Is Influencer Marketing Actually Valuable? Proving the ROI

To help you get the most from your advertising budget this year, the OBI Creative team has been serving up content around the new marketing rules you need to pay attention to — this is an article in our Old Rules, New Rules series. Get the latest content, here.

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You’ve seen them all — the effortlessly cool Instagram mom who posts photos of herself carrying her toddler around downtown like he’s the perfect accessory; the relatable vlogger who you can’t help but follow for your weekly dose of #fitspo; the tech guru live-tweeting about the latest update to their favorite (or, sometimes, least favorite) app.

They all have the same thing written in the caption of their Instagram post, the description of their YouTube video, or somewhere in their tweet — #ad.

(Or #sponsored. Either way, they’re making money off of your eyeballs.)

What is Influencer Marketing?

Contrary to popular belief, influencer marketing isn’t new. Due to its recent proliferation across all of our social feeds, it may seem that way, but the reality is that influencers (in some way, shape, or form) have been around for decades. Athletes on Wheaties boxes, celebrity endorsements on TV, and today’s Instagram stars posting “live” from a big brand’s retail store are all influencers in their own right.

So, what is influencer marketing, exactly?

“One of the biggest misconceptions about influencers is that they are someone with a large social media following. This thinking confuses influence with popularity. The act of influencing requires a specific result: a change in thinking or behavior. An influencer, therefore, is someone who has the power to influence the perception of others or gets them to do something different.” — Gerardo A. Dada, VP Product Marketing & Strategy at SolarWinds for  Forbes.

Yes, that mommy blogger with 100,000 Instagram followers is an influencer to a specific community. But, for a small business, an influencer might simply be the local news reporter who regularly covers their industry or the chairman of their neighborhood association. (And she’s only got 4,000 followers on LinkedIn.)

Dada puts it perfectly: an influencer has the power to drive your audience to take action.

That action could be anything from a purchase online to referring someone to your business to sharing your content on social. It all adds up, and it all gives them influence over your target audiences.

Why Influencer Marketing is On the Rise

According to data compiled by TapInfluence, influencer marketing is becoming more and more effective for brands who execute campaigns well for a variety of reasons, but most notably, it’s because consumer trust is more easily won from someone they see as a peer, and influencers build their communities based on that peer-to-peer trust.

A few standout statistics from the report include:

• 96% of people believe that the advertising industry does not act with integrity — 69% of these people attribute their mistrust to the advertisers’ desire to sell more effectively. (IPSOS, 2015)
• 49% of people say they rely on recommendations from influencers when making purchase decisions, and 40% of people say they’ve purchased an item online after seeing it used by an influencer on Instagram, Twitter, Vine, or YouTube. (Twitter and Annalect, 2016)
• 71% of marketers believe that ongoing ambassadorships are the most effective form of influencer marketing. (TapInfluence & Altimeter, June 2016)

As consumers have become more discerning and demanding when it comes to where they spend their money (particularly Millennials and Gen Z), influencers have amassed more and more power to sway their decision-making throughout the purchase process.

True influencers have a relationship with their audience, and even though that relationship is their meal ticket, it’s a mutually beneficial relationship for both parties — the influencer provides content the consumer can trust, and the consumer feels that the influencer will only endorse products, content, or people he or she believes in.

That’s human-to-human marketing at its finest.

How Influencer Marketing Fits Into the PESO Model

So, where does influencer marketing fit into the PESO model? Is it paid media, or earned, or shared? Considering that a lot of influencer campaigns are executed on social media, but cost money and also fall on the shoulders of the PR or Communications team, it’s no wonder it can get a little confusing.

Let’s recap: the PESO model merges four types of media — Paid, Earned, Shared and Owned.

• Paid Media. Paid media is social media advertising, sponsored content and email marketing that you pay to place as part of your PR campaign.
• Earned Media. Earned media is what you think of as traditional PR; getting your information printed in newspapers, trade pubs, on the radio, as part of the local or national news broadcast.
• Shared Media. Think of this one as social media. It’s all the social channels (Facebook, Twitter, LinkedIn, Instagram, etc.) you use to promote your brand to the public. The potential for content about your business to go viral on social media is huge; it’s not just you or your PR agency sharing information about your brand; others can get in on the action and massively expand your reach through social media.
• Owned Media. This is original content. Articles, blog posts, infographics, videos, and other pieces you create to connect with your customers and move them through the sales funnel.

According to the graphic above from Spin Sucks, influencer marketing falls under earned media, with engagement straddling the line between earned and shared. That being said, the whole point of the PESO model is that these different types of media integrate seamlessly. Therefore, any influencer campaign with a cost associated with it — i.e., the influencer isn’t writing or posting about it out of just the kindness of their heart — should also be considered paid media.

Speaking of paid media…

How Much Does Influencer Marketing Really Cost? How to Calculate the ROI

As influencer marketing has grown, so have the costs. We won’t proclaim that influencer marketing campaigns have to boast a huge price tag in order to be successful — there are still ways to engage with reputable influencers inexpensively, and sometimes for free or trade — but the tactic has undeniably grown more expensive as it’s gotten more popular.

The good news? Despite the initial investment, it’s still pretty darn effective — according to TapInfluence and Nielsen, influencer content delivers 11x higher ROI than traditional forms of digital marketing.

So, what does the average influencer really run? Reports vary. According to Later’s 2018 State of Instagram Marketing report, prices can range from as little as $250 to $10,000 for a sponsored social post. Spin Sucks reports that an average article from a mid-level influencer costs roughly $150-$500.

The truth is, there are a lot of variables to take into account when trying to set a budget for your influencer marketing efforts. Ask yourself these questions in order to determine what you should be paying:

• How many influencers do you want to work with? More people, more money.
• Do you want to manage the campaign yourself, or use a third-party tool or agency? Time equals money, so it’s not always necessarily cheaper to manage the campaign yourself. That being said, third-party tools and agencies are businesses, too.
• What channels will your influencer(s) be promoting your campaign on? The more you’re asking them to create or post, the more expensive it will be.
• What’s the duration of the campaign? Again, if you’re wanting multiple posts over a longer period of time, it’ll cost you.
• Will you own the content created for the campaign? Many influencers and third-party tools charge more for the usage rights (for use in your ads, organic social, etc. to amplify your message even more) to the content created for the campaign.
• How do you both measure their influence? The number of followers is definitely not the only metric to pay attention to, as noted previously, but it’s still a factor (and be sure to take into account their entire digital footprint, not just one social platform). Take “micro” or “mid”-influencers seriously — i.e. influencers between 1,000 and 100,000 loyal, engaged followers. Finally, keep in mind that fake followers are easily bought, but engagement is hard to fake. That’s why it’s important to be cognizant of other ways to measure their influence — data such as web traffic, engagement rate, and domain authority. How much they’re charging you should directly correlate with those numbers. 

Long story short, there are a lot of factors to consider when it comes to building a budget for your influencer campaigns. 

Influencer Marketing Tools for Any Budget

As influencer marketing has risen to the top of every marketer’s to-do list, so has the list of tools and companies looking to capitalize on the trend.

Sometimes, it can be overwhelming how many there are out there — so we’ve done a little of the work for you and compiled a list of our top 10 favorite tools, resources, and companies, plus why they’re great:

• BuzzSumo. BuzzSumo is fairly inexpensive, comes with a 7-day free trial, and is a great place to start when looking to identify influencers within your industry.
• Rival IQ. We’re big fans of Rival IQ at OBI for their competitive analysis data and performance analytics, but their recently launched Discover Tool on Twitter and Instagram also works as a great way to identify key influencers on both networks.
• TapInfluence. The Cadillac of all-in-one influencer platforms, with pricing to match. Still, they’re leaders for a reason: they’ve been around a long time, and boast an impressive list of influencers who’ve opted into their marketplace.
• Markerly. It’s easy to see why Markerly is on the rise — they’re one of the few third-party platforms that offer complete campaign management, at a surprisingly reasonable price. In addition, the cost includes the content created by the influencers you work with.
• Linqia. Linqia is another third-party tool but differentiates themselves by offering AI-driven software to identify influencers that match your brand and a goal-based pricing model, whether your goal is engagements (CPE) or clicks (CPC).
• Dynamic Signal. This tool helps you activate influencers that are often ignored — your employees and internal brand advocates.
• Trendkite. A great PR tool that allows you to monitor media mentions, conversations, and identify influencers (particularly those in media as well as individuals). Bonus: their analytics go a long way toward quantifying your PR efforts.
• Later. One of our favorite Instagram scheduling tools, but also great for searching relevant hashtags within your industry (great for influencer identification!) and managing conversations and content curation.
• Native Tools — Twitter, Instagram, Facebook Groups, LinkedIn articles, etc. Sometimes, the best way to identify influencers — particularly those in smaller markets — is by using native tools. For example, you can glean a lot from Twitter’s Advanced Search, scouting local or community-based Facebook groups, following trending Instagram hashtags, and seeing who’s publishing the best LinkedIn Pulse articles.
• Microsoft Excel. Sometimes, the best solution for a smaller budget is building a program on your own. There’s no better way to do that than with tools you use in your everyday business. To effectively build an influencer strategy in Excel, download our checklist. (Need more help? We got you.)

Ready to partner with an influencer for an upcoming campaign, or build a program from scratch? We can help! Contact us today to get started.

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Thanks for reading!

~ Mary Ann O'Brien, OBI Creative