Despite the ever-changing influences and trends in the marketing world, one strategy that never goes out of fashion - electronic word-of-mouth advertising (eWOM). Up to 92% of consumers choose to trust a personal recommendation from a friend. With the rise of social media networks, the circle of people we trust has expanded to our role models, bloggers, influencers, or any other individuals that we look up to. Over time, this has evolved into a separate branch of marketing called influencer marketing.
At Wholehearted Social, we are devoted to helping you grow your business and increase conversions. In this article, we are going to cover all the ins and outs of influencer marketing ROI and how it can help to grow your business.
Influencer marketing is a targeted method of advertising, where you build relationships with influencers in order to tap into their audiences. As such, influencer marketing may range from sending free products to content creators in exchange for them to share their experience with their audience, to more formal agreements, where they get officially paid for increased sales whether that be through a affiliate structure or pay-per-post agreement.
With this type of marketing, influencers operate independently and continue to create their own content, based on the advertising specifications provided by a brand. This leads to an effective advertising model that connects you with potential customers in a more organic way.
While influencer marketing is storming the world of digital advertising, it is important for brands to have an objective measure of whether their social media influencer budget actually produces any results. This is where influencer marketing ROI, or return on investment, comes into play.
Follow these five steps to calculate ROI of your influencer marketing campaign:
1. Set Your Goal
Running a social media influencer campaign without a goal is like driving without a destination in mind - it’s pointless. The goal of the campaign will vary from brand to brand and can include:
Make sure that the campaign goal aligns with your larger organisational and marketing goals as well. If you have trouble getting started - our influencer marketing specialists at Wholehearted will be happy to take care of all the legwork for you.
2. Define Your Metrics and KPIs
Your goal will determine what metrics and KPIs, or key performance indicators, you will need to measure to keep track of your campaign’s success. For example, if you want to generate more leads, tracking the number of new email subscribers will be more important than tracking straight-up revenue. On the other hand, if your goal is to build brand awareness, you might want to track page views and impressions instead.
Consider tracking metrics, such as:
3. Evaluate Your Expenses
Your influencer marketing ROI is meant to indicate whether your investment and influencer spend has paid off. Depending on the type of the campaign, you could encounter costs associated with direct influencer fees, product samples you send out, time and money spent on vetting influencers and managing the campaign, and even software required to streamline the entire process. Make sure to track all of the campaign-associated costs as you go.
4. Calculate Returns
Once you determine your costs, it is important to understand the monetary returns from your influencer marketing campaign. To do this you must set up an attribution system that can be tracked for each influencer - we tend to use UTM’s and Google Analytics which is linked to your website to help us do this.
However, depending on the goals you have determined in Step 1, there are different ways to calculate associated returns.
For example, for brand awareness, you might want to look at shares, impressions, or views of the influencer’s posts or stories. For the engagement, on the other hand, you could measure returns in terms of landing page visits, comments, or any other brand interaction… You get the idea!
5. Analyse Your Results
Finally, once you know your campaign’s costs and returns, you can determine the influencer marketing ROI as:
ROI = (Return / Cost) x 100%
For example, if you have spent £1,000 on influencer marketing and have generated £2,000 in profit, the return on investment would be: (£2,000 / £1,000) x 100% = 200%.
Grow Your Influencer Marketing ROI with Wholehearted
While influencer marketing is not exact science, there are ways you can reduce the time and costs associated with influencer campaigns, thus increasing influencer marketing ROI. Partnering up with a professional social media agency like Wholehearted Social can help you to identify content creators that will help you achieve your goals, secure lower rates, and build effective campaigns based on reliable metrics. Contact us today to learn more.