As the creator economy became popular in the last couple of years, there have been a lot of discussions about influencer marketing ROI. Almost everyone agreed that compared to other digital marketing channels, influencer marketing had a good ROI. In 2019, marketers enjoyed almost $5 returns on every dollar invested and the number has steadily increased over the years.
But initially, most marketers struggled with measuring ROI on their campaigns. And many even struggled with deciding which metrics to measure. The industry was very young and marketers and brands were experimenting with many approaches to figure out what worked and what didn’t.
Now the results are in - ROI is very much important. But at the same time, it's not the only important metric. Let’s have a look:
Why is influencer marketing ROI becoming more important?
ROI of influencer marketing is probably one of the most common metrics used to measure success in the creator economy. It was easier for everyone to understand; a simple number conveyed to both the stakeholders and marketers if a strategy was working or not.
While calculating influencer marketing ROI was not easy and involved a lot of manual processes, it served as a key selling point for brands. It showed that companies are actually making money and not just creating a lot of hype or excitement. In the next couple of years, the importance of ROI on influencer campaigns is only going to go up. Here are three reasons why:
Influencer marketing campaign costs are going higher
Building an influencer campaign was never cheap. In the beginning, marketers relied solely on major social media influencers who charged thousands of dollars per post. The situation has changed a bit of late with more brands being open to micro and nano influencers who charge way less. But the costs add up when a brand engages more influencers to reach larger audiences.
Being an influencer has also become a serious full-time business and not just a hobby or a side hustle. Creators are putting significant time to build their brands, creating content, and engaging with their audience. And they expect to be compensated accordingly. This is also contributing to the increasing costs of influencer marketing.
Brands are cutting down on influencer marketing efforts due to the recession
In the last couple of months, we have seen some of the biggest brands in the world announcing major layoffs expecting a recession. As these brands tighten their budgets, their ripple effects can be seen in smaller businesses as well. When businesses try to cut down on their expenses, marketing spend will be the first ones to be impacted.
Most companies often view marketing as a luxury or unnecessary expense and are likely to limit influencer marketing budgets to a minimum during a recession. If marketers cannot justify their marketing budget or showcase a positive ROI, they will be the first to experience budget cuts.
Pressure on marketers to show results from influencer marketing campaigns
Aside from budget cuts and recession, marketers are under more scrutiny to demonstrate the results of their marketing investment. It’s not enough to just pick a couple of influencers, create content, and get a lot of likes and comments. More companies are demanding marketers show real business value from their campaigns.
These trends are reflected in how marketers are approaching influencer marketing. Instead of a flat rate per post or video, more brands are offering creators compensation based on performance metrics such as reach, impressions, and other metrics. This has also prompted an increased interest in ROI in influencer marketing.
How can brands define influencer marketing metrics?
Influencer marketing has a lot of moving parts and it's complicated to compute the ROI. It is the sum of all investment that goes into a campaign compared to all the returns. It’s not easy to collect all of this data and compute an ROI. Besides, ROI may not always be the best metric.
Brands need metrics other than ROI to get better results
To better drive their campaigns, marketers have to define metrics that closely reflect their goals with the campaign. For some campaigns, the goal may be simply to raise awareness about a product or a service, for some it may be about improving the brand perception, and for some, it may be driving sales. Marketers will need a different marketing strategy for all of these goals and they cannot rely on the same metrics for different campaign goals. Let’s have a look at some of the key performance indicators marketers can use to drive specific results:
Metrics to drive sales:
Cost per action or CPA: Cost per action or CPA is commonly used to measure what an affiliate marketer gets paid for a certain action a customer does. It could be selling a product, but it could also be filling up a form, signing up for a newsletter, or even just going to a website. In the creator economy, CPA could be the cost associated with an individual liking your posts, following your brand on social media channels, or buying your product.
Total conversions: The total conversions could be the number of people taking an action or rather being converted to a sale. Instead of comparing it with the associated costs, conversions consider just the number of sales.
Total revenue: If you’re promoting multiple products, packages, or services, it may not make much sense to track conversions alone. The total revenue considers all the revenue generated from a campaign.
For brand awareness:
Reach and impressions: Reach is the number of people who have seen your content while impressions are the number of times it was shown on a screen. Reach considers only individuals; if someone saw the same content twice it won’t count toward reach. But impressions go up every time someone sees it on their screen.
Traffic to the website: Web traffic is the number of people going to your website after seeing a piece of content. If the platform lets marketers use specific tracker URLs or promo codes or shows the number of people going to their website, this would be a good metric. If that is not possible, it may be better to track the increase in traffic using Google analytics or similar tools.
For improving brand sentiment and loyalty:
Engagement metrics: It’s not easy to put a number on how your audience or customers feel about your brand. But analyzing the comments and posts and other consumer engagement on social media and other corners of the internet should give you a fairly good idea of how customers perceive your brand or company. There are some tools that let influencer marketers keep track of sentiments towards their brand across the internet.
What’s considered a good influencer marketing ROI?
While the ROI has certainly gone up from $5 for every marketing dollars spent, the fact is there’s no accurate figure on average ROI for an influencer marketing campaign. This is because marketers are exploring other metrics to drive campaigns and monitor them in real-time, but at the same time showcase the results accurately.
There’s also the fact that there are different strategies and approaches to marketing with creators and ROI expectations can change accordingly. For instance, working with mega influencers may create an inflated sense of expectations of ROI for an influencer marketing program.
Best tools to measure influencer marketing ROI
There are many influencer marketing platforms that can help track campaigns and metrics. Here are some of the top ones that can help marketers measure ROI of influencer marketing:
Modash is a popular marketing tool that has a lot of campaign tracking features. It can offer granular data at a per-influencer level. It can keep track of likes, comments, and other metrics of various campaigns to report to clients and to base the next campaigns on. The platform also has a set of tools to automatically keep track of campaign ROI and other metrics.
Keyhole is a powerful influencer marketing platform that promises to help marketers avoid screenshots. Besides tracking metrics for your own campaign, the platform also offers a wealth of data on top creators on social media platforms and helps you choose creators best suited for your brand. Keyhole lets you track campaign metrics to individual influencers and figure out how much they contributed to campaign success.
Aspire is a popular influencer marketing tool that offers a complete spectrum of solutions to manage your campaigns. It lets you discover influencers based on your brand’s needs, collaborate with your team, and track your campaign metrics. Its tools enable marketers to use performance-based payments for their influencer collaborations. It can help marketers keep track of conversions due to different creators and offer payments accordingly.
Klear has a wide range of marketing tools and its campaign trackers let marketers keep track of their promotion metrics. The platform offers real-time data into posts and promotions on various platforms and automatically calculates ROI. The solution collects all the content and related data from a particular campaign and uses its proprietary algorithm to calculate the influencer marketing ROI.
CreatorIQ is a 360° solution for managing influencer marketing campaigns. The platform has a powerful set of tools that lets marketers find creators, customize campaigns and metrics based on goals, and use the goals to drive content and strategy.
Boost your influencer marketing ROI with Phyllo
Granular creator data is crucial to take your influencer marketing ROI to the next level and that’s exactly where Phyllo comes in. Phyllo offers authenticated and public influencer datafrom all the major social media platforms through a single API. Our solution can help reduce your GTM time and maintain your tech stack with minimal overheads.
With Phyllo, you can focus on building your solution and creating your own USP without worrying about building data collection systems.
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