Marketing return on investment (ROI) — it’s actually pretty simple. Subtract the cost of marketing from the revenue gained from said marketing and divide by the cost of the marketing.
For those of you who like formulas:
Marketing ROI = (Marketing revenue – marketing spend)/marketing spend
Simple, right? Calculating influencer marketing ROI on the other hand?
Influencer marketing ROI isn’t calculated like you learned in school
If you add influencer marketing into your annual plan and budget, remember to include this in red print: “Influencer marketing ROI is difficult to calculate.” Then put it in bold. Then highlight it. Circle it in red. Then tell 5 friends.
I have seen too many people get very excited when they begin influencer marketing and then very, very upset as they wrap up their campaigns because they can’t connect sales to influencers.
There are, however, factors besides dollars that contribute to influencer ROI. Factors that you probably didn’t learn in school.
Influencer marketing ROI doesn’t always reveal itself in the form of dollars
Other than dollars, what does Influencer ROI consist of?
In this era of products and services, we’re all bombarded with sponsored posts touting the newest and greatest things. For example, FabFitFun. I had never heard of them until all the influencers I follow started singing their praises. I didn’t sign up after seeing the first post, but each post eventually chipped away at my self-control.
In the end, all those FabFitFun posts have left me very knowledgeable about the brand. Six months ago, I had no idea what it was. And now they succeeded in raising my awareness of their brand.
Here’s how it usually works. You see an influencer’s post in your social media feed. Curious, you click the link to look into that company/product and see what they’re all about. That link had a tracking code, and the moment you clicked, the influencer is credited with a referral to their site. It doesn’t matter if someone purchased a product or not, the brand now knows a little bit more about you based on how you got to their site. And now they know how to market to you, and perhaps get you to buy down the road.
Seeing an influencer’s post is great. But if someone makes a conscious effort to interact with that post, that’s evidence they’re not only seeing the content but something about it has motivated them to interact. Engagement is a sleeper contributor to ROI and should be highly valued.
Once you’ve triggered brand awareness through an influencer, their followers know about your brand — or at least, what they can buy from you. Perhaps two days or two months down the line, one of their followers buys what they saw weeks before. You may not be able to connect that sale to that influencer (unless you’ve given them an affiliate link, the customer uses a specialized promo code, etc.), but that influencer was a stepping stone leading to you.
Figure out your businesses’ priorities, calculate influencer marketing ROI
Knowing up-front that influencer marketing success comes from more than just dollars can not only prepare you for the challenges related to reporting ROI, it can give you time to figure out the ROI equation best suited for your business.