Here’s the thing: influencer marketing is growing like crazy. 75% of brands say they spend at least some of their marketing budget on influencers.
But those marketing dollars are more precious than gold. How do brands know if their influencer budget actually got results?
Tracking return on investment, or ROI, is mandatory if you want successful influencer campaigns.
After all, will your manager greenlight spending more money on influencer marketing if you can’t prove it worked?
We don’t think so.
What does ROI mean, anyway?
We could wax philosophical about the meaning of the word “ROI.”
At its core, ROI simply means you’re getting a perk from your campaign. In an ideal world, this perk outweighs the costs of running that campaign.
Keep in mind that ROI doesn’t always equate to “tons of money in my bank account.” Although that’s definitely a favorite form of ROI.
Some brands don’t care about making sales. They might measure ROI in terms of:
Content creation. Did you need to get a certain amount of content out into the world with this influencer campaign?
Awareness. People like to knock awareness, but customers have to know who you are to buy something. (Just sayin’.) If you see a noticeable spike in website views and clicks, that can count as ROI.
We like to quantify ROI with dollar signs, but less-tangible returns matter, too.
For example, if you’re a new brand and value visibility right now, you probably wouldn’t care jack-squat about sales.
At the end of the day, ROI is about tracking your campaign performance. It helps you see if the returns make up for the time and money spent on the campaign.
If you see positive ROI, that’s great! If you see negative ROI, it’s not the end of the world, but it means you need to change your approach.
While marketers sometimes quiver at the thought of tracking ROI, this is essential to being a good steward of your budget.
Otherwise, you’re flailing around on the internet and have no idea if your campaign matters.
5 steps to calculate influencer marketing ROI
While it’s important to calculate the hard numbers, ROI isn’t black and white. Follow these 5 steps to calculate the true impact influencer marketing makes on your brand.
1 - Set campaign goals
Running an influencer marketing campaign without a goal is like driving without a destination—it’s pointless.
Set a campaign goal to create a more relevant campaign that you can measure after the fact.
What matters for your brand? What do you really want to get out of your influencer relationships?
That might be:
Visibility: Do you want brand awareness? Positive brand affinity?
Engagement: Do you need people to comment on your blog or share your social posts?
Content creation: Do you need more awesome content for your website or social media?
Return on ad spend: Do your ad creatives need a little kick? Use that user-generated content in your ads!
Direct revenue: Do you straight-up need to stuff your coffers? There’s no shame in doing influencer marketing for the dollar bills, fam.
This campaign goal should align with your larger marketing and organizational goals, too. Make sure everything is in alignment before pressing forward.
2 - Define your metrics
But flimsy goals like, “I want more money!” aren’t helpful.
Everybody wants more money, silly.
A goal puts you in the right direction, but metrics and KPIs will get you to the finish line.
If you start an influencer campaign without KPIs, you can’t achieve results like “brand awareness.”
Because what does “brand awareness” mean to you, anyway?
Use the SMART framework to back up your goals with metrics. That transforms “I want more money” to “We will see a 10% increase in bottom-line sales by August 31.”
See the difference?
You might need to create separate metrics for different influencers, too. That’s especially true if you’re partnering with one influencer for traffic and another for sales.
Consider tracking metrics like:
Instagram post impressions
Landing page visits (give each influencer a unique URL to track this)
Number of new customers
Return on ad spend with creator-generated content
Choose your success metrics in the planning phase. When it’s time to reach out to influencers, you can explain how, specifically, you’ll measure success.
3 - Add up your costs
ROI tells you whether your investment in influencer marketing struck paydirt—or if it was a flop.
To know if this influencer marketing thing was worth it, you have to know what it cost you.
Depending on your campaign, you could see costs like:
Time: Time is money, after all. The more time spent vetting influencers and managing your campaign, the higher the cost. Time can even be creating the content yourself vs using creators Time tracking software can help you quantify this.
Product samples: Freebies might be free for influencers, but they aren’t free to you.
Influencer fees: Depending on the influencer, you could pay a few hundred to several thousand dollars for a campaign.
Software: You can streamline the entire process (and often eliminate these other costs) by going for an influencer marketing network. Some platforms, like Trend, minimize your costs in time and influencer fees.
For the sake of sanity, try tracking campaign costs as you go. You can tally up everyone’s hours and costs at the end of the week and track it in your marketing software.
4 - Calculate returns
Here’s the fun part! Now that you know your costs, you need to understand your returns.
These are your influencer marketing wins. Depending on your goals, there are a few ways to calculate returns.
Brand awareness ROI
We actually can quantify something as fluffy-sounding as “awareness.”
Look at your:
Impressions or views
… on a per-influencer basis.
If you have awesome data models already, you can assign a dollar value to each impression. This differs by social platform, too.
If you have a B2C business, you might assign a higher dollar value to an Instagram share than a Twitter share, for example.
If you know that your impressions average out to a worth of $0.012 per impression, multiply that by your total impressions. That will give you a dollar amount you can measure once the campaign ends.
What’s an engagement worth to your business? We can measure that in terms of:
Landing page visits
Any other brand interaction that isn’t a purchase
Based on how much you’ve earned in the past from these engagements, what is one engagement really worth?
If you average $0.10 per engagement, multiply your total number of engagements by $0.10. That should give you an idea of your returns.
Return on ad spend ROI
Take that great user-generated content from influencers and creators throw it into your ads campaigns!
We can then look at how those ads perform based on:
Cost per acquisition
Return on ad spend
Cost per click
If you’re using Facebook or Google ads, you can track this directly in the platform!
Boosting your return on ad spend can be huge for improving your margins on ads.
Don’t underestimate the value of great creative.
Direct sales ROI
Everybody loves money in the bank!
Direct sales is the easiest way to calculate ROI. You’re looking at metrics like:
Average order value
Cost per acquisition
Brands measure this through affiliate links, promo codes, and Google Analytics.
However you track it, make sure the dollars earned through influencer marketing are separate and distinct from your other initiatives.
5 - Analyze your results
Once you know your campaign costs and returns, you can finally calculate ROI.
This requires a little math, but a simple PEMDAS will get you the answers you need:
(Return / Cost) X 100 = ROI
So, if you spent $10,000 on influencer marketing and generated $20,000 in profit, that would look like:
($20,000 / $10,000) X 100 = 200% ROI
Easy enough, right?
As long as you can quantify your costs and returns, you can quantify ROI.
It’s not a perfect science, but it should give you boss-appeasing numbers to justify future influencer marketing campaigns.
The bottom line
Influencer marketing is here to stay. But if you invest in influencers, you have to know what’s working.
The best way to spend your marketing budget wisely is by calculating influencer marketing ROI.
Identify what matters to you. From there, determine which platforms, influencers, and tools will get you across the finish line.
If all this math made you go cross-eyed, consider partnering with a trusted influencer marketing platform like Trend.
Not only do we spell out the ROI for you, but we can minimize manual, hands-on campaign management by 50%.
Spend less time herding cats and more time enjoying the fruits of your hard work. Get a Trend demo now.