“What’s in it for me?” That’s a question every company or brand should ask before launching an influencer marketing campaign. One way to figure out what’s in it for your brand is to calculate your Influencer Marketing Return On Investment or Influencer Marketing ROI. That way, you’re able to see if your campaign is actually paying off, or if your company is spending money for nothing.
What Is Influencer Marketing Return on Investment?
Influencer Marketing ROI is a relatively simple concept that appears to be difficult. In the simplest of terms, it determines whether you earn more from campaign than you end up spending on the campaign.
ROI is often used to help investors see what they have earned from buying and selling a particular stock. For example, if you buy $100 worth of stock in a company, then end up selling your stock for $200, you’ve earned $100 and your return on investment is 100 percent. You calculate ROI by subtracting your costs from the sale price (in this case 200-100). You then divide the difference by your original costs (in this case 100/100, which gives you 1, or 100 percent).
Although the concept is similar when you’re calculating Influencer Marketing ROI, there are a few differences. For one thing, with Influencer Marketing ROI, you’re not simply buying something and then selling it for more money at a later date. To evaluate the cost of an influencer marketing campaign compared to the revenue it brings in, you need to look at a few key performance indicators (KPIs) that are exclusive to influencer marketing ROI.
What Are Influencer Marketing Key Performance Indicators?
A KPI is a measurable value that your brand can use to measure your influencer marketing ROI. You can use KPIs to measure sales success, to measure your site’s SEO quality, and to gauge how your marketing is doing. A few examples of influencer marketing KPIs include:
Coupon or promotional codes
Giving your influencers coupon codes to share with their followers is one of the easiest ways to track response and ROI. For example, if every influencer you work with has a coupon code that’s in their name, you can add up how many codes get redeemed and figure out how much revenue that one campaign earned your company.
In some cases, you might interested in seeing how many people are clicking on your site from the influencer’s page. Using a tracking pixel lets you see how many people are coming to your site and where those visits are coming from. If each of your influencers has a tracking pixel, you’re able to see who is generating the most visits.
Clicks or purchases in a set time frame
Evaluating the number of visits or purchases your brand gets during a set time period can help you calculate ROI. A good example of this is blogger Arielle Charnas, who posted a Snapchat story about a beauty mask. During the 24 hours after her story went live, the brand working with her sold more than 500 masks.
How to Calculate Influencer Marketing ROI
How do you actually go about calculating Influencer Marketing ROI? It does involve a bit of math, but don’t panic. Let’s say you hired an influencer to create a sponsored photo featuring your product. You pay the influencer $62 for the photo (the average price charged by influencers, according to the 2017 State of the Creator Economy Study).
You give the influencer a coupon code, INFLUENCER, to share with her followers in the photo. The code gives people 10 percent off their purchases. Within in one day, 10 coupon codes have been redeemed, bringing in sales of $1,000. So far, you’ve only spent the $62 on the campaign, so you subtract that from the 1,000 to get $938. You then divide 938 by 62 to get 15.12, or an Influencer Marketing ROI of 1,512 percent.
Here’s another example. You pay an influencer for a sponsored photo and include a tracking pixel on the post. After 24 hours, 100 people have clicked from the influencer’s post to your site. Of those 100 people, two ended up buying something from your brand, bringing in $300 in revenue. Subtracting the cost of the photo ($62) from the $300 results in an Influencer Marketing ROI of under 400 percent.
Of course, if you dislike math, there are easier ways to calculate Influencer Marketing ROI.
Influencer marketing software includes tools to help you determine how certain posts or pieces of content are doing. With Influencer Marketing software, you can adjust your strategy or campaigns to boost ROI in just a few clicks.