Influencer marketing has risen in popularity over the last couple of years. This industry is massive, and it's only about to get bigger as we get closer to the onset of Web3. Many brands worldwide have discovered the value of influencer marketing, meaning the stakes and budgets are about to skyrocket.
Unfortunately, unlike other online marketing strategies, there's no straightforward way to gauge the success of this marketing approach. Therefore, knowing exactly how much value you get from your marketing funds can be challenging. Undoubtedly, this new type of marketing metric remains a mystery for most marketers and businesses.
Without proper parameters, there's no real way of telling how an influencer marketing campaign did. Luckily, this article will discuss the best key performance indicators that brands, organizations, and companies can use to measure the performance of influencer marketing campaigns. Think of these parameters as GPS trackers. They essentially tell you how far you've gone and how far you still have left.
What is ROI in Influencer Marketing?
ROI is the backbone of any marketing strategy. It helps you determine how profitable your investment or expenditure was. And since influencer marketing ROI is used to quantify campaign performance, it should be measured and backed with hard data. That helps brands make more accurate predictions for the future, empowering them to make better decisions.
Since the marketing strategy and channel work together in influencer marketing, you can either measure the ROI of the whole strategy or individual channel. And unlike other marketing strategies, ROI in influencer marketing isn't limited to sales. It can help you establish brand awareness, engagement, and followers. So, when calculating your ROI, you can break it down into either sales or engagement.
Why Do You Need to Measure Influencer Marketing ROI?
Even with influencer marketing, measuring your ROI is crucial to ensure you effectively and cost-effectively reach your target audience. Marketers are accustomed to doing that with other marketing modalities, like PPC. However, those costs are more predictable, and it is frequently simpler to monitor the impact.
Unfortunately, when it comes to influencer marketing, you can have various line items for marketing costs. Additionally, it can be challenging to estimate the actual cost of a campaign for your business due to the varying rates per influencer.
At some point, a business's finance department will want to know what value the company is getting from influencer marketing. In such a situation, measuring the ROI is crucial as it also counts when filing taxes and other business plans. If you can show the success rate of the influencer marketing campaign, the finance department will be willing to give you a greater budget to expand the influencer marketing program.
Also, measuring the ROI of an influencer marketing campaign can help you to adjust your marketing approach accordingly. If the ROI is high, that's another reason to expand the campaign. However, if the ROI shows that the campaign has been unprofitable, you can either adjust the approach or discontinue it entirely.
What are the Essential KPIs Marketers Use to Measure Influencer Marketing ROI?
Unlike other marketing strategies, you have limited tracking capabilities when working with influencers on your marketing campaign. But luckily, various key performance indicators can help you better understand what's happening with your influencer marketing campaign.
Conversion rates are a critical element for most marketers, not just influencers. Typically, when most influencers measure their success, the first thought that comes to their mind is conversions. That being the case, to help measure your marketing ROI, you also need to consider the conversion rate of your campaigns.
Unfortunately, even though tracking sales when you run an influencer marketing campaign is straightforward, that's not always the case when it comes to conversion rates. That's because conversions have nothing to do with sales.
The best option is to monitor the conversion rate separately outside the confines of the sales. More specifically, the conversion only happens when the target audience reacts and completes the desired action by your marketing campaign. For instance, signup for a course or purchasing an eBook are some of the actions that can be considered conversion rates.
2.Pageviews and Impressions
Conversations and sales are the leading KPIs brands look at when measuring the ROI of an influencer marketing campaign. While such tangible results are significant, these aren't the only factors one should consider. Especially for businesses just starting out, impressions and pageviews are the best ROI indicators.
Remember, you are at the stage where you are trying to introduce your product to as many people as possible. If your impressions and pageviews are high, you have more people to engage who would potentially become customers.
3.Reach and Awareness
Brand awareness is another key performance indicator that shows how familiar your target audience is with your brand. For instance, if asked to name a couple of household names in the footwear industry, I bet Nike, Adidas and Puma would be on top of your mind. Why? That's because these brands have achieved excellent brand visibility.
The ROI on brand awareness shows the number of new potential customers who can recall your brand and product after the influencer marketing campaign. You can evaluate the number of unique people who have seen your content and traffic coming from the influencer's social media post to determine the campaign's performance.
Another key metric to pay attention to when running an influencer marketing campaign is brand engagement. That can be indicated by the number of likes, shares, comments, and click-throughs on the influencer's social media post.
That's why, as part of the influencer marketing campaign, you should request the influencer to share their analytics on their posts so that you can be able to measure the campaign's performance. All the same, be aware of influencers who have false engagement on their social media posts.
5.Earned Media Value
In essence, earned media value is the total social media exposure you gain from the influencer campaigns. EMV helps you place a monetary value on your sponsored campaigns. In that, you can track the earned media value through likes, shares, unique daily page visitors, and comments on social media posts. That helps you place a dollar amount on the value of impressions created from the influencer marketing campaign.
6.Audience Growth- New Followers and Subscribers
Your audience growth is another indicator of an influencer marketing campaign's performance. That may be categorized by the number of new followers on your social media pages or subscribers on your email newsletter or YouTube channel.
There are plenty of CRM tools that can help you track where a specific lead originated from. That way, you can pinpoint the traffic source that directed potential customers to your social pages or website.
7.Number of Backlinks
Backlinks are a surefire way to boost your site's performance and ranking. It helps build better SEO and content reach. You can establish backlinks through sponsored content and guest posting on other sites.
To determine the ROI of your influencer marketing campaign, you must first determine the number of backlinks your site had before the influencer marketing campaign and compare them after the campaign is completed.
8.Shares and Mentions
Multiple social media listening tools help you measure where and when people are talking about your brand and competitors. These results are more qualitative, which will help push your business ahead, especially if you want to establish yourself as a standalone brand.
Influencers have the ability to influence what others say and how often they mention your brand. This kind of data is precious, especially when measuring the ROI of your influencer marketing campaigns.
By allocating influencers' affiliate links, you can track the sales they make via their social media channels. The influencers will get their commission from the sales while, on the other hand, you will get data around the number of clicks to your website and the number of sales made.
And now, with the Instagram shopping feature, customers can make their purchases directly from their Instagram feed, shortening the buying journey and encouraging impulse buys.
10.Influencer-Specific Discount Codes
Since most platforms don't allow adding links to posts, that limits how influencers can utilize affiliate links. But the good news is that they can share unique discount codes with their audience, which will help you track the number of sales the influencer has made. Ultimately, discount codes give you a better look at influencer ROI.
How to Measure the ROI of an Influencer Marketing Campaign
Determining the ROI of an influencer marketing campaign is easy once you've determined your investments and results. For example, if you paid an influencer $10,000 and were able to generate an estimated $20,000 in profit from their earned media value or sales linked to their influence, your ROI is 200%.
The formula for calculating this is ROI=(Revenue/Cost) X100.
ROI= (20,000/ 10,000) x100
For most brands, influencer marketing has shown a lot of potential. However, your goals and brand must first be understood and analyzed to find a perfect fit, as with any other online marketing strategy. If you have prepared your KPIs and tracking tools in advance, you can experiment and learn from their performance.
Frequently Asked Questions
Q: What's considered a good influencer marketing ROI?
A: While there's no key industry number for determining good influencer marketing ROI, a 2020 report by Influencer's Marketing Hub shows that, on average, you can earn up to $18 in earned media value for every dollar spent on the influencer marketing campaign.
Q: Are there any other variables you should consider when tracking the ROI of an influencer marketing campaign?
A: The time of the year, your product's price point, the nature of your partnership, and the longevity of the content.
Q: How influential are influencer marketing campaigns?
A: Influencer marketing can generate 10x ROI than marketing with PPC ads. A brand can make up to $5.20 for every marketing dollar. For that reason, almost 70% of businesses are set to increase their influencer marketing budget as we close to 2023.
Q: What exactly is Realistic ROI in influencer marketing?
A: The realistic ROI in influencer marketing depends on various factors. That includes the type of campaign, the overall goals of the marketing campaign, and the target audience. All these factors play a crucial part in the results you will see from your marketing efforts.
CEO, Benco Services
I am the COO of Benco Services and the Founder of NFTZoomer. I have been passionate about building successful community-based projects for the past 4 years. I've been in the web3 space for the last 2 years and have a great passion for shaping the future of Web3.