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Imagine running an influencer marketing campaign where you partner with the best influencers and spend lots of money, but you don’t track your results.
You wouldn’t be able to tell if your efforts were successful, and that would be totally unrewarding.
Calculating and measuring your return on investment (ROI) would help you know how well your campaign performed.
If you have no idea how to do it, start here. 👋
This guide will break down the process of calculating influencer marketing ROI.
You’ll learn:
- What a good influencer marketing ROI is
- The benefits of measuring influencer marketing ROI
- How to calculate ROI for influencer marketing campaigns
- Tips to boost your influencer marketing ROI
4 Benefits of Measuring Influencer Marketing ROI
Why should you measure your social media influencer marketing ROI?
Let’s use a practical example.
Imagine planting a seed that refuses to grow.
Every day you put in the right amount of water, expose it to sunlight, and nurture it, yet it refuses to sprout or yield fruits.
We bet that would be frustrating, to say the least.
Well, that is exactly how you would feel if you invested resources and effort in an influencer campaign without knowing what you got in return.
And that is why measuring your social media influencer marketing ROI is important.
When you measure your influencer marketing campaign’s ROI, you can:
Benefit #1: Track campaign effectiveness
Before launching an influencer marketing campaign, you must first outline your objectives.
What do you hope to gain from your campaign?
Do you want to increase sales or conversions? Do you want to create more brand awareness on social media? Do you want to generate leads?
Outlining your campaign goals will make it easier for you to track the effectiveness of the campaign.
This way, rather than just blindly paying an influencer, you can say “we pay with the expectation that by X number of weeks, we will have X number of new followers”.
Benefit #2: Adjust the campaign budget based on results
There are 5 major types of influencers;
- Nano-Influencers (1K – 5K)
- Micro-Influencers (5K – 20K)
- Mid-tier-Influencers (20K – 100K)
- Macro-Influencers (100K – 1M)
- Mega-Influencers (>1M)
As follower count differs, their prices and marketing strategies also differ.
Therefore, by measuring the ROI of influencer marketing campaigns, you can identify the most cost-effective influencers and marketing strategies for your brand.
You can also evaluate different campaigns, influencers, and content types to determine which ones generate the highest ROI.
This information can be used to optimize future investments and allocate resources more efficiently.
Benefit #3: Quantify the financial performance of your campaign
Not all metrics are financial. However, all metrics lead to financial results.
Examples of metrics that are not directly sales-related, but lead to financial results are:
- Views
- Shares
- Reach
- Reactions
- Likes
- Brand engagement rate
- Clicks
- Impressions
- Followers
- Retention
- Referrals
When an individual follows, views, shares, or contributes to any of the above metrics, there is potential in converting that individual into a customer, thereby boosting revenue.
By measuring these metrics, you can evaluate the financial impact of their influencer marketing campaigns.
Ultimately, ROI measurement helps in determining if the investment made in influencer collaborations is yielding the desired returns in terms of revenue, profit, and other financial metrics.
Benefit #4: Make data-driven decisions
In digital marketing, decisions constantly change to align with trends and meet campaign objectives.
Marketers and brand owners often ask questions such as:
“Should I change my content type from promotional to informational?”
“Should I implement more promo codes, discount codes, or loyalty reward programs in my influencer marketing strategy?”
“Should I hire micro influencers rather than macro influencers?”
Measuring the KPIs and financial metrics of your business can help you answer these questions.
You can properly identify which influencer marketing platforms, influencer posts, or influencer marketing content formats deliver the best results and make informed choices based on this information.
Now that you know all these benefits, let's explore how you can calculate the ROI of your influencer marketing efforts.
How to Calculate ROI for Influencer Marketing Campaigns
There are several factors that are involved in the calculation of ROI for Influencer Marketing.
Some of these factors include; campaign objectives, expenses, and metrics.
Each of these factors will be explained in detail below.
Step #1: Establish your campaign goals
Start by clearly defining your campaign goals and objectives.
These goals could include increasing brand awareness, driving website traffic, generating sales, or boosting social media engagement.
Ensure that your objectives are specific, measurable, attainable, relevant, and time-bound (SMART).
Specific
Always attempt to answer the 5 Ws when setting goals. These Ws are:
- Why is your objective important?
- Who is the target audience?
- What do you aim to achieve with the goal?
- Which influencers do you plan on using in your campaign?
- Where will you market your campaign? This means which social media platforms will you use (TikTok, Instagram, LinkedIn, etc)?
Measurable
This mostly answers the question “how”
- How will you track your campaign performance?
- How many influencers or content creators will you use?
- How much time would it take to achieve your goals?
Attainable
It is good to shoot for the moon when setting goals, but are those goals realistic? Are they achievable?
Despite stretching your abilities, would they be possible to attain?
Relevant
A goal that proves relevant would answer “yes” to the questions below:
- Is this the best marketing objective for my brand?
- Is this the right time?
- Will it yield results?
Time-bound
The simple question that is often attached to this is “when”
- When can I achieve this goal?
- When are the deadlines and timelines (weekly, bi-weekly, or monthly)?
Step #2: Monitor all campaign expenses
Calculate the total investment made in the influencer marketing campaign.
This includes costs associated with various categories, such as:
Influencer fees
The influencer fee is the amount of money paid to the influencer.
As previously discussed, there are different types of influencers, each with their own unique budget. Below are the different prices for Instagram:
- Nano-Influencers (1K – 5K): $10 – $50
- Micro-Influencers (5K – 20K): $15 – $110
- Mid-tier-Influencers (20K – 100K): $35 – $350
- Macro-Influencers (100K – 1M): $185 – $2500
- Mega-Influencers (>1M): average min. $1,200
Although these prices are standard, they are not fixed.
According to agreements, some collaborations and partnerships offer commissions or other forms of monetary compensation.
Production of content (if applicable)
There are different types of content creation. Depending on your campaign goals, the production of content could be expensive or affordable.
For simple user-generated content (UGC), the influencer can shoot content from the comfort of their homes.
However, for content production that requires travel, the cost of travel, food, and reservations will be covered by the brand.
Campaign management
Whether you choose to outsource your campaign management to marketing agencies or you choose to manage it in-house, there is still a cost attached.
If you choose the former, you will need to monitor the amount you pay the agency for their professional service. If you choose the latter, you need to also monitor the amount you pay your staff for their time and services.
Free products or services
Part of influencer marketing is gifting new products to the right influencers or offering them free services.
The cost of these free gifts and services should be factored in when monitoring your campaign expenses.
Step #3: Establish the right metrics to track
These could include metrics like number of followers, impressions, reach, engagement (likes, comments, shares), click-through rates (CTR), conversion rates, sales, or any other relevant data points.
For better understanding, let’s break down some of these terms.
Impressions
Also known as “ad view”, an impression is the number of times a person sees an ad, a post, a web page, or a link to your site on Google.
For instance, when you are scrolling through your Instagram handle and you see an ad on your feed or story, that counts as an impression.
This is an important metric because the more people see your brand, the more they become aware of it.
You can track the number of impressions you get when you run an ad.
The social media channels you use (Instagram, Facebook, etc), provide you with an analysis of the impressions on your page.
For web pages, the Google Analytics tool helps you measure your advertising ROI.
Reach
This is a measure of the number of people within your target audience that have seen your ad in one viewing.
This means that the reach does not increase when one viewer sees it multiple times.
Unlike impressions which can appear multiple times for an individual, reach is calculated when your ad appears once to your target audience.
Engagement
This is a measure of the overall interaction you receive on your page, which could include: likes, comments, shares, and so on.
Some techniques to improve responsiveness and interaction are:
- Contests
- Polls
- Giveaways
- Encouraging UGC (user-generated content)
- Requesting Feedback
Click-through rates (CTR)
This is the number of clicks on a link, divided by the number of times the content containing the link is shown.
Let's break it down.
Assuming you run an ad, the number of clicks on the ad divided by the number of times the ad is shown is your click-through rate.
In email marketing, if you send a bunch of emails, the number of people who open your email and click on the link in your email is your click-through rate.
Your ability to track your click-through rates will identify high performing ads, email campaigns, and social media posts.
Conversion rates
This is the rate at which a potential customer (lead), becomes an actual customer (conversion).
An example is an e-commerce website having 150 visitors on their webpage and 50 of those 150 visitors purchasing products from the website.
The e-commerce brand is said to have generated 150 leads, and 50 conversions.
The conversion rate is then calculated to be:
50 divided by 150, multiplied by 100. This equals 33.3%.
Step #4: Assign monetary value to non-financial metrics
While it is true that non-financial metrics are not directly related to money, this does not mean that they cannot be numeric or financially valuable.
When you assign a specific value or monetary figure to each metric, it becomes easier to track.
For example, if your objective is to drive sales, you can attribute a specific dollar value to each sale generated.
If your objective is brand awareness, you can assign a value to impressions or reach based on your marketing budget and industry benchmarks.
Other examples of non-financial KPIs that can be measured include:
On-time rates
This is an area of marketing that is often overlooked.
When you have a successful influencer campaign, you can calculate the percentage of time that products purchased from the campaign are delivered.
This is calculated as the number of on-time units in a given time period divided by the total number of units delivered within the same time period.
Efficiency measure
This metric is measured differently depending on the industry.
However, you can simply measure it by examining the number of signups, logins, website traffic, follower count, clicks, or general engagement on the influencer’s post.
Step #5: Invest in campaign management solutions
Analytics tools, social media platforms, e-commerce systems, and influencer marketing platforms can offer customized solutions that manage your campaign for higher ROI.
One such influencer marketing platform is Insense.
The platform’s Campaign Management features enable you to:
- Track your budget and results.
- Launch an unlimited number of campaigns.
- Match you with the right content creators and influencers.
- Plan UGC campaigns from a centralized dashboard.
- Invite teammates and grant permissions to your team.
Step #6: Calculate the campaign ROI
The formula for calculating your campaign ROI is quite simple.
It involves 2 easy steps.
Step 1:
Subtract the total investment from the generated value and divide it by the total investment.
Step 2:
Multiply the result in Step 1 by 100 to express it as a percentage.
The formula for ROI is given as:
ROI = (Value - Investment) / Investment * 100
Step #7: Adjust your strategy to improve campaign ROI
Based on your ROI analysis, you can identify areas of improvement and optimization.
Determine which influencers, content types, platforms, or targeting strategies generated the highest ROI.
Use these insights to refine your influencer marketing strategy for future campaigns.
Knowing how to calculate the ROI of influencer marketing campaigns is the first step.
A second and equally important step is recognizing when you have a good ROI, and when you don’t.
Keep reading to find out what a good ROI on influencer marketing is.
So, What Is a Good ROI on Influencer Marketing?
Before breaking down the mathematical complexity, keep in mind that a good ROI is subjective.
This means that the definition of a “good” ROI is dependent on factors such as your industry, external variables, and the circumstances of use.
For instance, brands with saturated markets might require larger marketing budgets to help them run campaigns that ensure they stand out.
The ROIs on these campaigns tend to be much larger in comparison to a smaller campaign with low production costs.
Having said this, the standard ratio for a good influencer marketing ROI is 5:1.
In simple terms, it means you are making $5 for every $1 spent.
Keep in mind that $5 is not your profit, it is your income. The profit you gain is the amount left after deducting all expenses from the $5.
For this reason, an ROI of 2:1 is considered poor, because when you deduct all expenses, the ratio would reduce to 1:1.
In contrast, an ROI of 10:1 is considered to be excellent because even with all deductions and expenditures, you would still make a valuable profit.
The question now is, “how can you get a higher influencer marketing ROI?”
4 Tips to Get Higher Influencer Marketing ROI
Everyone wants to increase their ROI ratio from 5:1 to 10:1.
This means better sales, better income, and more importantly, better profit.
To do this, we have outlined four major tips to help you get higher influencer marketing ROI.
Tip #1: Test and optimize different strategies
Continuously test different strategies, influencers, content formats, and messaging to find what works best for your brand and target audience.
Experiment with different types of collaborations, campaign durations, or creative approaches.
Collect data, analyze results, and make data-driven decisions to optimize your campaigns over time.
Tip #2: Partner with micro-influencers
According to statistics, micro-influencers generate up to 60% more engagement than macro influencers.
As macro influencers have more followers, you might wonder “how is this possible?”
Well, the fewer the number of followers, the more people perceive influencers to be authentic.
It is easier to relate to someone when you feel they are like an average everyday person, and not some big-time celebrity.
When you collaborate with these micro-influencers, your brand automatically receives more engagement, at more affordable rates.
Tip #3: Stay up to date with industry trends
Stay updated on the latest trends, changes in algorithms, and emerging platforms in the influencer marketing space. This is called social listening.
This knowledge can help you adapt your strategies, explore new opportunities, and stay ahead of your competition.
Also, industry trends can help you know which objectives to tweak, what new metrics to measure and how to collaborate more effectively with influencers.
Tip #4: Prioritize content authenticity
Encourage influencers to develop genuine and authentic content that resonates with their audience and maintains their unique voice.
You can do this by allowing them a certain degree of creative freedom, offering them tailored products, and helping them understand your product better.
Authenticity builds trust and credibility, leading to higher engagement and better campaign results.
Now that you have learned four valuable tips to enhance your influencer marketing ROI, it is time to put them into action.
Over to You
Having armed yourself with the knowledge to calculate and boost your influencer marketing ROI, the success of your campaigns now lies in your hands.
This is the best time to practice and put the knowledge to good use.
Begin by setting your objectives and testing and optimizing different marketing strategies to find the best fit for your brand.
Still trying to figure out how to manage your influencer campaigns?
Sign up with Insense! We’ll show you the ropes.
