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We will start with some experimentation. You are employed as a marketing specialist with a significant firm charged with taking influencer marketing forward in the 21st Century. Your manager is reading about digital advertising. She is pretty thrilled with every article she has come across, declaring that Influencer Marketing offers an 11x ROI over the entire spectrum of other digital media. Before entering a new marketing frontier, the user starts researching various tools to discover the best option.
Measuring Influencer Marketing ROI
You hear about the tools already available for advertising ROI and start thinking about measuring an ROI in Influencer Marketing.
Influencer marketing is making money for you.
Influencer marketing ROI can be challenging to measure. But with the right tools, it's possible to see precisely what kind of return on investment (ROI) each influencer marketing campaign has generated for brands. Using Geolance, marketers will have access to a dashboard that provides insights into their campaigns and helps them understand which influencers are most effective at driving sales conversions and brand awareness. The more information they have about their movements, the better equipped they'll be to make informed decisions about future investments in influencer marketing.
If you're looking for an easy way to track your influencer marketing ROI, check out Geolance today! We provide all kinds of data-driven insights so that our customers can make smarter business decisions based on actual numbers instead of hunches or gut feelings. You won't find another tool like this one anywhere else - we guarantee it!
The ways to measure influencer marketing ROIs
There are several ways of measuring influencer marketing ROIs, broadly categorized into three groups - Authentic reach, Engagement Rate, and Sales Conversion Rate. Let us look at each of these ways one by one.
It is pretty simple to measure authentic reach in Influencer Marketing - you have all the data on followers (or friends) listed by every product/brand influencer. How do we know whether this list holds any value, though? One way would be to compare it with another influx of own followers/friends. Assuming good quality data, this comparison should represent effective reach.
A higher influencer marketing "authentic" reach is better, isn't it
Yes, but not always. A higher influencer marketing reach can represent more awareness for your brand, but it doesn't indicate a better engagement rate or sales conversion rate. So, you should know how to measure these other parameters before counting the reach of influencers.
Engagement rate is one aspect that marketers are getting increasingly interested in while running campaigns with influencers. There are many ways of calculating engagement rate - the percentage of a total follower engaged (based on click/open, etc.), percentage of followers engaged out of number engaged (open divided by number clicked), and so on. But all engagement rates have different evaluation criteria - an engaged follower could be a potential customer or just someone following the trend of the influencer. We'll discuss more on this topic later in this article.
Moving Beyond ROI
One of the most critical but often overlooked aspects of influencer marketing is to track the ROI once you have identified your target audience. Since there are several ways to place an influencer's followers, it becomes crucial for brands and marketers to identify their customer profiles to measure organizational goals against the reach developed through their influencers.
Engagement Rate per Follower = Engagements / Follower Count
This metric will give you some idea about the quality of engagement (real customers or just trend-followers). You should perform this calculation on follower lists provided by various influencers (of course, after proper categorization is done). This way, you will be able to pick up outliers who command a high organic follower count with a lower engagement rate. You can then track them for future campaigns.
Sales Conversion Rate
The next step is to find the sales conversion rate of different influencer marketing campaigns you have run in the past, but how? First, identify your industry benchmarks with some help from respected publications in Influencer Marketing - this will give you a fair idea about conversions per 1000 followers/friends. Then compare it with the influencers' list and their followers/friends so that you can determine whether organizations are achieving satisfactory results given specific metrics. Of course, this number may vary depending on the type of product promoted by the influencer, so make sure you know all possible influences before measuring ROI based on sales numbers.
Who is a Better Investment
Looking at these numbers, you can see that Nathan's engagement rate is almost half of the influencer benchmark, especially for small ticket items requiring lower conversion rates from product/service influencers. On the other hand, Igor commands excellent attention from his audience but doesn't come close to the benchmarks in terms of authenticity - it may be because he doesn't have a strong focus on small-ticket items.
As a potential customer, what would you rather see? 1000s of followers with low engagement rates or 100 right ones with high engagement rates? The answer is pretty obvious - the latter is more authentic and thus better to engage your customers! In fact, because of higher organic follower counts, influencers like Nathan could be considered better investments than Igor despite lower authenticity levels.
The best way to implement an investment plan
It's simple - invest in both and let them work for your brand and business goals. Even if you don't get the desired results from Igor, Nathan should compensate for it by working on his engagement rate. This goes back to our old discussion on the various ways of evaluating engagement rate - you should consider all these factors to get a clear-cut idea about influencer ROI!
At this point, you'll be able to compare Nathan and Igor's cost-effective investment rates as well as determine your overall return on investment. For example, let's assume that both influencers have a cost per Facebook post for a specific campaign or product promotion of Rs.10,000. This means that given 1000 followers/friends, each can command a maximum price of Rs 100/- for a single post (verified through Benchmarks). Thus maximizing sales revenue will become much easier now that you know their ability to convert followers into actual customers.
In short, here are the steps you can take to measure Influencer Marketing ROI:
1. Identify your audience and industry benchmarks
2. Find the engagement rates of influencers by comparing their follower lists with benchmarks
3. Compare sales conversion rates for influencer marketing campaigns you've run in the past
4. Measure ROI based on cost-effective investment rates and your overall return on investment through conversions! "
From apples to oranges: ROI Formulation Has Gone Bananas
Influencer marketing is a relatively new concept, but its influence on sales conversion rates has been felt for years. While we highly believe in the shared outcome of influencers and brands, we also understand that it may take some time for influencer marketing to become as transparent as traditional advertising.
That said, there are ways to measure ROI through cost-effective investment rates and overall return on investment through conversions! These metrics can be easily attained by implementing various steps such as those listed above. We hope this article helps you determine the best approach towards measuring Influencer Marketing ROI - let us know how it goes in the comments below! Then, join us next week to discuss four golden rules to effectively plan your campaign with influencers. Until then, happy marketing!
Views on ROI in 2021
The best way to spend your marketing budget wisely is by calculating influencer marketing ROI. First, identify what matters to you. From there, determine which platforms, influencers, and tools will get you across the finish line. If all this math made you go cross-eyed, consider partnering with a trusted influencer marketing program. Rather than manually tracking your campaign ROI, look for influencer marketing platforms to help. You can also use free tools such as Google Analytics to find other click metrics such as how many people visited your website from the campaign post and your retention rate with new visitors.
It could be a little early to talk about ROI in 2021, but we'll take the liberty of looking into the future and mapping out what this metric would look like:
1. Influencer marketing has officially become a standalone advertising channel and is no longer seen as a subset of regular (offline/online) marketing
2. Influencers with big followings command even higher prices when it comes to engaging their audiences for brands, resulting in lower cost-per-influence rates for marketers
3. Authenticity levels have reached all-time highs due to increased popularity and demand for influencer marketing (and its core values such as transparency) among both influencers and followers alike
4. More premium tools are developed to help measure influencer marketing ROI, especially on social media channels where conversions are most likely to occur
5. Social listening becomes even more critical as it helps marketers match influencers with the right audiences based on their post topics and brand affiliations
6. Influencer marketing is no longer limited to big-name bloggers but includes micro-influencers that have smaller followings but higher engagement rates due to their niche subject matter expertise
7. Influencer marketing matures into an official profession, resulting in more influencer agencies being formed and brands seeking help from them rather than doing it themselves (think of talent agencies for Hollywood stars)
8. Influencers become more reluctant to work with brands whose beliefs do not align with theirs, resulting in increased authenticity levels
9. Most marketers report influencer marketing as one of their top 3 revenue-generating channels (after SEO and display ads)
10. Influencers become more inclined towards offering brand deals (exclusives and paid product placements) to make up for falling revenues per sponsored post in the wake of increased competition and a saturated market."
What is ROI
ROI means "return on investment." It measures how effective your advertising or marketing has been by considering the amount of money you've invested into ads and the return you get from it in terms of sales conversion rates and brand awareness. In this case, influencer marketing ROI would mean understanding whether influencers have generated more impressions, engagements, and conversions for the brands they partner with than traditional forms of advertising.
Similar to traditional forms of advertising, it's possible to measure influencer marketing ROI by considering the following (and many more) factors:
1. Relevancy - The content shared is relevant to the audience asked for! However, brands should also ensure that their influencers are competent enough to share content pieces worthy of engagement. After all, this involves placing your brand in the hands of somebody else, so you must trust them fully!
2. Engagement Rate - On average, how many people engage with each piece of content shared by influencers on behalf of brands? This can be measured through click-through rates, conversion rates, and additional metrics such as time spent on the content piece and sharing rates.
3. Audience Fidelity - The likelihood of influencers' followers to be influenced by them and take desired actions such as recommending the brand, evaluating it favourably, and even buying it! It is also possible to measure this through sentiment analysis (positive or negative) of reactions towards specific ads and conversions.
4. Brand Sentiment - How does each influencer-generated piece affect a brand's image? Brands need to track their social media channels carefully to understand how their messages are being received and whether they're generating positive buzz that is proportional to advertising spending or not.
5. Reach & Frequency - The number of people out per campaign is essential, but equally important is the number of times audiences see brand messages per campaign and how exposed they are to them.
6. Cost Per Mille (CPM) is a traditional metric used for online advertising that measures cost-efficiency by calculating the amount spent on ads divided by total impressions (that get generated). For example, CPM metrics would involve measuring the effective cost paid for every thousand images generated through influencer posts for influencer marketing.
7. COGS (Cost Of Goods Sold) - While CPM calculates the actual value of ad spend efficiency in terms of impressions, COGS or costs per sale take into account conversions instead. The formula for this has traditionally been below:
COGS = Cost of Goods Sold
TOTAL SALES PRICE - TOTAL ADVERTISING EXPENDITURE (or Media Budget)
8. Content Performance Metrics - Just like traditional advertising, influencer marketing is measured through content performance metrics such as recall or brand awareness too! While they're not necessarily influencer-specific, it's important to note that these are direct results of the message being associated with influencers' credibility and expertise.
9. Influencer ROI - After considering all relevant factors, brands need to calculate the overall return on investment by using a simple ratio or percentage formula, i.e. (Gain From Investment / Investment Amount) * 100 for every work on with influencers and the net effect of each on brand equity and revenue.
Take the next step with influencer marketing.
Incorporating influencer marketing into a broader digital marketing mix requires understanding how it fits in with other campaigns and which of its many forms work best for specific brand objectives. This could include the following (and more):
1. Conventional Campaigns - Influencer marketing can be used as an additional or secondary means of communication for brands looking to spread awareness about their offerings in the market. Such campaigns are usually launched when organizations create content around specific themes in line with their regular media plans (such as TV, radio, and print, among others).
2. Experiential Campaigns - These influencer marketing initiatives usually revolve around experiential events that help build closer connections between brands and customers by involving them closely in the campaign. They are usually more suited to B2C companies looking to build loyalty, generate brand awareness or increase sales by participating in large-scale events that showcase their products and services.
3. Content Marketing - These influencer marketing campaigns leverage influencers' capabilities to create content around specific themes or categories on behalf of brands that inform audiences and entertain them too! It is best suited for B2B brands that wish to participate in conversation among industry thought leaders to create demand for their offerings.
4. Product Placement - This kind of influencer marketing campaign involves working with leading bloggers, journalists, celebrities, etc., who can integrate mentions of specific products into news content without sounding unsolicited. These initiatives are usually used to generate brand awareness, create content around particular themes, or build thought leadership among industry experts.
5. Tech & Innovation Campaigns - Nowadays, brands are increasingly looking at influencer marketing as a means of promoting their technological capabilities too! This includes showcasing the use of new technologies by creators through case studies, product launches, demonstrations, among others. For instance, an engineering major could approach relevant thought leaders working with technology companies and create online tutorials on using their machinery/equipment for better productivity or value addition.
6. Sponsorship Campaigns - Organizations also look at leveraging the power of influencers by engaging them as their preferred partners for sponsorship opportunities, including sporting events, conferences, etc. For instance, an automobile company could approach influencers in the market considered thought leaders in their respective fields and ask them to become ambassadors for upcoming events or conferences across industries - including engineering, medical science, business management, etc.
7. Influencer-Generated Content - These kinds of campaigns revolve around working with influencers to create 'co-created' content (alongside brands) that can then be published on an influencer marketing platform like blogs and YouTube channels, among many others. This kind of initiative allows organizations to leverage digital marketing mediums to explore all possibilities by co-creating multiple types of content alongside industry experts, including infographics, among other formats!
A good influencer marketing ROI
The most significant advantage of working with influencers is that they're very influential, whether about reaching out to their followers or getting other industry thought leaders involved. Often, organizations may look at running multiple campaigns simultaneously, which can help improve the ROI on marketing initiatives. However, many brands believe that influencer marketing becomes more effective when executed over extended periods rather than short-term attention boosts. This brings in more significant value, especially compared to traditional media, which tends to be one-dimensional and usually limited to reach!
Some of the emerging trends you see emerging in India
As mentioned before, there's always a lot of interest in leveraging digital mediums for promotion purposes (digital has already overtaken television as the preferred medium for ads), and we see a lot of organizations looking at influencer marketing initiatives as an effective way of getting the attention of their target audiences.
Advice to brands in India on how they can use influencers
Identifying the right kind of influencers is extremely important, and any market research conducted should be leveraged for this purpose. After all, if you're not able to engage with your intended audience effectively, then there's little point in running such campaigns! Instead, their efforts could be better utilized by engaging with genuine influencers interested in such activities and can carry out campaigns most effectively. Finally, don't forget to calculate influencer marketing KPIs.
There are many brand promotion avenues available today, which makes it challenging for companies to identify where they can effectively launch campaigns. . This is why influencer marketing has become such a powerful and effective marketing strategy for any social media platform. As an effective influencer marketing partner, we believe that brands must look at the ease of execution (it should be quick and cost-effective) along with high levels of engagement & authenticity - all of which will help them derive much higher value from their influencer marketing initiatives!
Challenges you see about working with influencers.
Hiring influencers can be challenging as they may charge a lot more than conventional media channels; however, the benefits derived through such activities are undeniable. Another challenge associated with this strategy is not calculating influencer marketing ROI, but this can change soon once industry experts explore ways to pitch this concept better to organizations. Finally, another issue is not identifying the right kind of influencers who are genuinely interested in such influencer campaigns - which is where research & analysis can help organizations. Influencers charge brands payment in exchange for creating sponsored content. These influencer fees are nearly always in the form of cash.
Common mistakes you see brands making with influencer marketing
Many companies follow the 'quantity over quality approach when engaging influencers for their brand promotion activities which is not the right way to go about things! Another mistake that many marketers tend to make is looking at short-term results and giving up on these initiatives just when they're starting to pick up momentum.
The biggest strength of working with influencers lies in developing ideas that can execute quickly and without any significant investment from the brand's end. You can improve your next campaign's effectiveness and run a successful influencer program for your brand through this process. However, this has always been a challenge since marketers often look at influencer marketing campaigns as another form of advertising. This is only partially true since they can engage with influencers to help them tap into their creativity when coming up with ideas for brand promotion activities. Many influencer analytics platforms are available that will allow you to translate your influencer campaign's impact, engagement, sentiment, and traffic.
The most effective industries for influencer marketing
We have seen some fantastic results from the travel industry regarding leveraging influencer marketing initiatives. While there may be several others who disagree with us, we believe this is primarily because the concept of sharing has always been associated with this industry. People are often more inclined towards reading reviews - both offline & online!
Overall, any organization looking at effective brand promotion strategies can benefit significantly by working closely with influencers. What's important is to identify the right ones and then give them a free run when coming up with ideas that can work for both of you! This step-by-step plan enables you to track your influencer campaign ROI.
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