Here's a scenario we've seen play out often enough.
A new brand is excited to start working with influencers. They find a few Instagram creators, hand out discount codes, and wait.
A few months and "not enough direct sales" later, they pull all budget from influencer marketing and decide that the channel doesn't work for them and “We had a hard time proving ROI.”
The bad news is this is a very common challenge facing many marketing teams. Measurement and attribution are still messy, and everyone wants to see results yesterday. As a channel, influencer marketing is still young and underreported.
The good news is that you don’t need to find the precise ROI of influencer marketing to do your job well and reach your goal!
In this post, you’ll learn how to measure ROI, but more importantly how to understand if it’s a worthwhile channel to pursue.
This will be most useful for anyone who’s starting out with influencer marketing, for those who want to prove its value post haste, or for anyone who has found success but is having a difficult time showing it.
Now, let’s rumble!
You’ve done your research, and you’ve seen Influencer marketing delivering great ROI.
So why aren’t you seeing more sales?
The issue with these types of surveys is that it’s unclear how each marketer measures ROI, what attribution model they’re using, or the industry or vertical they’re in. So, our best advice is to focus on your own mat and take these benchmarks with a grain of salt.
There are a few reasons you’ll face (or have faced) as you attempt to calculate the ROI of your influencer marketing program.
Whether you’re using UTM links or discount codes to measure influencer campaigns, you’re well aware that attribution isn’t perfect.
One study even found that 85% of purchases are unattributable.
So, if you’re relying on a last-click attribution model to measure the success of influencer marketing, you'll fail to capture some of the impacts. There’ll be impact at the top of the funnel, as well as indirect traffic & conversions (e.g. someone searching your brand name after seeing IGC).
While using tools like UTMs and promo codes to track conversions will give you a snapshot of what’s happening, it won’t tell you the full story.
This brings us to the second reason calculating ROI is tricky.
Quite often we see that brands don’t give the channel enough time for returns to start showing. Not because they don’t happen, but because they’re not tracking the right metrics or looking at the right reports.
Campaigns live longer than you think. Statistically, it’s apparent that the life cycle of a given campaign behaves differently than traditional pieces of advertising.
Imagine a creator makes a piece of content that is Christmas-themed, that content can catch virality if made with good creative and can see a lift the following year.
Influencer campaigns have a long life cycle. Take YouTube videos, they often continue to get organic traffic for years after going live, creating a compounding effect with every piece of content created.
Without a 360-degree view of how influencer marketing fits into your marketing mix and without understanding its long-term effects, you might give up on a channel that could drive more website traffic, more brand engagement, and ultimately boost sales.
Trying to calculate the true return on investment of influencer marketing is almost impossible, and for smaller brands or young programs, unnecessary.
Instead of trying to find a precise ROI, focus on proving that the channel is worthwhile for your brand.
All you need to know is:
This means that your goal setting, tracking, and measuring all need to be in alignment with this ultimate objective.
Do not pass go. Do not start anything without setting clear goals and choosing key performance indicators (KPIs) that will help you understand the real value of influencer marketing.
There are over 30 different metrics and countless KPIs you could use. But to build out your ROI narrative, we recommend focusing on:
Keep in mind that brand awareness will show up when you’re comparing effects across channels. So, goals around web traffic and earned media value are well worth setting too.
To measure direct and attributable ROI, we recommend setting Conversion or Direct sales goals. Think about improving your conversion rate or setting a direct sale goal. Always remember that 85% of purchases are unattributable.
Set a few cost-saving goals around content production. This can be an easy win for you when showing the value of the channel.
More often than not, using a combination of measurement tools is best. This way you can collect data and report on the ROI of influencers, campaigns, and the entire program, as needed.
Here are 8 proven ways to track influencer marketing. The methods you use will depend on the goals of your influencer campaign and how you’re measuring ROI.
Let’s go back to your objective: You need to show that influencer marketing is a worthwhile channel and/or just as good as other more established channels.
These 4 measurements will help you:
Measuring direct and attributable ROI is the easiest way to answer the question, “What’s the ROI of that?”
Add up the sales you made (based on a trackable method) and divide those sales by the total cost of the campaign
We recommend tracking sales by discount codes, UTM links, or affiliate links when you’re just getting started. (Some sales influenced by creators will not be attributed to those tracking methods, but ignore that for now.)
With this simple setup, you can find your direct ROI.
Let’s look at a hypothetical example.
An eCommerce store selling handmade bags made $50,000 in attributed sales in June. They spent $5000 on a micro-influencer campaign which they tracked using UTM links. What’s the ROI of this campaign?
$50,000 (in attributable sales) divided by $5000 (marketing spend)
So, for every $1 spent on influencer marketing, they made $10 in sales.
Do this for every influencer marketing campaign you run over three months and the numbers will begin to show a trend or narrative that you can use to show the value of the channel.
The limitations of this method are that it fails to measure any effects influencer marketing has higher up the funnel and how it interacts with other marketing efforts.
So, you’re not going to stop there.
Influencer marketing is a full-funnel channel, it will have an impact on all your growth levers, from brand awareness initiatives all the way through to customer acquisition and retention.
Don’t measure it in a silo!
Instead, you want to understand how influencer campaigns impact your other marketing channels.
Did your other channels see an uplift? Is there an increase in Direct traffic in Google Analytics, or an increase in branded searches tracked via Search Console? That was most likely your influencer marketing efforts.
When you report this alongside direct ROI, your stakeholders will begin to view influencer marketing as an essential part of your marketing mix. And that’s what we want.
Don’t notice a change in other channels? Influencer marketing didn't have an effect yet. In most cases, this isn’t a channel problem, but a process problem.
If you don’t see a change, go back and optimize specific parts of your process. For example, can you improve the way you find influencers? Focus more on their audience than their follower count. Did one influencer have a higher engagement rate than others? What was their content like? Run another campaign with these learnings.
For those working with unique landing pages or UTM links, this is your reminder to look beyond the last-click report.
The assisted conversion report in Google Analytics will show the different channels included on the path to a conversion. Notice how many times influencers' content is included on the path to conversion.
Show this report to stakeholders to highlight the potential of influencer marketing.
Put a dollar value on all the content you're generating through your influencers. This is especially important when you’re not seeing directly attributable conversions immediately. You can still justify your work by showing how much this awesome video content would have cost from an agency or freelancer compared to the influencer’s rate.
You might also want to consider the following when calculating ROI:
Now let's look at a few different ways you can improve different aspects of your influencer marketing program to keep getting a higher ROI over time.
Whether you’re using UTM links, app install links, tracking pixels, affiliate links, or digital promo codes, you’ll want to keep improving your measurement.
Try going one step further than you did before.
Are you already tracking UTM links in Google Analytics? Great, now create an assisted conversions report to understand how your creators are impacting your overall marketing.
Already tracing assisted conversions? Consider marketing mix modeling if you’re working at a larger scale.
Recruitment is probably the most important part of influencer marketing. Finding the right influencers for your brand AND your target audience will take trial and error. That’s why when you find influencers that are a joy to work with & deliver results, propose a long-term collaboration with them.
Long-term collabs magnify the effects of influencer marketing. Consumers trust influencers more than brands because their content is more authentic and long-term collaborations are a signal of authenticity.
Long-term collaborations also help consumers become more familiar with your brand. Higher brand awareness increases the chances they’ll make a purchase down the road.
Micro-influencers usually have between 2000 and 100K followers. Not only are the rates of these smaller influencers lower, but their engagement rate is usually higher.
This is a much more cost-effective path for new or smaller brands to get started. Even if your budget grows over time, we still recommend using nano and micro-influencers because of the high engagement rate.
As the channel grows, you consider hiring more people. As costs rise though, your ROI will likely start dipping. Instead, managing your program differently and introducing assets that can take some of the busy work off your shoulders can keep costs down.
For example, landing pages that answer the most common FAQs and a newsletter strategy to share news and changes can save significant time.
On top of this, create different templates for yourself and your team to use. Anything you find yourself doing repeatedly deserves to be templatized. For example, brief templates, and reporting templates.
Another way to reduce costs as the channel scales is to introduce automation into parts of the process that can (and should be) automated.
Compare the pricing of tools like this to hiring an agency or another full-time employee and you might be surprised at the savings.
Repurposing content saves time and money on associated costs for your whole marketing team. IGC can be reposted across your brand’s social channels and emails, repurposed as ad creative in paid social, and reused across your website in reviews, case studies, or as visuals.
Repurposing content from influencers helps you collect more quality content at a much more affordable rate than using an in-house or agency team. (That’s the reason we prefer calling influencers “creators”, FYI!)
By reusing IGC, you’ll lower costs across marketing which naturally improves overall ROI.
The overarching truth about influencer marketing is it requires learning and iteration. With these ideas, we hope you can prove the value of the channel early to give you time to unlock the growth of your brand.