How Brands Can Effectively Calculate the ROI of Influencer Marketing (Updated June 2018)
GRIN also recommends: Quick Guide to Earned Media Value
Marketing has changed a lot over the past few years. In the past, it was an industry which was run by two elements: making and nurturing relationships, and following gut instincts.
Although relationships remain to be a major part of marketing, the industry is no longer based on following gut instincts. It has predominantly become data-driven, leaving no room for gut feelings and instincts.
With the increased use of Adblock by 30% in 2016, conventional marketing techniques are failing to do the trick. This has led to brands collaborating with influencers. Influencers often tend to specialize in a niche and create content around it. This makes them a more authentic source of product reviews and promotions than traditional celebrities.
Now comes the big question. How do you measure or calculate the ROI of your influencer marketing campaigns? A study by Econsultancy states that measuring ROI is the second biggest challenge marketers face.
With influencer marketing continuing to grow, the process of measuring its success has also evolved. Remember, before you can measure success, you need to know what success means to you and for your campaign.
So first, you need to think about what you want from your influencer marketing campaign. This means setting up clear goals, measurable metrics, and then tracking them to measure results and ROI.
Let’s take a look on 3 major types of goal and the key performance indicators (KPIs) for them. As well as how they can help you measure ROI.
Engagement simply means the amount of likes, comments, and shares a post receives. The traditional style of calculating engagement included all 3: likes, comments, and shares.
Nowadays, likes are no longer accepted as an important metric in calculating engagement. This is because people have started to like content created by influencers randomly without giving it a read.
Comments are still important, although they should not all be counted as engagement. An influencer’s followers may often comment things like, “great pic,” or “good post” without giving it much thought. These type of comments should not count as engagement.
For this reason, social media shares have become the most important metric to use to calculate engagement. Think about it. When do you expect users to share posts? That’s right, when they feel that the content posted was not only meaningful but also relevant and useful to them.
This makes shares an important metric which help us effectively calculate the results and ROI of influencer marketing.
In the screenshot above, we see celebrity model Kylie Jenner promote her partnership with the corset brand, WhatAWaist. The post has more than 3,000 comments, and over 2,500 shares making it a highly engaging one.
#2. Reach and Impressions
Reach can simply mean the number of unique people/accounts that have seen your content/post. Impressions can be referred to as total number of times the content has been seen.
So both the reach and impressions of an influencer’s previous posts may determine how successful they will be in promoting your brand.
This information is not public so you need to ask the influencers to share the info of their last 3-4 sponsored posts to understand the campaign success rate. For Instagram, it’s important to note that reach and impressions data is only be visible to Instagram business accounts.
See the example below from a post on an Instagram business account. This shows you the impressions and reach of a post. This information can help you measure the results and ROI of your campaign.
Popular beauty YouTuber Amy Serrano promoted the beauty brand, Glossier in her vlogs. Amy recorded her 48-hour journey from LA to NYC during which she used Glossier products.
Just 2 days after uploading the vlog, she had received more than 5000 views. This explains how effective reach can be if the audience is authentic. It also explains how reach is an important metric to effectively calculate the ROI of influencer marketing.
The endgame for any marketing campaign is to generate sales. Many brands think that just by running an influencer marketing campaign, they will increase sales. So the question remains, how do you drive sales with an influencer marketing campaign?
Here are some popular strategies that will help you generate sales from your influencer marketing campaign:
- Discount codes – Create special discount codes that influencers can share with their audiences.
- Affiliate marketing – Use affiliate marketing as it persuades influencers to support your brand.
- Flash Sales – Host flash sales and use your influencers to promote them. This will not only increase brand awareness and engagement, but also help create a fear of missing out, which helps boost conversions.
Recently, popular model and Instagram influencer Kylie Jenner partnered with watch brand Daniel Wellington. In the image above, we see Kylie posing while wearing a Daniel Wellington watch and cuff. The caption included a special discount code Kylie provided to her followers. The discount code helps persuade her audience to make a purchase.
#4. Site Traffic
The KPIs of your influencer marketing campaign are based on your goals for the campaign. If you’re aiming to leverage your increased social reach to drive site traffic, then that’s what you need to measure.
There are numerous parameters you should be looking at if your goal is to increase visitors to your site. Some of these key metrics are as follows:
- New/Unique Visitors – The obvious metric to look at here is the number of new and unique users visiting your web pages. This way you’ll know if you’re campaign is actually doing what you intended it to, i.e. grow site traffic. You can leverage free tools like Google Analytics to check this as shown here.
Image via Medium
- Time Spent on Website – It’s equally important to know how long your site visitors are spending on your site. This may give you some insights into your bounce rates and how you can improve it.
- Session Data – Sessions are a good way to measure your site usage. Record the total number of sessions during a specified date range. This helps you to check if your influencers are driving visitors to your pages. Session length and user actions during a session are also key parameters you can look at.
- Total Number of Pageviews – Know which pages your visitors tend to visit while on your website. Pair this knowledge with session data and the time they spend on each page to figure out where they spend most of their time.
You can leverage this information to improve your website and optimize it. Learn the product pages they visit most and try to push those particular items to them by providing special offers.
- Referral Traffic – You can track which influencers are driving your site traffic through their discount codes and affiliate links. Hook up your campaign with Google Analytics to track the traffic being generated through their custom and shortened links. Here’s their page:
Image viaGoogle Analytics
You can even use the Bitly platform to implement this. And you can segment your influencer content, posts, and channels to create more detailed and accurate reports. They are also a great tool to help you gain more insights into your customer’s purchasing patterns and behavior.
Image viaSavory Experiments
Look no further then what blogs like Savory Experiments did for Dorot Gardens. Jessica, who runs the blog, didn’t just share a recipe using frozen herbs from Dorot. She added custom links like the one highlighted above. The affiliate link takes you to a special promotional discount that the brand was offering.
They provided all of their other food bloggers and influencers with similar links to use in their recipe posts. Making it easier for Dorot Gardens to track which food blog is sending referral traffic their way.
How To Calculate ROI
So let’s talk about calculating ROI. Calculating ROI will help you understand the return on investment you can expect from your influencer marketing campaign.
Let me explain it with the help of an example.
Let’s say that you have collaborated with an influencer and agreed to pay them $1000 for a post. You have also provided them with a special discount code of 20%, exclusively for their followers.
In the first week, you notice that 35% of your influencer’s followers have redeemed the discount code. This has resulted in sales amounting to $20,000.
Then the ROI will be calculated as: (Total Sales – Total Cost)/Total Cost)*100
In this case: ($20000-$1000)/$1000)*100 = 1900%
So, with a single post, you have an ROI of 1900%.
Calculating ROI manually can be a little time-consuming. With Grin, you can easily calculate your campaign’s ROI in real time. You can check out the most effective influencers and how many sales your influencer marketing campaign has generated.
Grin also reports on Influencer Media Value, which has its roots in public relations. With Influencer Media Value you can determine the views and visibility your campaign is earning.
It also helps you to measure the direct revenue earned from conversions by enabling you to add tracking links.
You now know that to effectively measure your influencer marketing ROI, you first need to clearly define your campaign goals. This will help you understand what results you are expecting from your influencer marketing campaign.
Once your goals are set, you need to determine how you will measure those goals with appropriate KPIs. Your KPIs will then help you to calculate your ROI.
Do you have any more tips or strategies for calculating influencer marketing ROI or results? Feel free to mention them in the comments section below.
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