How To Measure Influencer Marketing ROI
What’s the return on investment (ROI) on influencer marketing? That’s the million dollar question in the industry, and we have an answer that should satisfy your curiosity. In fact, ApexDrop clients consistently report increased sales when working with our network of Instagram micro-influencers.
Yet, despite discernable increases in conversions, brands are still having a difficult time connecting this strategy with rock-solid evidence of a payout. In order to help marketers validate their intuition that influencer marketing is the real deal, we’ve laid out the intricacies of ROI and streamlined an approach to measurement.
SIX KPIS OF MICRO-INFLUENCER MARKETING
One of the most significant problems with measuring ROI is that marketers and executives are unsure of what they should be measuring. When it comes to influencer marketing, you need to have a clear understanding of your goals. To help brands parse through metrics, ApexDrop President, Zak Stahlsmith, breaks down effective influencer marketing into six key performance indicators:
- Distribution (follower reach)
- Engagement (number of likes/comments)
- Insights (feedback to improve business process)
- Return on Relationship (ROR)
- Sales Lift (increase in sales)
- User Generated Content (UGC)
SET YOUR GOALS & BUDGET
The bottom line is that the ROI from influencer marketing is going to depend on the goals you set for your brand. The reason for this is that each KPI will equate to a different monetary value, and some KPIs won’t be expressed in dollars.
However, in order to calculate your ROI, you still need to know what your investment was/is. If you’re about to engage in a new campaign with an influencer marketing agency, they should have transparent pricing. Conversely, if you’re about to run an influencer marketing campaign yourself (not recommended!), you should decide on a budget before ramping up.
If you’re like most marketers, you want to stretch your investment as far as it will go. It’s that cost-effective angle that makes trade collaborations with micro-influencers so attractive.
If you’re unfamiliar, “trade collaboration” or “gifting” is a method of compensating influencers for their content. Therefore, if you’re engaging in an influencer campaign that’s managed by a professional marketing agency, your costs will generally consist of:
- Gifted products and shipping
- Initial campaign start-up fee
- Flat-campaign fee
On the other hand, if you’re managing an influencer campaign in-house, your list of expenses will be far more difficult to calculate. In-house managed influencer-campaign costs include:
- Time spent researching influencers
- Time spent reaching out to influencers
- Time spent managing influencers
- Campaign management system
- Data analysis
- Time and software to curate content
- Gifted products and shipping
REACH & IMPRESSION
If you’re working with a premier influencer marketing agency, they’ll actually guarantee a specified reach and number of impressions per campaign. If they don’t ensure results, find one that does, like ApexDrop.
But regardless of the guarantee, you’ll have to decide what your goals are in terms of brand awareness. If you’re unsure, your campaign manager should be able to help you determine your needs.
It’s important to note that impressions and reach are two different metrics. While they both have to do with how many times a post has been seen, reach is the number of unique accounts that have seen your post. This number does not change even if a person saw your post more than once.
Conversely, impressions are the total number of times your post has been seen. Typically, your impressions will be higher than your reach. If the number of impressions is substantially higher, it’s a strong indication that your audience is engaged as they’re revisiting your post.
The industry standard for content distribution is based on $10 cost per thousand reached. Therefore, if your goal was to reach 100,000 individual people, you should plan on spending around $1,000.
ENGAGEMENT
On Instagram, engagement occurs when someone takes action on your post. This interaction includes likes, clicks, comments, and shares.
Many markets are also interested in engagement rates, which indicates the proportion of people who saw a post and then interacted with it. To find your engagement rate, simply divide the number of post engagement by the total number of impressions. From here, multiply that quotient by 100 to turn it into a percent.
(500 (likes) + 25 (comments)) / 10,000 (impressions) = .053
.053 x 100 = 5.30%
But what is considered a good engagement rate? Well, it depends on the agency you’re using and the kind of influencers promoting your products. For instance, ApexDrop sets the bar higher than most influencer marketing agencies.
- Weak: 0% - 1.75%
- Average: 1.76% - 4.00%
- Great: 4.01% - 7.00%
- "Unicorn Strength": 7.01% - And Up
CUSTOMER INSIGHTS & MARKET RESEARCH
People often forget the value of customer feedback, but the truth is, it’s one of the best ways to improve your product. While not every influencer marketing agency follows this best-practice, campaign managers should be sending customer-feedback surveys to influencers who choose not to post.
Not only does this maintain a high level of authenticity by eliminating the pressure for influencers to post products they’re not legitimately fond of, but the feedback itself is invaluable. However, if you’re looking to put a number to the insight, the industry average for qualitative survey data is worth about $25 per response.
RETURN ON RELATIONSHIP
Return on Relationship (ROR) is the value accrued from the authentic connection to a person or brand. This value is both perceived and real, meaning the power of customer loyalty, word of mouth, and emotional resonance is intangible, but still vital to the customer journey.
After campaigns come to a close, you can continue working with the network of influencers with whom you’ve built trusted relationships. Further, our research shows that influencers are eight times more likely to buy products from brands they’ve collaborated with.
SALES LIFE & OTHER CONVERSIONS
According to ApexDrop’s lift metrics, brands see up to a 73% increase in website conversion rates (transactions/visits). What’s more, ApexDrop’s clients saw a 17% increase in average order value and a 48% increase in revenue per website visit.
But remember, conversions are just sales, and honestly, sales shouldn’t be your only goal. If you’re focused on healthy, long-term growth, you need to think of conversions that build a foundation of trust with your audience. Some marketers refer to these as “soft conversions.” These could include:
- Newsletter signups
- eBook Downloads
- Contact form submissions
Again, you have to decide what these soft conversions are worth to your brand. If you’re unsure, talk to an ApexDrop representative to learn more.
USER GENERATED CONTENT (UGC)
For brands attempting to calculate ROI, it’s vital that you include content creation in the equation. After all, you’re gaining volumes of high-quality, professional-grade, reusable photography and blog content.
By and large, the industry standard is $100 per post. If you think that sounds high, pause for a moment, and consider how much it would cost to hire a photographer, find and pay a model, and secure a location for the shoot. It’s hours of time, and hundreds (if not thousands) of dollars for a couple of usable shots.
Plus, when you work with influencers, you’re tapping into more than just photography; many of them have blogs that will feature your brand as well. Should they include a backlink to your site, it’ll be like rocket fuel for your search authority. After all, MOZ found that backlinks are heavily weighted factors in Google’s algorithm.
Finally, in the last couple of years, Google has finally started weighting social metrics in their ranking factors. In fact, researchers over at MOZ found that social metrics account for 7.24% of the search giant’s algorithm.
OVERCOMING THE CHALLENGE OF CALCULATING ROI
Instead of thinking about ROI like a cost-per-click campaign, think of it as buying content and the distribution of that content. However, if you’re looking for deeper insights, consider implementing trackable links, conversion pixels, campaign-specific promo codes, and branded hashtags to get a clearer picture of where site traffic is coming from, who is visiting your site, and which campaigns are most successful at driving sales.
But at ApexDrop, going we’re going one step further to help brands determine their ROI. We’ve actually built an ROI calculator for all of your influencer marketing initiatives. If you’re interested in learning more about influencer marketing and how to measure the success of your campaigns, click the link below to schedule an ApexDrop demo.
WHY APEXDROP?
ApexDrop has helped top brands activate thousands of authentic micro-influencer connections to create branded lifestyle content that can be repurposed infinitely. We’ve mastered affordability and quality by specializing in micro-influencer trade collaborations. ApexDrop also offers unparalleled campaign management services. For more information, schedule a call with an ApexDrop Influencer Specialist today.