What’s your influencer marketing ROI? 7 ways that these brands calculate it
With all things digital, we expect results, fast. You can plug in a banner ad and credit card, and boom. Visitors start flowing in. You purchase just about any software product and within 15 minutes, you’re up and running. So in this environment of instant digital gratification you may be asking, where they heck is my ROI from influencer marketing?
Today we’ll help you calculate it! And there’s two things to know about doing that. The first, is that to find the ROI you’re looking for, you have to start off with goals in mind. And the second, is that really profitable relationships take real time. While other digital marketing channels can but much faster to the table, so too is fast food, and we both know what that does to you. If you’re willing to invest in cooking a proper meal, you’ll get far better results in the long run.
What are the positive, healthy side effects of influencer marketing? They are legion. It delivers $6.50 on every $1 invested, increases long-term reach, boosts followers, enhances customer quality, produces marketing content, and the list goes on.
So today, we invite you to eat a healthy meal and let’s explore the ROI behind it!
The first step for calculating influencer marketing ROI is to set out your goals clearly.
Begin with asking yourself the question, “what do I want from my influencer marketing program?” Some brands are trying to be seen, some are hoping to forge partner relationships, and others are just plain looking to drive revenue (and most are a combination of the three). In setting out those goals, measure where you’re starting out at today so that you have a benchmark.
Here are a few sample goals:
I want to ….
Drive an additional $2,500 in sales each month
Expose more than 500,000 consumers to my products
Increase my following on X social platform by 200%
Increase my users by X
Once the results are back in, we can calculate and compare.
Here are 7 ways for brands to calculate their influencer marketing ROI:
1. Dollars and cents: This is your good old fashioned bottom-line revenue, the life-blood of any business. You can think of it in terms either of net-new revenue generated or in terms of money saved generating the same revenue as before. Let’s explore a real life example.
The equation: (revenue earned from campaign – money spent on campaign) / money spent on campaign = ROI
GlossyBox offers deluxe beauty products in a subscription box. Because those are sold on a monthly subscription basis, their sales from influencer marketing became the gift box that kept on giving. They generated over $3k in monthly recurring revenue that continued for long after the campaign, meaning that the initially calculated $3 return on every $1 spent on the campaign will continue to double every month into the foreseeable future (minus their churn rate, of course). This is return is $3 right now, but will be $5.80, $11.17, and so on up.
For comparison’s sake, email marketing campaigns return $1.19 – $1.27 according to Marketing Sherpa.
2. Audience Reach: This has always been the common denominator for advertising, and will continue to be until the day when we’re all chipped and tracked by big brother, which hopefully is not soon. This is about getting the largest number of eyeballs on your ads so that familiarity will eventually lead to positive feelings and then a sale, while simultaneously admitting that we can’t fully track that entire journey because, well, life’s complicated. Traditionally it’s been difficult to wrangle a dollar-value ROI metric out of these exposure campaigns, but some influencer marketing platforms have used data science to calculate the dollar-value of impressions to give brands a useful benchmark.
Derma e for example uses this method. They felt confident that video was the best way to both reach their audiences and to explain the value of their products. They ran a campaign and connected with 55 beauty influencers on YouTube who helped them reach 5 million people (the total views) which led to 150k new engagements from potential customers. For a fairly inexpensive campaign, the ROI based on _____ is _______.
3. Growth in followers: This calculation goes one layer deeper than audience reach in that your goal is to amplify your voice and power future campaigns. That is, when people follow you, they’re bound to hear everything you say in the future. Every post you make to your followers is like a free CPM campaign to an already engaged audience. Thus, you can either calculate the cost that you might have spent on advertising to reach that number of people, or you can think of it in terms of the lifetime value of a follower.
For example, Fashion Nova is an affordable fashion-forward LA brand who knew that visual impressions would be everything in appealing to their target demographic. They thus focused on Instagram and grew their followers from a respectable 700k to an impressive 2.3M through a series of campaigns. On an initial goal of 1M followers, they saw a ____% return on their money invested.
4. Grow in users: For those companies that operate on a subscription model and are focused on an ongoing relationship rather than a one-off sale, user growth is extremely important. Users compound the activity and buzz around your business. They interact, provide free product testing, create their own content, and if happy, evangelize you and help you achieve a viral growth factor.
Caldwell is a great example of a men’s style brand that tailors your look to generate the perfect wardrobe, taking the hassle out of looking great. They set out with a goal of acquiring 3,000 new users and through a series of campaigns, gathered 5,600. Because they had expected to generate new users at about $1 each, and for the same spend they generated them at $0.56, they saw an ROI of ______.
There we have it! Four methods for calculating your ROI! But we aren’t even half finished, because we’re on to a rapid-fire list of the intangible benefits that to many clients, outweigh the monetary ones.
How much are these benefits worth to you as a marketer?
5. Higher quality customers: Research shows that customers brought in through influencer marketing campaigns are ___ more loyal, typically because they were better educated upon arrival because of the influencer.
6. A content creation machine: Influencers create photos, narratives, and quotes that you can repurpose in other campaigns. Fashion Nova acquired 280 pieces of content this way, and Love with Food acquired 75 videos.
7. Residual marketing effects: Influencer’ activity continues to ripple across social media long after their campaigns are done. The content they create persists on their profiles and across all of the channels that it’s shared upon, generating additional traffic, views, and clicks for years to come (albeit at a diminishing rate).
Whew, we’re all done! We hope you’re feeling far more confident about calculating your influencer marketing ROI. If you’re like us when we first started many years ago, your eyes are wide like dinner plates in contemplating the multitude of benefits to influencer marketing, both tangible and intangible. The bottom line is that it generates sales, reach, followers, marketing content, and user growth, and that seems like a pretty good return from just one of your marketing channels.