A Complete Guide to measure and maximise Influencer Marketing Campaign ROI

May 21, 2024
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Peter Nettesheim
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A Complete Guide to measure and maximise Influencer Marketing Campaign ROI

The global influencer marketing market size has more than tripled since 2019 and it doesn’t show any sign of slowing. In 2024, the market was estimated to reach a record of 24 billion USD (Source: Statista). In fact if you consider the entire ecosystem often referred to as the creator economy the total addressable market is expected to roughly double in size over the next five years to $480 billion by 2027 from $250 billion today (Source: Goldman Sachs Research).

This significant growth attracts businesses in all sectors looking to capitalise on this trend. 60% of marketers plan to increase their budget allocated to influencer marketing. On average brands earn $5.78 for every dollar invested in influencer marketing, some seeing returns as high as $20 for every $1 spent. 

However, although all these numbers look amazing, influencer marketing is also one of the most operational forms of advertising as it requires a brand to coordinate relationships, campaigns and work with a lot of different people at the same time. This challenge is at the same time an opportunity for brands which are willing to put in the work and identify creative ways to maximise ROI. In this article we will go through all the best practices to measure and maximise influencer marketing ROI for your next campaign. If you follow the steps outlined in this article it will maximise your chance of success.

4 Key Steps to maximising influencer marketing success

Influencer Marketing Key Performance Indicators (KPIs) are specific metrics used to evaluate the success and impact of influencer-driven campaigns. These KPIs help brands determine the effectiveness of their partnerships with influencers and measure various aspects such as brand awareness, audience engagement, and return on investment (ROI). By carefully monitoring these metrics, brands can gain valuable insights into their campaign performance, refine their strategies, and ensure that their marketing efforts resonate with their target audience, ultimately driving both short-term and long-term business goals.

If you need to report the impact of your influencer campaign you can access our free influencer marketing reporting template trusted by hundreds of influencer marketers. 

Most important categories for Influencer Marketing KPIs

  1. Understanding influencer marketing ROI
  2. The importance of measuring influencer marketing ROI
  3. Different categories to measure influencer marketing ROI
  4. How to maximise influencer marketing ROI

1. Understanding influencer marketing ROI

Influencer marketing ROI refers to the return on investment gained from campaigns involving influencers who promote a brand's products or services. It measures the effectiveness and profitability of these collaborations by comparing the financial returns to the costs incurred. This ROI includes various metrics such as increased sales, enhanced brand awareness, and improved social media engagement. Ultimately, it helps businesses evaluate whether their influencer marketing strategies are yielding favorable outcomes and justifying the expenditures involved.

2. The importance of measuring influencer marketing ROI

In order to improve your influencer marketing ROI you have to measure it. As the saying goes, what gets measured gets done. Without proper tracking in place it is very difficult to understand the true impact of your influencer marketing efforts which is required to maximise your influencer marketing ROI.

3. Different categories to measure influencer marketing ROI

Conversions in the context of influencer marketing refer to the desired actions that consumers take as a result of engaging with an influencer's content. This can include purchasing a product, signing up for a newsletter, downloading an app, or any other measurable action that aligns with the campaign's goals. Measuring conversions helps brands assess the effectiveness of their influencer partnerships in driving tangible business outcomes, ensuring that their marketing efforts lead to meaningful and profitable consumer behavior. 

1. Conversions

At the end of the day all marketing activities come down to one thing which is sales. As this is the metric which impacts your business most, let's start with the most bottom of the funnel ROI metric.

Technologies to use to measure influencer conversions

Affiliate links

Affiliate links are a powerful method for tracking clicks and conversions. For optimal results, create custom links for each influencer to accurately monitor the number of clicks they generate and the resulting conversions. Typically, affiliate links place a cookie in a prospective customer's browser, allowing the conversion to be tracked even if the order is placed at a later stage. This enables precise measurement of each influencer's impact, facilitating better ROI analysis.

Personalised voucher codes

Custom voucher codes are another effective method for tracking conversions. Ideally, share a unique voucher code with each influencer, enabling you to attribute each conversion directly to the corresponding influencer. This approach allows for precise measurement of each influencer's contribution, enhancing your ability to assess the effectiveness of your influencer marketing efforts.

Industry average attribution rate in influencer marketing:

Now what is important to understand when using these technologies is that as with all things digital marketing attribution is never 100%. Based on various international expansion campaigns we managed for clients where we set up a brand new Shopify store and the only channel active was influencer marketing (using affiliate links & discount codes) we know that:

The industry average attribution rate is around 70%.

Use influencer marketing platforms to track conversions & clicks

Influencer marketing platforms often integrate the capability to create affiliate links and discount codes directly from a centralised CRM. Allowing you to also automatically process payments to influencers. Some examples of such influencer marketing platform are: 

  • Influencer Hero 
  • Grin 
  • Upfluence 
  • Aspire 

Access our top10 influencer marketing platform comparison article here. 

When measuring conversions it is important as a marketer to analyse different influencer marketing KPIs. Some important KPIs to analyse when measuring influencer marketing ROI are: 

  • Return on ad spend - ROAS 
  • Customer acquisition cost - CAC 
  • Customer lifetime value - CLTV 
  • Average order value - AOV 
  • Conversion rate - CR 

Read a detailed explanation of all the important influencer marketing KPIs in our detailed article on this topic here

2. Brand awareness

Brand awareness refers to the extent to which consumers recognize and recall a brand, its products, or services through the endorsements and content shared by influencers. Leveraging influencers with a strong, engaged following can amplify a brand’s visibility and credibility, creating a lasting impression on potential customers and driving higher engagement and recall rates beyond traditional advertising methods.

Below are some of the KPIs you should measure for brand awareness 

  • Number of impressions 
  • Cost per mille - CPM 
  • Total reach 
  • Follower growth 

3. Engagements

A more tangible impact on ROI are engagements. The reason this is considered a middle of the funnel KPI is due to the fact that the people took tangible actions to interact with your brand in some form or another. 

Below are some of the KPIs you should measure for engagements

  • Likes
  • Comments 
  • Shares & saves
  • Brand mentions 
  • Click through rate - CTR 

4. Content

One of the things which is often difficult to quantify when working with influencers is the value of the content they create. The most successful brands reuse the content on multiple levels. Below are some examples how influencer content / UGC can be reused: 

  • Paid social 
  • Organic social 
  • Website 
  • Newsletter 

One effective method brands are increasing their effectiveness for their paid social is a technique called influencer whitelisting where brands run the ads through the influencers account leading to more authentic advertising. Read our full article on how to partner with influencers for whitelisting here. 

Influencer marketing platforms like Influencer Hero automatically capture all influencer content which you can easily download through a content library to be reused. 

4. How to maximise influencer marketing ROI

Now that we know how to effectively measure influencer marketing ROI let's get to the solution to maximise your influencer marketing ROI. 

1. Define a Strategic Alignment of Objectives

First off, the foundation of any successful influencer marketing campaign lies in aligning brand objectives with influencer goals. Hence, before diving into partnerships, it’s crucial for D2C brands and marketers to define clear and measurable objectives, whether it's increasing brand visibility, driving website traffic, or boosting sales. Consequently, by establishing shared goals with influencers, brands can ensure that the campaigns are strategically aligned, leading to higher ROI.

2. Find the right influencers to work with

Once your campaign objective has been clearly defined the next step is to find the right influencers to partner with. Whether we like it or not, one size does not fit all when it comes to influencer marketing. Hence, D2C brands should prioritize audience relevance over reach when selecting influencers for collaborations. So, instead of focusing solely on follower count, the best option is to delve deeper into influencer demographics, engagement metrics, and audience interests to ensure an efficient alignment with your target audience. This way, by partnering with influencers who resonate with your brand's target demographic, you can drive higher engagement and conversions, ultimately leading to increased ROI.

When finding the right influencers there are a lot of metrics to analyse. As this would be a complete post on its own we would like to refer to our research paper where we analysed over 10K commercial influencer posts to determine which metrics correlate with conversions. To access our article on which metrics to analyse when working with influencers click here. 

3. Choose Authenticity over Advertisement

In an age of ad fatigue, authenticity reigns supreme in influencer marketing. That is why D2C

brands must prioritize genuine endorsements and authentic storytelling instead of overtly promotional content. Let’s face it; consumers crave authenticity and are more likely to engage with content that feels genuine and relatable. So, by choosing to partner with influencers who authentically align with their brand values, D2C brands can build trust, credibility, and loyalty, eventually driving higher ROI.

4. Maximising influencer marketing impact and reducing cost

Once you have identified the right influencers you will still need to go through the process of identifying your performing influencers. Let's take a step back and understand the following. Your influencer marketing ROI consists of two parts. 

  1. Marketing impact such as sales, brand awareness and engagements 
  2. Marketing cost such as influencer compensation, product cost and shipping 

This means that there are two ways to maximise influencer marketing ROI. 

  1. Increase the marketing impact 
  2. Reduce the marketing cost 

Continue reading as we will analyse how to improve both to reap maximum results. But first we need to understand the underlying metrics when it comes to influencer marketing.

Unit economics and performance distribution of influencer marketing

In order to understand how to maximise your influencer marketing ROI it is important to know the unit economics and performance distribution of influencer marketing. 

We frequently refer to the 80/20 principle when talking about the performance of influencer marketing. It would be great to know in advance which influencers can sell a lot of products right? Unfortunately, it doesn’t work this way. You will need to go through the process of “testing influencers” in order to identify the ones which perform well. The problem and the reason why a lot of brands fail is because they don’t understand the strong power law distribution involved in influencer marketing.

The 80/20 principle often becomes more profound where typically around 5-10% of the influencers you work with generate over 80% of your revenue.

Based on this principle let's take a look at the two components which we can influence to improve influencer marketing ROI. 

1. Reduce marketing cost

Based on the performance distribution outlined above you can lose money quite fast if you start to offer fixed payments to all the influencers you work with. This is why we recommend in the earlier stages to start with affiliate & gifting campaigns where you “test influencers”. 

Note: it is important to note that this is for performance driven influencer marketing campaigns only. If your main objective is to create high quality content which you can re-use this strategy is less suitable. 

We typically break down your influencer program into 2 central elements. 

  1. Influencer testing 
  2. Relationship building 

In essence what you are trying to do is keep your cost low when identifying high performing influencers. As explained earlier you ideally want to use an affiliate link and personalised voucher so you can track the performance. By offering a free product and an affiliate % you can reduce cost which will have a positive impact on your ROI. 

2. Increasing marketing impact

The 2nd element would be relationship building. Once you identify your performing influencers, welcome them to your brand ambassador program and make sure to invest in these relationships. These are the influencers which will carry the overall performance of your influencer program. You can access our detailed article explaining the two most important elements of an effective influencer marketing program here

To maximise your influencer marketing ROI organise seasonality campaigns with your performing influencers. A seasonality campaign is simply a special promotion during the retail calendar. Influencers can be an effective way to announce your promotion and now that there is a “reason to buy” this can lead to enhanced conversions. To read more on how to organise these seasonality campaigns you can access our full article on this topic here. 

To read more on how to maximise ROI with performing influencers read out full article on this topic here. 

Influencer Hero provides an effective CRM through which you can effectively manage and organise all your influencer relationships which is crucial when running campaigns at a larger scale.

5. Persuasive communication

At the end of the day it all comes down to persuasive communication. When working with influencers, effective negotiation is key. Make sure to always negotiate based on data which is why measuring your influencer marketing ROI is so important. By using affiliate links and discount codes you can allocate budgets based on past performance and you know what budgets you can allocate to be profitable. Convincing influencers to work with you with limited resources means that you need to be persuasive in your negotiation. We outline this process step by step through this influencer workflow chart and our influencer communication templates which you can access completely for free. 

6. Reuse the user / influencer generated content / UGC

In order to fully maximise the value you get out of influencer marketing make sure to reuse the content created by the influencers. As mentioned previously some of the ways to reuse the content is:

  • Paid social 
  • Organic social 
  • Website 
  • Newsletter 

You ideally want to reuse the content as much as possible as UGC serves as social proof, validating your brand's value proposition and fostering trust among consumers. By leveraging UGC in marketing campaigns, D2C brands can amplify their reach, drive engagement, and ultimately, achieve higher ROI.

Conclusion

In conclusion, influencer marketing offers significant growth potential and impressive ROI, but success requires the right strategies and measurement. By effectively tracking key metrics such as conversions, brand awareness, and engagement, brands can optimise their strategies for greater impact. Utilizing affiliate links, personalized voucher codes, and influencer marketing platforms streamlines the measurement process and enhances accuracy. Furthermore, maintaining a balance between marketing impact and costs, and focusing on building relationships with high-performing influencers, are crucial for maximizing ROI. Embracing these best practices can propel your influencer marketing campaigns to new heights, ensuring long-term success and profitability.

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