How is ROI measured in influencer marketing?

One of the most important ratios to measure in influencer marketing campaigns is the ROI, “Return On Investment”.

Sounds simple, right? The question is, why do we use this in influencer marketing?

ROI serves as a principal indicator of campaign performance when measuring and evaluating results. Campaigns that have revenue related objectives must take into consideration the brand conversion funnel and the total impact of the campaign. In other words, all the earned media variables which are related to visibility and brand awareness objectives.

In influencer marketing, it’s important to measure and evaluate the results achieved through each social network, such as the quality of the interactions, in order to see if the return has been positive or negative.

Why is it so useful and important?

ROI is the ideal KPI for measuring a campaign strategy’s profitability and results, and it’s easy to work out through the use of a simple formula.

Thanks to ROI, we can see how much return is generated per euro invested in the campaign.

It’s essential to calculate the return of each marketing campaign in order to know which investments are worthwhile for future campaigns, as well as determining which medium is best to use when creating campaigns.

For example, according to Hubspot, email marketing has a ROI of 4,300%, a very high percentage which ought to be taken into consideration when elaborating campaign strategies.

Why do we need it and how do we calculate it?

ROI is used to see if a campaign’s return has been positive or negative. In other words, has the campaign proved profitable or has the brand lost money.

The following formula is used to calculate the ROI:

ROI = (Profit – Investment / Investment) x 100

The profit corresponds to the campaign results generated by the content posted, taking into account the interactions and the quality of each social network profile.

The investment is the total amount invested in the campaign by the brand.

To interpret the data generated from the campaign and work out the ROI, we must look at the following data: each euro invested in the campaign and the campaign’s return.

How can we apply it to marketing strategies?

The formula is simple. Here’s a real-life example of how it’s applied to an influencer marketing campaign:

A company that sells tickets for concerts, sports events and musicals wishes to launch an influencer marketing campaign. Their objective is to increase brand awareness and increase their platform’s visibility in order to impact as big an audience as possible. Our proposal is the following:

• Campaign investment: 5,000€
• 5 influencers (who match the event’s target audience): 100K followers (reach)
• 2 social networks: Instagram and Twitter
• 4 publications per influencer
• Total publications: 20

Each influencer will post a total of 4 publications in which they’ll share information, create a buzz and raise awareness of the event, as well as facilitating the purchase of tickets. Each influencer will be assigned a specific discount code for the concert.

Once the campaign has finished, the data will be measured. The overall profit from this campaign was 15,000€, thanks to the sales generated through:

• The number of discounts codes used and tickets bought by the influencers’ audiences.

The campaign’s profit is measured by the intangible value of the content created by the influencers, which is translated into the following data:

• The content value which is created by the diffusion of the publications.
• The quality of follower interactions, such as likes, comments, shares and mentions for each post.
• The campaign reach: 500K
• The increase in web traffic (20% increase in weekly visits)

All of this data falls under the category of Earned Media, which we’ll be taking a look at in future posts.

If we take into account the investment made in this campaign, as well as the profit generated, and we apply the formula, we get the followings results:

(15,500€ – 5,000€ / 5,000€) * 100 = 210%

That means that for every euro invested in the campaign, they received a return of 2.10€, a positive result, meaning the campaign was profitable and a total success.

The importance of influencer marketing and the optimisation of campaign ROI

Thanks to ROI, we can make decisions that can help us improve campaign strategies.

Quite often, campaigns don’t receive the desired return. Sometimes external factors, such as web management or customer service, can directly affect the campaign’s performance.

For that very reason, it’s important that influencer marketing campaigns are well aligned with the brand’s strategy to obtain the desired ROI. In order to do this, the brand must be aware of their strengths and weaknesses and take them into consideration when evaluating their campaign strategy.

One of the most important things to consider with influencer marketing campaigns, is the that the audience interact directly and organically with the brand.

In summary, the best ROI is that in which the obtained value:

• Is positive
• Exceeds the number of euros invested
• Achieves or exceeds 100% of the target value
• Matches the campaign’s objectives
• Shows an increase in brand awareness
• Creates an impact thanks to the content of the posts
• Increases organic content related to the campaign thanks to word-of-mouth

According to research which complied data from Brandwatch’s clients, “campaigns lead by influencers have a ROI 11 times greater than campaigns with other types of marketing strategies”.

After having read this article, are you still ensure about what ROI means in influencer marketing?

Get in touch, we’d be delighted to answer your questions!