10 Ways to Measure ROI from Influencer Marketing Campaigns
Achieving marketing success in a new cookie-less and privacy-first era will be no small feat. The skyrocketing costs of paid advertising due to iOS privacy updates (with less than a third of users allowing in-app tracing), death of third-party cookies and other developments in the privacy space has yet again led to a boom in influencer marketing. As ways to get in front of customers are getting more limited and expensive, brands will need to get old-school to find contextually relevant media and environments that their customers frequent and enjoy. It looks like the combination of first-party data and influencer marketing will be with us for the long haul. Especially given the generational change and as reported by YouGov, around 50% of Gen Z shoppers making an incentivized purchase triggered by influencer endorsement.
Coming up with an idea for a promotion and finding appropriate influencers is a prerequisite of any successful social media campaign. But there’s also one more step with greater impact on the overall campaign performance and ROI which often gets overlooked. You read the title, I am talking, of course, about controlling the budget and measuring the ROI from your influencer campaigns.
What is influencer marketing?
“Influencer – someone who affects or changes the way that other people behave, for example through their use of social media.” (Cambridge)
Influencer marketing is a form of paid advertising which revolves around social media influencers endorsing products and services via their social media channels. There are three main types of influencers – micro (1k – 100 k followers), macro (100k – 500k followers) and mega influencers (500k – 1mln+ followers). Besides being predominantly an awareness driver, influencer marketing has something truly unique about it – no targeted ad can ever recreate the sense of trust and affection that influencers can build with their audiences. Around 2018, the influencer marketing tanked due to increase in fake followers, lack of interest on the side of customers, and ineffective ROI tracking where influencer campaigns were not focused on direct sales but rather on brand awareness or brand loyalty.
Before we go into the details of tracking influencer promotions, let’s take a quick look at a checklist of how to set it up first.
How to create an influencer campaign?
1. Define your campaign goal
Without a clear KPI in mind such as sales increase, loyalty program memberships, trial accounts number, or simply clicks and impressions, you won’t be able to derive credible results on the success of your influencer campaign.
Here is a list of possible KPIs that you can track:
- Engagement (can be views, clicks) & Impressions
- Likes & Shares
- Sales (conversions)
2. Seek alternatives
Define the possible ways of reaching your campaign goals, other than influencers, and calculate how much reaching the goal would cost with alternative options for investment (reverse ROI). Perhaps, you do not even need influencers at this stage.
3. Set the budget
Besides standard commission based on the number of sales or other metrics, you can also add some other perks to your influencer campaign, like a permanent discount for the affiliates to turn it into a more sophisticated ambassador program. Also note that the time of the year can play a huge role in the ultimate influencer costs which increase during the holiday season. What follows is that social media feeds are full to the brim with sponsored content which may negatively impact the ROI you see.
4. Double-check your funnel
Go through your style guide, tone of voice, message, and vision. While you're at it, you should also go through the funnel to see if perhaps some elements can be improved or shortened, increasing the chances for campaign success.
5. Select influencers
Choose influencers who:
- Match your brand book and have your target audience within their audience.
- Have a high engagement ratio (check if their comments are not just automatic bot comments).
- Have big enough reach to even invest in them at all (a small follower count is fine as long as it is still possible to achieve your goals with that reach and with the related costs).
- Do not buy fake followers or use bots (there are tools that can measure how genuine the audience and engagement of your influencers are) or at least do this within reasonable limits.
- Do not have a 9/1 ratio of sponsored to normal posts, a 1/1 ratio is perfectly healthy.
- The size of their following is the last thing to look at – as long as your ROI calculation seems fine, and all depends on your product and your brand, this might be the right size of influencer for your brand.
6. Communicate your needs
This is the step when you reach out to selected influencers and share with them what your expectations are, what your offer is and how your product or a service can be incorporated into the influencer’s digital presence. Each piece of content influencers create for their sponsorships needs to look natural and genuine. If you cannot strike that balance, perhaps their style does not fit your brand after all.
7. Get down to measuring
Plan for how you are going to measure your campaign objectives (sales, engagement, awareness, other), preferably with your own tracking (not provided by the influencer) and implement that into the campaign from the very beginning. But measuring clicks and impressions is one thing, but I bet you want to see some actual conversions. One surefire way to achieve this is to include a discount code into the influencer campaign. All you have to do is come up with a nice incentive, ask your e-commerce platform manager to activate the promo code, and then you can send it out to influencers. Or do it yourself with the use of a Promotion Engine (e.g. Voucherify).
8. Compare results
Compare the results from the influencer promotion to the results of alternative channels, if you gain less from influencer marketing than from alternative channels, then maybe this is not the right channel for you. Go through the points for consideration looking for possible problematic areas and optimize, if possible. If you are still seeing round zeros, you should probably try something else.
It all comes to planning out your strategy, knowing your alternative costs, and measuring the outcomes of your campaign. Influencer marketing issues usually arise if one of those points is missing.
How to measure influencer marketing ROI?
Sadly, cooperating with influencers often means limited tracking capabilities. Let’s see what tracking tools you can employ to better understand what’s happening with your influencer marketing campaigns.
1. Affiliate links
Generating a unique affiliate link for an influencer allows you to track online sales made through their social channels. Influencers typically receive commission from these sales. These links will also provide data around the number of clicks on your site and the number of sales with the average order size. There is one issue here. The link cookie may be valid for around 30 days at most, so if a customer decides to purchase after that time, you won’t be able to connect this sale with the influencer campaign you run. Another thing is that some customers don’t trust weird-looking affiliate links which may prevent them from even clicking on them.
The good news is that Instagram and other popular platforms are now introducing shopping posts options, where customers can purchase products directly from the Instagram feed which shortens the user journey and increases impulse purchases.
UTMs are by far the easiest ROI tracker to implement and the most versatile at the same time. You only need to add a couple of structured parameters to a link and, once a visitor clicks on it and enters your site, your Google Analytics (or any other web traffic analysis tool) will digest them. Every influencer and every campaign gets a different set of parameters so Google Analytics can present the source of traffic correspondingly. But UTM have their own problems too – they can be easily removed from the link and they make links way longer which might decrease their credibility in the eyes of potential consumers. To get around these shortcomings, you can use link shorteners. Their sole purpose is to hide the original link with a long UTM part under a shorter one. So, instead of
Additionally, some link shorteners monitor the number of clicks independently, so you can monitor the traffic with an additional channel (for example, Bitly).
3. Dedicated landing pages
As link shorteners may be perceived as suspicious at best, shortened links can lead to distrust and that to fewer clicks. One solution is to use providers which allow you to use branded links.
The other is to ditch link shortening altogether and replace it with landing pages with unique links. Here’s an example of the structure you can use: https://acme.com/campaign/influencer1. Assigning a unique landing page to each influencer campaign requires introducing a landing page generator. Landing page software providers often offer detailed traffic analytics. They are usually integrated with Google Analytics, so you can put campaign performance results under a unified report.
4. Unique discount codes
Many platforms (like Instagram) do not support adding links to posts. By giving each influencer a unique discount code they can share with their audience, you make sure you track how many transactions the influencer brought. It can also be used as a basis for influencers’ commission as there are companies which simply pay a percentage of sales as affiliate sales for the influencer or a basis for calculating the fixed rate for sponsored content for further collaboration. Whatever the goal, personalized discount codes give you a better look at influencer ROI.
You can generate coupons codes not only for a selected influencer but also across multiple campaigns run within a single influencer collaboration. This approach will let you get a super-detailed view of what works and what doesn’t. With this scale, having this kind of experimental (A/B testing) capability in place is invaluable (ecommerce giants have already built them). You can also turn coupons into unique links, so the discount is auto-applied for a particular user. A good customer experience is the sum of these small simplifications:
KEVIN_AT_SPRINGFEST_2018 -> yourcompany.com/deals/kevin_at_springfest_2018
Adjusting incentives isn’t just about changing the value of a discount. It’s also about ingraining the product-, customer-, and time-specific constraints into the deal. This kind of offer has two key benefits. First, a personalized and eye-catching deal can increase the overall engagement of the influencer campaign and therefore lift the brand awareness, and second, the limits will help you keep your promotion budget under control.
Trackable and specific coupon incentives are the proven way of making your influencer marketing more data-driven and effective. Remember, however, that the more sophisticated rules you’re going to use, the more advanced promotional software you need to get.
5. Brand engagement
If the campaign is focused on engagement, you can request the influencer to direct the customers to your website. Then you can easily see the traffic coming from a social media reference or to your channel (in case of placements where a link cannot be used). You can measure your own follower/engagement rates change and how it translates to ROI. A good practice is creating your own hashtag that the influencer would use and see how popular it gets – this also works well with some contests on your brand’s side. By knowing the number of contest participants, you can measure the gained engagement with your brand. You can also see how much of this engagement fades away with time (let’s say after one month from the initiative) and see what real gains were.
6. Brand awareness
You can measure the number of times the post has been seen but here again, we have the issue of fake following which can distort the data. You can measure the traffic coming from the influencer social media channels (with any tracking software) or, in the case of channels where they cannot share links, you can try to isolate your marketing activities to define how much engagement the specific channel brings. You can measure the influencer campaign’s impact as traffic (predicted traffic without campaigns) or traffic from other campaigns that you measure. The same goes for sales increases or share of voice, if you can calculate all other activities, this one is the remainder.
7. Share of voice & mentions
With social tracking tools such as Brandwatch or Social Mention you can measure what (and where) people are talking about your brand and about your competitors. The results are more qualitative than quantitative but if you want to position yourself as a standalone brand, this data is relevant. Influencers can influence what the others say about you and how often they mention you. This is a very valuable source of data for measuring influencer campaigns ROI.
Consider using your influencers’ posts for sponsored ads. It is a controversial technique – why would you pay for sponsoring their posts if you are already spending on them – but it might work in some cases as sponsored content gets more reach and if the content is good, then it might be a winning strategy.
Influencers also provide you with free content you can use across your channels. You save the costs on models, camera person, make-up artists, travels, rental of the studio – your ROI can be the costs you’ve saved on making that content yourself.
8. Earned media value
EMV is the total of all social media exposure you gain from influencer campaigns or other third-party referrals. By calculating EMV, you can place monetary value on your sponsored campaigns. The total that you calculate represents the amount that you would need to spend on the social media channels to get the same level of engagement. There is no general formula for calculating earned media value. But digital marketing teams usually take these three metrics into consideration:
- The average cost per engagement.
- The average cost per impression.
- The average cost per click.
You can also model your influencer campaigns as a single or double-sided referral programs. How would this work? The influencer receives a personalized referral code to share with their followers, without the cap on the number of referrals. The referral software of your choice would then count each successful referral (customer using the referral code). Then based on the number of referrals, you can pay the influencer a fixed commission or some percentage of the generated sales. To increase the success of the campaign, you can turn it into a double-sided program where customers also receive an incentive for using the influencer’s code.
If your campaign goal is awareness or link-building to improve domain authority and trust, you can also measure the number of backlinks that link to the sponsored content that your influencers put out. This type of influencer campaigns can be a great choice to B2B businesses which can collaborate with thought leaders in the given area who in turn create and share content about your business.
Calculating the ROI
After you finally know what your investment and results were, it’s simple to calculate the final ROI. For example, if you paid the influencer $5000 which brought back an estimated $10 000 in profit (either for sales associated with the influencer or earned media value), then you are looking at the ROI of 200%.
The formula is simple – (Revenue/Cost) x 100.
Influencer marketing has great potential for most brands. But like any marketing strategy, it needs first the analysis and understanding of your goals and your brand, to find a perfect fit. You can experiment and learn from it, if you have planned ahead your KPIs and tracking tools.
Run a code-based influencer campaign for better tracking