How To Calculate Influencer Marketing ROI
In this article, Alessandro Bogliari is the CEO & Co-Founder of The Influencer Marketing Factory, explain, how a business can effectively calculate the ROI of an influencer marketing campaign in order to maximize the influencer marketing results in terms of conversions and optimize the CPM, CPC and CPA.
Social Media is one of the most powerful forms of marketing. There are many different social media platforms that let you advertise your business in an efficient manner. One of the most important ways of social media marketing is by collaborating with influencers. Influencers, nowadays, play a very significant role in the online marketing arena.
What Is Influencer Marketing?
Influencer Marketing is a type of social media marketing where a person with a strong online community can influence other people because of the trust, knowledge and direct relationship with his/her followers. It is quite common nowadays that influencers suggest to their following a certain product or service in a specific niche. The concept is easy: the influencer is paid by the brand to promote something: The influencer uses his/her popularity to earn money while the brand gets an amazing amount of exposure. Influencer marketing is expected to become an $8 billion sector by 2020.
There are four main social media channels that work great for influencer marketing:
- YouTube
- TikTok
- Twitch
And each of these channels has different demographics and ways to propose contents: on YouTube is usually more efficient a long video where the influencer explains well the promoted content with a dedicated video or a 45-second integration, while on TikTok the most converting video will be a 15-second entertaining clip, better if funny and sharable.
Influencer Marketing And Its Return
Influencer marketing is a very popular and effective marketing concept but sometimes businesses still can’t track the exact return they get from their investment in Influencer Marketing. It is crucial for every business to set up a stable tracking system to measure the return on investment for their influencer marketing efforts. In fact, without a tracking system in place, a company cannot properly identify and quantify the conversions got thanks to influencers, and without knowing the digital ROI, the brand can have difficulty in understanding the value of a certain digital campaign. A marketing campaign that is not tracked can be the equivalent of almost wasting money.
Determine An Objective
You need to set a goal or an objective for influencer marketing. Whether you want to increase your sales or introduce your product to a certain demographic segment, it is very important for you to determine what you want to do. Having a set goal will help you track how well your marketing efforts are going.
An example would be to add a tracking pixel on the Thank You page of your eCommerce after a user buys a product. This will fire an event to your analytics tool and you will be able to track every single sale.
Another example could be to track every new user that signups to your website or join your newsletter, so even if this is not a sale, you can count the leads and potential prospects for your business and calculate a CAC (Customer Acquisition Cost).
Influencers And Affiliate Marketing
If you are working with influencers it is very important to build a relationship with them that would work in the short run and long run as well. You can also give certain benefits to the viewers and followers of your influencer. You can offer promo codes to your influencers which they can share with their audience, who would then use those codes to buy products from you on a discounted rate.
Using a promo code is a great way to add another layer of tracking, in fact, this will give your business a way to measure how many people buy your product thanks to a specific influencer.
What Other Factors Can You Use To Measure Your Influencer Marketing Efforts?
In order to measure the success of your influencer marketing efforts, you need to first choose a few measurement parameters. You can then judge your performance with the help of these parameters. You can use factors like:
- Clicks
- Impressions
- Engagement
- Reach
- Conversions
- Audience Alignment
- Product Sales
To make an example, if you spent $ 10,000 for an influencer marketing campaign and you got:
- 1200 clicks
- 1,750,000 impressions
- 50 sales
- 15 content created
- 30 user-generated content (earned)
This means that you paid 8.33$ per click (CPC), $5.71 cost per mille impressions (CPM), 200$ per sale (CTA), 666$ per content created per influencer and 333$ per user-generated content (earned)
Influencer Marketing ROI Measuring Softwares & Tools
It might be hard to measure the return on investment on your influencer marketing efforts but you don’t have to measure them manually. There are certain tools and softwares in the market that let you measure the return on investment. Grin, Neoreach, Upfluence, and many more. Businesses who invest heavily in influencer marketing should also invest in such measuring tools as well. These tools will help them understand if they are using the right influencer platform for their business or not. You have to study these tools as each tool offers some different and unique features.
