February 21, 2022

How to Measure ROI On Influencer Marketing Campaigns

We hear it all the time: "I just don't see a positive return from influencer marketing campaigns."

We don't necessarily disagree, either. Most who are just testing the waters with influencer marketing likely won't see the direct impact of their partners' campaigns. But, that doesn't mean it's not there.

Indeed, you'll most likely see a lower CPA on your Facebook ads campaign than you will on your influencer campaign. The total value of influencer marketing can't be measured by dollar signs or neatly summarized in a performance report. That doesn't mean there isn't a way to demonstrate return, though.

We're here to break down how brands can measure ROI from influencer marketing campaigns.

The lifetime value of a customer is higher with influencer campaigns

Even the top-performing influencers won't cost less than your highest-performing ads, but they have far more branding power. An ad will sell your product better than an influencer, but an influencer will sell the brand better than an ad.

For example, if you see an ad from J.Crew for a dress on sale, you might tap through and purchase that dress. But if an influencer you trust posts multiple times about how much they love J.Crew clothing during a try-on haul featuring that dress, something else will likely happen. You may buy that single dress, but you'll also be more likely to continue shopping at J.Crew on a regular basis, just like your favorite influencer.

Influencer campaigns are comparable to cold traffic prospecting ads

Any good advertiser knows that the warmer the audience is, the higher the conversion rate. Influencers are like a cold traffic prospecting ad that warms your target audience up for a bottom-of-the-funnel conversions ad. Neither cold traffic nor conversions ads are highly profitable when they stand alone, but collectively, they're the backbone of any successful ad campaign.

Both cold traffic prospecting ads and influencer campaigns are necessary to prime the audience and warm them up for conversions ads. Both generate a lower ROAS than conversion ads do, but they're essential for conversion ads to be profitable.

So how do you measure the ROI of influencer campaigns?

There's no perfect method to determine the true value of an influencer partnership, but there are a few ways to put a dollar value on campaigns:

  • The Media Value of reach and impressions, based on your established blended average CPM.
  • The lift in traffic or purchases/signups the day of an influencer's post. Not every person will click a link to purchase - some will navigate to the brand's profile and shop there, some may move from mobile to desktop if it feels more native to them - so that boost you're seeing likely won't be a coincidence.
  • Break down your campaign budget in a way that takes into account the branding value: Consider 50% of the influencer's payment for branding/brand awareness while the other 50% of their payment is the amount you use to determine your ROI based on attributed sales. For example, if you work with an influencer for $30K, assume that $15k of that amount is brand awareness efforts and the other 15k for advertising the product. If you generated $30K in sales from their campaign, then your ROI would be 2x.

On a final note, we've worked on influencer campaigns big and small and speak from experience when we say influencer marketing campaigns are profitable and should be part of every good social media marketing strategy. While key performance indicators like brand awareness, brand recognition, and brand loyalty aren't as easily quantifiable as KPIs like profits and return on ad spend are, they're equally as essential to the growth of your brand.

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