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 conclude that the channel doesn't work for them.
When prompted, they’ll reveal, “We had a hard time proving ROI.”
The bad news is this is a very common challenge facing marketing teams in general, and influencer marketing teams in specific. Measurement is still messy, attribution is a hornet’s nest, 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 get buy-in or do your job well!
In this post, you’ll learn how to measure ROI, but more importantly how to show 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!
Clarifying the ROI of influencer marketing is like trying to untie a tightly-wound knot
What is the ROI of influencer marketing?
You’ve done your research, and you’ve most likely seen the claims. Influencer marketing delivers shocking ROI.
- On the low end of the scale, for every $1 in marketing you invest, you can expect to get $5 back in sales. (Neal Schaffar, 2022)
- On the high end, and this is for top performers, you can invest $1 in marketing and get $20 back in sales. (Influencer Marketing Hub, 2019)
Then 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.
Why is the power of influencer marketing tricky to capture?
There are a few reasons you’ll face (or have faced) as you attempt to calculate the ROI of your influencer marketing program.
Because attribution still sucks
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.
Because influencer marketing creates long-term returns that brands fail to consider, capture, and measure.
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.
So, how do you measure the ROI of influencer marketing aka how do you prove the channel’s value?
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.
All you need to know (& make the case to stakeholders) is:
- you can make this channel profitable
- it’s at least as good (or better) than spending more resources on another channel (e.g. PPC, email).
This means that your goal setting, tracking, and measuring all need to be in alignment with this ultimate objective.
Setting goals to show the value of influencer marketing
Do not pass go. Do not collect $100 without setting clear goals and choosing key performance indicators (KPIs) that will help you show the 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:
- Content production goals (e.g. cost savings from content collection)
Set a few cost-saving goals around content production. This can be an easy win for you when showing the value of the channel.
- Sales & Conversion goals (e.g. conversion rate)
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.
- Brand awareness goals (e.g. number of views, traffic, earned media value)
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.
Tracking & measuring ROI to show the value of influencer marketing
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:
1. Measure direct, and attributable ROI
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.
2. Look for indirect impact
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.
- Run an influencer campaign during a time when no other changes are happening in other channels. (PPC isn’t adding or reducing the budget. Email marketing isn’t testing new promos). You want it to be business as usual.
- Ask all your influencers to post during a concentrated period. The shorter the period, the easier it’ll be to see the impact of influencer marketing on other channels. Ask them to all post over the same 1-5 days.
- Now in Google Analytics, select the view of this concentrated period and compare it to the previous week, month, or year. Compare the results of the different channels during the same two comparison periods.
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.
3. Assisted conversions
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.
4. Content savings
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:
- If you’ve benefited from influencer-generated content (e.g. reused as social proof or ad creatives), how much would that have cost to produce otherwise? How much did you save?
- If you have a noticeable uplift in direct traffic or brand searches, how much would that traffic otherwise cost? (e.g. using an average cost-per-click)
- ‘Soft” or vanity metrics: If you gained social followers, email subscribers, or even grew your remarketing audiences with your campaign, there’s a chance they’ll convert in the future. How much would that have cost in paid social?
Maximizing ROI: 7 ways to improve influencer marketing 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.
1. Get better at tracking and measuring.
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.
2. Keep recruiting the right influencers and work long-term with them
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.
3. Try recruiting nano or micro-influencers
Nano- or micro-influencers usually have between 1000 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.
4. Implement influencer management practices
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, contract templates, and reporting templates.
5. Introduce automation into your process
Another way to reduce costs as the channel scales is to introduce automation into parts of the process that can (and should be) automated.
- Looking for influencer contact info > Use Modash to collect all email addresses for those on your shortlist.
- Speed up outreach > Use your email automation tool to send out automatic follow-ups.
- Track content faster > Use an influencer marketing platform like Modash to collect and store all content of a campaign. Modash also alerts you when an influencer hasn’t used the correct tags or made the right ad disclosures.
Compare the pricing of tools like this to hiring an agency or another full-time employee and you might be surprised at the savings.
6. Work towards using performance-based pay as much as possible
No matter where you start with payment, move to a performance-based payment model as soon and as much as possible.
A performance-based payment model reduces the chances of wasting your budget on collabs that for one reason or another don’t drive results. When your goals and your influencers' goals are aligned in this way, there’s a higher likelihood that creators will post about your brand more often. This in turn boosts the likelihood they’ll purchase your product or download your app.
7. Repurpose influencer-generated content
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.