Leveraging influencer marketing can help create a buzz around your brand and take it to the next level. However, influencers don’t come cheap, especially when they have millions of followers. That’s why you need to track if your campaigns are meeting their goals and if you are getting value for money.
However, calculating the ROI of influencer marketing can be challenging. According to one study, two-thirds of marketers say that the biggest challenge they face is calculating the return on investment of influencer marketing. This post will teach you how to calculate the ROI of influencer marketing.
Why Influencer Marketing Works
There are several reasons why influencer marketing is excellent. These include:
- Better traffic and conversion. No matter your goal, influencer marketing will enable you to meet it better than ads.
- Wider reach. With influencer marketing, you can enhance your brand reach. You will get potential customers that you would otherwise have missed.
- Increased brand awareness. When someone else is promoting your brand, you are likely to reach a bigger audience.
Key Measures of ROI of Influencer Marketing
It’s important to consider the ROI on influencer marketing as a whole rather than just looking at the revenue. Marketers suggest that you need at least three touch points before you can close a sale. From the awareness staqe of the sales journey to the product research, there are other areas where influencer marketing can impact.
The most important thing is to have clear expectations and goals. That will ensure that you have clearer KPIs to measure. The most obvious way of tracking the ROI of influencer marketing is by tracking if you met your goal. The metrics to track can be categorized into:
- Newsletter signups
- Scheduled demons
These can include:
- Blog posts
- Customer review
- New articles
- Recommendations through Word of mouth
Others could be something like:
- Brand awareness
- Increasing engagement like views, clicks, and impressions
- Increasing your clicks
- Increasing sales in sales
With social media metrics now available on most sites, tracking brand awareness, engagement, and clicks is easier.
How to Track Influencer Marketing Sales
Here are a few methods you can use to track the sales brought by an influencer marketer:
- Affiliate links. When working with an influencer, you can give them a unique link to help you track the sales generated by them or even individual posts.
- Promo/discount codes. Promo codes can also help marketers determine the sales they receive from influencer marketing. A discount code can also help you to incentivize your followers.
- Running Ads. You can also run ads on the content the influencer has created to see their performance.
- UTMs. Urchin Tracking Numbers are tags added at the end of a URL to enable marketers to determine the traffic source. You can use them to track the traffic and conversion from a post done by an influencer.
- Dedicated landing page. If you are working with different influencers, you can create different landing pages to track the sales and conversion from their posts. This can also help you determine the influencer bringing the most results.
However, the above measures have their limitations as they cannot track certain sales from customers who:
- Visit your site without clicking on an affiliate link
- Buy a product without using the discount/promo code
- Buy the product after the promotion has ended
- Sales from the influencer’s word-of-mouth marketing
The Formula for Calculating ROI on Influencer Marketing
Let’s now look into some numbers. But before we do that, it’s important to note that no specific formula for measuring ROI exists. Instead, these figures will only give you a rough estimate or context of the result you get from your influencer marketing.
The most basic way of calculating the ROI is to measure your marketing spending in relation to your sales figures. You should deduct the marketing spend over a particular period from the sales of the same period. If the result for over three months is positive, this is a good sign.
You can also track the sales of a particular period when you are collaborating with the influencer. You can then track another period when there was no collaboration. You can then deduct the latter from the former. This will show you how your sales have increased since you started running the campaign.
Undoubtedly, influencer marketing is one of the most successful tools that have risen from social media. When properly used, it can help grow your brand. However, you still need to measure whether or not your relationship is bringing returns. By following the above steps, it’s possible to determine if you are getting returns on influencer marketing.