How to Measure the ROI of Influencer Marketing in Business?

Marketing BY Soumava Mar 03, 2024
How to Measure the ROI of Influencer Marketing in Business

A few years back, many marketers became cynical about influencer marketing. They complained that customers were getting weary of sponsored posts and videos. Hence, the ROI of influencer marketing campaigns became difficult to track. However, these headlines became irrelevant as influencer marketing continued to grow with time. Furthermore, in the next few years, influencer marketing will continue to grow.

In this article, you will learn how to find the return on investments (ROI) of influencer marketing for your business. Furthermore, this article will also show you how to measure the success of your influencer marketing campaigns and determine the cost of your campaigns. Apart from that, you will also learn about various tools and techniques that are helpful in calculating influencer marketing ROIs. Hence, to learn more, read on through to the end of the article.

What is ROI in Influencer Marketing?

As marketing methods are continuously evolving, influencer marketing has become one of the most effective ways for brands to promote themselves. Furthermore, with the popularization of social media platforms like Instagram, TikTok, etc., brands started to integrate their eCommerce efforts with user-generated content.

According to Forbes, “Influencer marketing is a relationship between a brand and an influencer. The influencer promotes the brand’s products or services through various media outlets such as Instagram and YouTube. Not to be confused with celebrity endorsements, influencer marketing does more than just attach a well-known celebrity to a brand. Influencers must be trusted figures within a niche community and retain a loyal following.

Hence, it becomes essential to monitor the ROI of influencer marketing campaigns. Furthermore, it becomes more crucial to find the ROI since the algorithms of social networking platforms are continuously changing.

What is the Importance of Measuring ROI in Influencer Marketing?

Numerous studies show that influencer marketing is growing at an impressive rate and helps businesses generate an impressive return on investments (ROI).

According to Convince & Convert, “On average, businesses generate $6.50 in revenue for each $1 invested in influencer marketing. 70% make $2 or more, and 13% make $20 or more. Most businesses get solid results from influencer marketing, with just the bottom 18% failing to generate any revenue.

Although influencer marketing generates attractive statistics for businesses, it is challenging for marketers to calculate ROI. This is because, in general, influencer marketing depends on a variety of short-term and long-term goals. The main focus of influencer marketing is to drive brand awareness among the target audience. This is one of the most difficult aspects to measure when it comes to marketing.

The following are some of the major aspects that you need to learn about influencer marketing ROI:

  • To calculate the ROI of influencer marketing, you must know that there is no one-size-fits-all. Here, the goals and the stage of the business impacts the campaign.
  • ROI does not depend solely on the short-term goals and immediate sales of the business. Businesses need to have a good idea of the Key Performance Indicator (KPI) and also the overall impact of the campaign.

Impact of Influencer Marketing Campaign

According to Sprout Social, “An influencer whose audience matches your target market introduces your brand to untapped customer segments, thus enhancing brand awareness. This authentic promotion attracts attention to the brand’s content, products and services, and can lead to higher conversion rates and direct traffic increases.

The following are some of the major impacts an influencer marketing campaign can have on your business:

  • It helps to increase your brand awareness.
  • You can build your brand authority with the help of influencer marketing.
  • Influencers help in creating better content for your brand.
  • You can improve the SEO performance of your brand on search engines.
  • There is better customer engagement with influencer marketing.
  • You can have access to a niche audience, and hence you can amplify your reach with the help of an influencer.

What is the Cost of Influencer Marketing?

The cost of influencer marketing will depend upon individual influencers. Basically, the more popular an influencer is, the more price you might have to pay. It works mostly like celebrity endorsements. Furthermore, you cannot know about rates in general, as they are mostly confidential and depend on the asking price of the influencer subject to negotiation.

Factors that Influencer the Cost of Influencer Marketing

The following are some of the major factors that influence the cost of working with influencers:

  • Popularity of the influencer
  • Follower-base of the influencer
  • The willingness of the influencer
  • Audience demographics
  • The creativity of the influencer
  • Long-term goals of the influencer

General Costs of Working with Influencers

Here are some of the major costs of working with influencers on various platforms:

Instagram

  • Nano-influencers – $10 – $100 (for every post)
  • Micro-influencers – $100 – $500 (for every post)
  • Mid-tier influencers – $500 – $5,000 (for every post)
  • Macro-influencers – $5,000 – $10,000 (for every post)
  • Mega-influencers – $10,000+ (for every post)

TikTok

  • Nano-influencers – $5 – $25 (for every post)
  • Micro-influencers – $25 – $125 (for every post)
  • Mid-tier influencers – $125 – $1,200 (for every post)
  • Macro-influencers – $1,200 – $2,500 (for every post)
  • Mega-influencers – $2,500+ (for every post)

YouTube

  • Nano-influencers – $20 – $200 (for every post)
  • Micro-influencers – $200 – $5,000 (for every post)
  • Mid-tier influencers – $5,000 – $10,000 (for every post)
  • Macro-influencers – $10,000 – $20,000 (for every post)
  • Mega-influencers – $20,000+ (for every post)

How to Measure the Success of Influencer Marketing Campaigns?

The following are some of the major factors that you need to consider to measure the success of influencer marketing campaigns:

  1. You can measure brand awareness by tracking your reach and impressions of your influencer marketing campaigns.
  2. Most marketers track social media metrics (likes, comments, and shares). This can show how the posts of your brand are resonating with your target audience.
  3. If the number of social media followers of your brand is growing, then it shows the success of your influencer marketing campaign.
  4. Check your brand mentions on social media and elsewhere. It shows how many people are discussing your brand online. If there is a rise in mentions for good reasons, then consider it a success.
  5. There are various tools you can use to compare your brand presence against your competitors in the market. Here, you need to compare the metrics of your brand against the total metrics of the market.
  6. Check how much website traffic you can generate through social media posts, especially with the help of the influencer you are working with.
  7. Check for conversions (rise in sign-ups, sales, use of promo codes, etc.).
  8. Your search interest on social media and search engines will also increase if your influencer marketing campaign is successful.

All these factors will lead to a rise in revenue for your brand and will ensure your brand becomes popular in the marketplace.

Measuring the ROI of Influencer Marketing

By measuring the ROI of your business’s influencer marketing campaigns, you can assess their effectiveness.

Formula to Calculate the ROI of Influencer Marketing

The following are some of the major factors that you need to calculate before you calculate your ROI:

Formula to calculate leads:

Leads = Number of audiences reached x Rate of engagement

Formula to calculate conversions:

Conversions = Number of leads x Rate of conversion

Formula to calculate revenue:

Revenue = Number of conversions x Average value of order

Formula to calculate ROI (percentage):

ROI% = (Revenue – Total Cost of Campaign) / Total Cost of Campaign

Wrapping Up

Hope this article was helpful for you to understand how to calculate the ROI of influencer marketing. You can see that there are a variety of factors that influence the cost of your campaign, and your ROI depends on it. Hence, to determine the success of your campaign, you must consider these factors.

Frequently Asked Questions (FAQs):

The following are the most common questions on calculating the ROI of influencer marketing campaigns:

How to Calculate the ROI of Influencer Marketing?

The formula to calculate the ROI of influencer marketing is:

ROI% = (Revenue – Total Cost of Campaign) / Total Cost of Campaign

How to Measure the ROI of Influencer Marketing?

To measure the ROI of an influencer marketing campaign, you need to have the value of the following:

  • Number of audience
  • Rate of engagement
  • Rate of conversion
  • Average order value
  • The total cost of the campaign

A passionate writer and an avid reader, Soumava is academically inclined and loves writing on topics requiring deep research. Having 3+ years of experience, Soumava also loves writing blogs in other domains, including digital marketing, business, technology, travel, and sports.

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