How to Measure ROI In Influencer Marketing

Return on Influencers (ROI) 

Influencer marketing has blown up into a $17.4 billion powerhouse, with over 80% of U.S. companies jumping on the influencer bandwagon. Why? Because nothing says “authentic” like having your favorite TikToker casually drop your brand in their morning routine video. As consumers crave more real, less-polished content (thanks, pandemic!) influencer marketing has become the go-to strategy for brands looking to connect with people in a relatable way. But here’s the kicker: only 67% of brands are actually measuring their return on investment (ROI). Wild, right?

So, what is ROI aka Return on Investments? Think of it as figuring out if that pricey influencer collab is bringing in the dough, or just a lot of heart-eye emojis. Direct ROI tracks hard numbers like sales and cost per acquisition (CPA)—basically, the “did we make money from this?” kind of stuff. But don’t forget the intangible benefits: indirect ROI. We’re talking about brand awareness, customer loyalty, and engagement—the long game that builds love (and hopefully sales) over time. Knowing the difference between the two is key to nailing your influencer strategy—and who doesn’t love a win-win?

Set your goals, identify KPIs, and manifest! 

Step one in measuring ROI for influencer marketing? Setting goals and identifying KPIs. It’s like plotting your route before embarking on a road trip—unless you want to end up lost in a desert of Instagram likes with no real idea of what success looks like. Setting clear, measurable goals is key, whether you’re aiming for cold hard sales, skyrocketing engagement, or the holy grail of all things social: user-generated content (UGC).

Why UGC, you ask? Well, in today’s TikTok-crazed world, UGC is the it factor. Brands are tapping influencers to create dance challenges, quirky tutorials, and anything else that screams “authentic” (a.k.a. not overly polished). If your goal is to flood social media with content that looks and feels like it came straight from a super fan’s phone, you’re not alone—UGC is often a main objective of influencer campaigns.

Once you’ve locked in on your goals—whether it’s UGC, engagement, conversions, or brand awareness—it’s time to identify the right KPIs to measure. Want more likes, comments, and shares? Then track those metrics. Hoping to boost sales or website traffic? Time to keep an eye on conversions. By defining what success looks like upfront, you’ll know exactly which metrics to focus on, making the whole ROI tracking process way less daunting (and way more satisfying). Because let’s face it, nothing feels better than hitting your goals—except maybe that first sip of coffee after pretending to be productive all morning.

Once you’ve set your goals, it’s time to make sure you’re equipped with the right measurement tools, truth be told—if you can’t track, you can’t prove ROI (and no one wants to play a game without keeping score). This is where things like affiliate links, promo codes, and custom landing pages come in clutch. These little digital breadcrumbs help you track conversions, which is ultimately what separates an influencer who’s just creating pretty content from one who’s actually helping you sell stuff.

One of the most common ways to measure influencer marketing success is by tracking views, reach, and impressions. Sure, it’s great to see those numbers skyrocket, but in the era where even your dog’s Instagram can buy likes, it’s all about whether that influence leads to actual conversions. Shoppable features, special codes, and referral links give you the power to trace sales right back to the source—so you’ll know exactly which influencer is really making it rain.

But don’t stop at sales alone. Combine quantitative metrics like engagement rates (ER), reach, and conversions with qualitative ones like brand sentiment and influencer-audience fit. This way, you’re not just looking at numbers but also evaluating whether the influencer’s followers are vibing with your brand. If they’re loyal to the influencer but lukewarm on your product, it’s time for a rethink. Here at AP, we utilize the latest tools such as CreatorIQ to understand audience fit from a demo, geo, and niche perspective. We also manually review our creators to weed out anything CreatorIQ might have missed, nothing beats that human touch! 

Tracking tools like unique URLs and promo codes will be your best friends here. By using these, you can directly measure the impact of an influencer’s post on your bottom line. Tools like Earned Media Value (EMV) also help by giving you a dollar figure for all that press you’re getting from influencer posts and social mentions. Just think of it as calculating how much you’d have spent if you had to buy that kind of exposure—spoiler alert: it’s usually a lot!

Then there’s brand lift—this is all about how your audience feels about your brand after seeing it hyped by influencers. The frozen food retailer, Iceland Foods, saw a 70% boost in approval ratings after leveraging influencers. When people start associating your product with someone they trust–that’s influencer gold.

Of course, measuring results doesn’t stop at slapping some codes and links on an influencer post. Get deeper insights with things like social listening and pre and post-campaign surveys, though be aware these have their limitations. They won’t guarantee that everyone surveyed actually saw the campaign, but they’ll give you a decent idea of how your brand’s perception is shifting.

So, between tracking sales, monitoring engagement, and understanding brand lift, you’ll get a complete picture of whether your influencer marketing campaign was a hit or just a really expensive collection of likes and comments.

When calculating ROI for influencer marketing, understanding the impact of campaign costs and revenue is essential. Here’s a detailed overview of the methods used to measure ROI:

1. Direct Sales ROI
   Direct Sales ROI focuses on the revenue generated directly from an influencer campaign. The formula is:

For example, if your campaign generated $10,000 in revenue and cost $2,000, the ROI would be 400%

2. Return on Ad Spend (ROAS)
   ROAS measures the efficiency of your advertising expenditure. The formula is:

If a campaign cost $2,000 and generated $10,000 in revenue, the ROAS would be 5x, meaning you earned $5 for every $1 spent on the campaign.

3. Cost Per Acquisition (CPA)
   CPA calculates the cost of acquiring each new customer through the campaign. The formula is:

For example, if an influencer campaign cost $2,000 and you gained 200 new customers, you spent $10 to acquire each new customer.

4. Earned Media Value (EMV)
   EMV reflects the monetary value of the exposure gained through influencer content compared to paid media. The formula for EMV is:

For instance, if an influencer’s post generates 50,000 impressions and the CPM rate is $10, the EMV would be 500,000.

This means the earned media value of the campaign is $500k. While 80.7% of marketers view EMV as a fair measure of ROI, calculating it can be complex, making it challenging to explain to stakeholders. Complexities arise in calculating Earned Media Value (EMV) due to the difficulties in accurately estimating media impressions, determining consistent CPM rates, comparing earned and paid media, and attributing influencer impact across different platforms.

5. Indirect ROI
   Indirect ROI assesses long-term benefits such as brand awareness, customer engagement, and sentiment. Although these metrics are more challenging to quantify, they can be evaluated through:
   • Brand Awareness: Measuring increases in mentions and visibility across social platforms.
   • Customer Engagement: Tracking likes, shares, comments, and interactions with influencer-generated content.
   • Customer Loyalty: Analyzing repeat purchases and retention influenced by the campaign.

Combining both direct and indirect metrics provides a comprehensive view of a campaign’s effectiveness. By tracking conversions, engagement metrics, and conducting cost-benefit analyses, businesses can gain a deeper understanding of their influencer marketing ROI and make informed decisions for future campaigns.

Reveling in Your ROI: Why Influencer Marketing Works

You’ve crunched the numbers, and now it’s time to celebrate your ROI! Influencer marketing isn’t just a passing trend; it’s a powerhouse strategy that delivers. It connects your brand with niche audiences you might not otherwise reach, leveraging the trust followers place in influencers. This trust means they’re more likely to click and buy, much like getting a friend’s endorsement on a grand scale.

In a world where people see around 362 ads daily but remember only 12, influencer marketing cuts through the noise. With 81% of customers needing to trust a brand before buying and 77% preferring brands they follow on social media, influencers help build that essential trust. Plus, these campaigns boost brand awareness and future engagement, with 83.8% of marketers believing they attract higher-quality customers compared to other methods.

Analyze, Optimize, and Influencer-ize: Making Your Data Work for You

With your ROI data in hand, it’s time for the fun part—analyzing, optimizing, and strategizing to turn insights into action. Think of this as your influencer marketing makeover session.

Analyze Data

Start by diving into the data to uncover patterns. Are your influencers’ audiences engaging and converting in a way that makes the investment worthwhile? Don’t just focus on direct metrics; also consider indirect benefits like heightened brand awareness and positive sentiment. Sometimes these more nuanced impacts can be even more valuable than immediate sales.

Adjust Strategy

Remember, influencer marketing isn’t a “set it and forget it” gig. It requires ongoing tweaks and adjustments. For instance, the latest trend shows that 44% of brands now favor nano-influencers (1K-10K followers) over micro-influencers (10K-100K), up from 39% last year. Nano-influencers often offer a more cost-effective approach, thanks to their closer connection with their followers.

Activate and Optimize

Elevate your influencer content by integrating it into paid ad campaigns. While many ads use brand-generated content, leveraging influencer-generated content (IGC) can lead to higher engagement and conversion rates. It also provides a clearer view of ROI. Combine this with insights from your data to determine what content to promote, who to target, and which ad formats work best. This mix of paid and organic strategies can significantly boost your social media performance and maximize your ROI.

Use your data to refine and evolve your strategy. By analyzing performance, adjusting tactics, and seamlessly integrating your approach, you’ll ensure your influencer marketing efforts continue to rock the results!

The Future of Influencer Marketing and the Role of AI

As the influencer marketing landscape evolves, it’s clear that measuring ROI is becoming more sophisticated and nuanced. With the influencer marketing industry set to hit approximately $24 billion by the end of 2024, the stakes are higher than ever. Brands are increasingly turning to artificial intelligence to streamline and enhance every phase of their influencer campaigns—from discovering the perfect influencers to generating detailed post-campaign reports. In fact, 63% of brands plan to use AI for executing their influencer campaigns, with 55% focusing on AI for influencer identification. This tech infusion is not just a trend; it’s shaping the future of marketing by making processes more efficient and data-driven.

The future of influencer marketing isn’t just about leveraging influencers for direct sales. It’s also about the long-term value of these relationships. Influencers can become brand advocates, contributing to a positive reputation and sustained growth over time. Think of it like this: while a single campaign might provide a burst of value, influencer content marketing is an investment that, if done right, can build increasing value over time. Just as Red Bull’s media empire has added immense value to its brand, the right influencer partnerships can elevate your brand’s profile and credibility.

TL;DR

If you’re ready to take your influencer marketing to the next level, explore our proprietary management process and methodology at AP, and discover how our expertise can help your brand thrive in the digital landscape. Let’s gear up, embrace the tech, and make your next campaign a lasting success!

About the Author: Gow Naguleswaran, Campaign Manager

Gow joined AdParlor in 2022 as a campaign manager and is currently working on the STAPLES and Creator accounts. When he’s not fine-tuning optimization dials or overseeing an influencer campaign, Gow likes to keep an active schedule–between yoga, cooking, weight lifting, or volunteering, who knows where you’ll find him! 

Extra credit–If you’re in the Toronto area and need a good recommendation on the latest 🔥 place to eat, Gow’s your guy. He’s always on the lookout for the next best place to find some good Arancini 🧆