Influencer marketing in 2022 is bigger than ever, evidenced by the fact that it is a multi-billion dollar industry and has shown no signs of slowing down. Overall spend on influencers and the creator economy is expected to reach $15 billion by the end of 2022.
In talks about influencer marketing, content creators and the like, you've probably heard the term "ROI" thrown around a lot. But what is influencer marketing ROI, really? Is it truly just as simple as your monetary return from influencer marketing on your monetary investment into influencer marketing campaigns, or is there more to it?
In this blog, we cover what the real ROI of influencer marketing is, how to measure your influencer marketing ROI, and our tips on how to "hack" your ROI for even better influencer marketing campaign results.
Not All Influencer Campaigns Are Created Equal
First of all, it's important to remember that there are many different types of influencers, as well as a vast variety of influencer campaign and strategy types. Some influencers and campaign types will give you a better return on your investment (ROI) than others. But it's not an exact science - the best choice strategy is not the same for every brand.
The impact of influencer marketing is multi-dimensional and will largely depend on your brand's unique goals, as well as the stage of your business.
For example, smaller brands with the goal of building community and short-term sales may have wild success with micro-influencers. Whereas larger brands with more long-term goals of overall brand awareness may prefer working with larger macro-influencers.
No matter what campaign type you choose, you have to first decide what your goals are. You need to be able to shape your influencer strategy based on your brand's unique short-term and long-term goals, and create campaigns that complement those.
If you're looking to generate immediately measurable returns on day 1, choose an influencer strategy that's best for your short-term goals.
If you're wanting to build community, affinity, and trust among your target consumers that will fuel your brand awareness and brand story over time, then choose an influencer strategy that's more long-term.
Often times, marketers will think they have to pick one or the other: either short-term or long-term. But realize that you can work with both in tandem! Of course it's important to choose a main metric, or a Key Performance Indicator (KPI) that you are tracking in order to measure ROI. But, also realize that the ROI of influencer marketing can be measured in a lot of different ways that may take time to extrapolate.
So this begs the question: how do you go about measuring ROI, then? If there are so many different influencer and campaign types, different ways to run them, and different returns to measure, calculating influencer marketing ROI can get a little complicated. So let's break it down:
Returns You Can Get From an Influencer Marketing Campaign
Direct Sales (Revenue)
Probably one of the most common ways to track influencer marketing ROI is by measuring the sales output of your influencer marketing campaigns. Tracking sales as a return of influencer marketing just means you must count every sale that can be directly attributed back to influencer marketing.
Of course with any marketing campaign your efforts will contribute to sales in some way, whether it's long-term sales from brand awareness over time, or short-term direct sales tracked through the unique links and promo codes shared by a specific influencer on social media. You just need to decide if you want sales to be your primary objective with your influencer campaigns.
According to research by Influencer Marketing Hub, on average, brands earn $5.20 in sales for every $1 spent on influencer marketing (which is a 520% ROI), so revenue is a reasonable return to track. Particularly if your brand has a lower-consideration purchase point, a short customer journey (i.e. fashion, makeup, etc.), and the ability to offer exclusive discounts through influencers, sales could be a great return goal for your influencer campaign.
Brand Awareness and Visibility
Another common influencer marketing campaign return to track, although it may be a bit less demonstrable ROI than sales, is measuring brand awareness. Brand awareness is simply a measure of how familiar your target audience is with your brand. Brand visibility, which is putting your brand in front of your target market as much as possible, leads to stronger brand awareness.
These kinds of return are popular influencer marketing KPIs because at its core, influencer marketing is simply building brand awareness. An influencer marketing campaign helps a brand reach its target audience more effectively, or even build stronger connections with its social media audience.
So how do you put a number to measuring brand awareness and visibility? Think about it like this -- brand awareness is the number of new potential customers who become aware of your brand or product through your marketing campaign. You can even break that down further by tracking specific KPIs like impressions, reach, branded search volume, social media mentions, website traffic coming from social media channels, or overall website traffic growth. Attaching a number to the return of brand awareness makes it easier to calculate true ROI.
If your brand is entering a new market or you're a smaller brand in a crowded market, brand awareness and visibility could be a great return to shoot for when working with influencers. Especially if you have a high-consideration purchase point (like expensive jewelry or furniture), or you have a longer sales cycle (ex. pregnancy products), measuring the ROI of influencer marketing with added brand awareness could be a great campaign goal for you.
Taking it a step beyond brand awareness is the return of actual brand engagement. It's not enough for your target market to simply know that your brand exists. You want to inspire some sort of engagement from them, too. You know what they say: the people who engage with you today will buy from you tomorrow!
To attach a number to brand engagement, the return you should look for is an increased number of people who take action with your brand on any given social network or on your website. Again, you can break this down further into tracking more specific key performance indicators like social media followers and post comments, likes, saves or shares, as well as metrics off of social media like website clicks, new email subscribers, or even add-to-carts.
Any positive engagement you can drive from influencer marketing is valuable. Brand engagement is the hero metric for long-term influencer marketing ROI. If your influencers can drive these numbers up, and you can successfully calculate influencer marketing ROI, it will help you forecast how your business will continue to grow over time.
Influencer Generated Content
We've all heard of user generated content (UGC). Now, enter influencer generated content (IGC).
IGC is an essential, yet often forgotten way to measure the ROI of influencer marketing. The content created from your influencer marketing campaign can have an impact on your entire marketing funnel and can be seen as an incredibly powerful added bonus on top of the returns mentioned above (brand awareness, engagement, and sales).
Why is high quality content from influencers so important?
- It is extremely high-performing. IGC garners double the engagement of brand-directed content and has 88% greater impact on increasing brand affinity than other content, even customer/user reviews.
- By repurposing influencer content across various channels -- paid ads, emails, website, and social media -- you can support every single stage of your funnel with eye-catching content marketing.
- Negotiating image rights to an influencer's content is far less costly and time-consuming than a full-blown professional photo shoot.
So again with the practice we've been using throughout the article, how can you attach a number to content that is easily measurable? There are several options. Keep in mind that you can use these numbers to compare your influencer marketing ROI to the ROI of your other, more traditional marketing campaigns:
- The money you've saved on content production (i.e. by repurposing content or reducing professional services)
- Branded content performance across channels
- Costs saved by generating content through influencers
- Time saved by generating content through influencers
Now that we've covered the different returns you can aim for with influencers, let's go over what it's gonna take to get those returns: your investment.
Investments Required for Influencer Marketing Campaigns
Influencer Pay ($$)
As with all marketing activities, money is typically involved. Depending on the type of campaign(s) and influencer(s) you are working with, the marketing investment required may vary. For example, many influencers expect monetary compensation in exchange for the time and effort they spent creating content and posting for you, which is fair. Influencer fees vary from person to person depending on their audience reach and industry, and expectations vary too. Other influencers may not care about up-front or flat rates, but prefer to get free products or a share of revenue generated (which we'll get to later).
I know you may be thinking to yourself, "that sounds like so much money." Just keep in mind that ROI is all about measuring the return on your investment - not just the investment itself. With good influencers, any rates and fees required are often 100% worth it! Just make sure to leave room in your marketing budget for influencer marketing in addition to your other traditional expenses, like paid ad spend.
Another common investment into influencer marketing is product costs, which involves either sending influencers free products or giving them access to products at a discounted price. For example, if you're running a campaign where you are driving sponsored blog posts to an influencer's audience, you would be expected to provide the influencer with the products you want them to feature free of cost. Product seeding is typically a core pillar of any influencer marketing program, as social media influencers have become accustomed to receiving free products as a part of the marketing campaign they're being asked to participate in.
As with the previous investment type, cash, there is a real pay-off with providing free and discounted products to influencers -- so don't fret too much about losing out on production costs. Product seeding breeds brand loyalty, affinity, and warm relationships with your influencers. It also may even result in organic content creation for your brand, which both you and the influencers can share on any given social media platform (as long as you have their permission), leading to traffic and sales for your eCommerce store.
Reduced Profit Margins
On the same note of sending out free products, another investment into influencer marketing is lower profit margins on your eCommerce orders. It's common to offer influencers a unique promo code they can share with their followers, and then give them revenue share on the sales they bring in for your brand. This would obviously reduce the average order value of orders coming in through influencer promotions, which would lower the profit you get from the production costs you put into creating and shipping your products.
If you are going to offer influencers coupon codes to share, make sure that the discount rate they are worth is high enough to drive engagement, but low enough to not kill your profit margins. Each brand is different and there's no one standard rate!
Service and Platform Costs
Another investment into influencer marketing that may not come to mind as quickly as things like influencer fees and product costs is the costs of an influencer marketing platform, or even a service-based influencer marketing agency.
With influencer campaigns, there are a lot of moving parts involved across multiple channels: recruiting and onboarding influencers, attributing sales, tracking engagement, reviewing and approving IGC for social media, email marketing, and more. Many businesses prefer to use agencies or influencer marketing platforms to help them automate all these moving parts, as well as measure campaign success.
If you value data driven campaigns, having an analytics software to help with measuring qualitative data -- including calculating ROI -- is crucial. The cost of influencer software varies greatly. Some of the leading softwares and agencies can bill you for thousands per month, which just isn't reasonable for small businesses. Luckily, there are more affordable options that still tick all the boxes you need! Like Buzzbassador (shameless plug) -- we help you with all of the moving parts, including tracking ROI, while still maintaining straight-forward and affordable pricing compared to most influencer platforms. Try us for free for 2 weeks 😀
Now that we've covered some of the most common monetary investments into influencers, it's also important to point out some non-monetary investments that you should think about when measuring the ROI of your campaigns.
It's important to remember that there is risk that you won't get return on your investment. In the case of influencer marketing campaigns, it could be that you tried a sponsored blog post with an individual influencer who seemed to have great organic reach, but you ended up not getting the engagement you hoped for. Or, maybe your influencer marketing strategy included working with a YouTube influencer to do a YouTube video reviewing your products, but their YouTube subscribers didn't buy in like you expected.
These things can happen, as with all marketing efforts -- whether it's an attempt at organic marketing on social channels or an investment of paid ad spend. The good news is, there is a science to influencer marketing that can be hacked to mitigate risk as much as possible. It's all about choosing the right influencers, running the right campaigns, and aiming for the right goals and metrics for your unique brand.
Beyond common investments people consider with influencer marketing like marketing dollars, influencer fees, and paid media, something people may not consider is the time it takes to manage everything. First you have to create a way to discover and recruit influencers, whether it's a landing page, cold outreach, or tapping into relationships with existing customers. Then once you have multiple influencers promoting you on social media and beyond, you've got constant lead generation and/or sales that have to be attributed and compensated for appropriately. Not to mention all the tracking, which for brands without an influencer software is typically done manually through a hodgepodge of spreadsheets, Google Analytics, and other tools. This can make your influencer marketing efforts a hassle, which can even leave you wondering, "is this marketing strategy even worth the time?"
Trust me, we get it -- in fact, we went through that same struggle and questioning ourselves. Luckily though, a great way to vastly reduce your time investment is to choose the right influencer marketing platform. If you don't already have one, just give us a try for one of your future campaigns. The difference it makes and the time it saves you will be well worth the investment -- talk about a good ROI! 😉
How to Measure Influencer Marketing ROI
So now let's get to the fun part! Calculating influencer marketing ROI is not so daunting now that you know the investments and returns to compare, right?
As we mentioned in the beginning, to calculate ROI it's just one simple formula:
So to demonstrate, let's just do an example. Let's say you choose to invest in a micro-influencer who has a social media audience of about 12,000 followers. You choose to send them 3 free products up front, as well as compensate them with a 10% revenue share on every sale they bring in. You also agree to pay them $500 in up-front compensation for the rights to use the content they create, which includes 2 short-form videos and 3 product placement photos. Now, you create a doc for them with a couple of caption prompts or content ideas they can use in their marketing.
So with all that done, you found the influencer (20 mins), negotiated your offer (combined 40 mins), sent them products (20 mins), and onboarded them into your influencer software (10 mins) – which took care of automated welcome email(s), sharing the content guidelines doc, and creating their code & affiliate link. With all that prep taken care of, you invested about 1.5 hours of your time up front. You also check in to your software tool(s) for a total of 30 minutes each week in order to monitor things like sales, payments, affiliate link traffic (i.e. Google Analytics), etc.
Fast forward to 1 month down the road. All content pieces have been created and they're awesome! The influencer posted the short-form videos to their 10K followers on TikTok, and the images to their 2k followers on Instagram. Their promo code and affiliate link was plugged in all posts.
Their TikTok videos garnered a total of 6,000 views and 1,100 engagements, while their Instagram posts garnered 3,000 impressions and 650 engagements. These posts performed just about or slightly above average based on the influencer’s size and standard engagement rates – the average TikTok micro-influencer (10K followers) has a 17.96% engagement rate, while the average Instagram nano-influencer (2,000 followers) has a 10.7% engagement rate.
From this social media promotion alone, their affiliate link got clicked 750 times (based on the average click-through rate for micro-influencers) and their discount code was used to place $2,880 worth of orders (based on an average micro-influencer conversion rate and average Shopify order value of $72).
So with that example set up, let's practice calculating ROI; first monetary, then non-monetary.
First, calculate your total monetary investment:
Then divide your monetary return by that investment using our ROI formula: Return / Investment = ROI (%)
So you ended up with a 206% ROI from just one influencer campaign over one month. Imagine how much you could scale by doing multiple campaigns over time? 💸
While it can be difficult to use an exact formula for non-numerical items, you can still evaluate whether your ROI was positive or negative, and even gauge -- loosely -- by how much.
Consider your non-monetary return (750 website visits, 9,000 social impressions, and 1,750 engagements) versus your non-monetary investment (3.5 hours of your time). I’d say that’s a pretty positive ROI, wouldn’t you?
So just like that, boom: you ended up with positive ROI on both monetary and non-monetary fronts! This measurement can vary based on what metrics you compare with each other. In this example I matched monetary with monetary and non-monetary with non-monetary. But you can assess your own unique data to identify conclusions wherever it makes sense!
Not only that, but you can take this beyond just measuring the effects of the influencer’s promotion. Because the influencer's content output was so good, you are able to repurpose the IGC as social proof in your paid ads, website, social media channels, and email marketing blasts. Combined across these efforts, you are able to generate even more site traffic, impressions, engagement, and sales from marketing using this influencer's content!
Our Tips on Hacking The ROI of Influencer Marketing
Now you know everything you need to optimize and calculate ROI. But since ROI is simple math (and influencer marketing is a science, as we've said), that means there are ways to hack it. So how do you do just that? Without further ado, and in conclusion, here are our final tips:
- Micro-influencer marketing typically results in higher ROI. With micro-influencers, their smaller audiences are actually a plus. Not only does a smaller audience result in smaller fees & compensation expectations, but it also results in higher engagement rates, more audience trust, and more long-term relationships with a lot of brand loyalty. Micro-influencers can create just as high-quality content and just as great of a return as a larger influencer, but for a much more affordable investment.
- Investments into content are investments worth making. Content is one of the most valuable returns of an influencer marketing campaign, because it's basically evergreen. Once you come to an agreement and/or appropriate compensation with an influencer for the right to use their content, you can use it forever, in any channel - a landing page, social media, wherever you see fit. And as mentioned earlier, IGC is extremely well-converting in terms of sales. So even though you may have to pay a fee up front, the long-term return of that content is nearly invaluable.
- A good influencer software is a life-saver. When it comes to "hacking" the time investment specifically, an influencer marketing software is key. Finding an application that can automate all of the order attribution, promo code and link tracking, recruiting, onboarding, setup, emails, and all of the other busy work will save you HOURS per week of valuable time. Remember that it doesn't have to be the $1,000+ per month investment that many softwares ask for - it can be as simple as $39 per month. 😉
- Know your brand and ensure your influencer strategy aligns with it. One of the most important parts of hacking ROI is to have a deep understanding of your unique brand, your unique target audience, your unique marketing budget, and your unique goals. As we covered earlier, not all influencer campaigns are created equal; neither are all brands. What you see working for someone else, even one of your competitors, may not work for you - and that's okay! You just have to try out different strategies, work with different people, and figure out what works best for you. As with any marketing strategy, practice (and trial and error) makes perfect. So, be patient and be creative. You got this!