply dividing campaign cost (how much you were compensated) by the total number of engagements on the sponsored post
CPE = investment/ Engagements]
The growth of the brands social media following since the commence of the marketing campaign is a good indicator of potential new customers your sponsored post has brought in. By following the brand, users show interest in what they have to offer.
Brands estimate it by comparing the number of followers, they had pre and post campaign manually or tracking their new followers in platforms such as Buffer. However, if a brand’s campaign involves more than one influencer it’s much more difficult to pin point which influencer campaign, the followers have come from.
According to the Rise of Influencers Report, 79% of marketers choose web traffic as their most important metric. They track whether their website traffic is a result of their collaboration with you by giving you your own unique link to add to your blog. Through your Google Analytics you could also view the number of clicks that link has received. However you should be aware that web traffic in itself is not everything. Brands also consider the users on-site activity and conversions which give more meaningful metrics.
It all comes down to numbers, and when you hear ROI, you think revenue; the sales which you drove and were a direct result of the campaign. Ascertaining sales is tricky and something you won’t be able to estimate, but brands can track conversions, through custom links, promo codes and Isolated marketing.
As mentioned brands provide each influencer with custom links, for each of the platforms they share content on. This way they can track the conversions from each link, determining which influencer brought in the most sales and on which platform. In turn crediting you with the sales which are a direct result from your custom link.
Promo codes which don’t expire is the most foolproof ways of measuring the effectiveness of an influencer. There is no room for error, when brands give you a promotional code specific to your name, they can calculate exactly how many have been submitted. Using promotional codes, not only makes it easy for brands to pin point your sales but also gives you something extra to offer your followers.
In some cases brands will only use influencers to promote a product so as to compare the results with other marketing strategies. If you’re the sole promoter of a product, effectiveness could be easily tracked through the product’s sales and you will be considered as the only driving force for those sales.
Were you worth the investment? How to identify whether your collaboration was a success
Reach, actions and reactions on social media happen within a number of seconds, so brands would typically keep on top of what’s happening as it’s happening. Using the metrics to constantly review, revise and improve your promotion.
Typically marketers would collect the data as close to real time as possible, this way making quick updates and changes, with the campaigns you’re involved in by scaling, re-targeting and optimising.
- Scale- if brands find that your content is bringing greater than expected return, then they might consider you to do more of the same.
- Re-target- if a particular form of content or collaboration is doing well with your audience, the brand may consider you take it to a larger audience on other platforms.
- Optimise- if the collaboration isn’t going anywhere, brands may either choose to change the content, or look for different influencers.
What you can do to help brands track your ROI
- Get your head around custom UTM links, and their function. If the brand doesn’t provide you with one, you, yourself can create a custom link for your collaboration. By including the brand’s webpage and your details in the link, it will then appear in the brand’s Google Analytics as a source, making sure they know exactly where their traffic is coming from.
- Understand how tracking of conversions works, and ask the brand to set goals to track the sales you drove.
- Know that when you collaborate with brands through ZINE, brands can see their ROI in the forms of CPM (cost per thousand impressions) and CPE from each influencer they collaborated with. When the brand is signed up with ZINE, as an influencer all you have to do is tag them in your sponsored posts with their social media handles, and ZINE does all the rest.
It’s important to realise that any individual measurement of ROI is only a piece of its’ overall value. As an influencer, you have limited access to insights, and can use exposure as a rough estimate of the collaborations’ ROI. But it’s important to realise that no single measurement of ROI can be definitive and comprehensive. They are all good indicators of which their overall value needs to be assessed as objectively as possible.
I’m head of Content at ZINE, where I use my expertise in fashion consumer psychology to empower brands and influencers in their marketing campaigns. I love to travel, bake as well as shopping online.