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Keyword sales: Measuring influencer marketing ROI can be a challenge for brands. That’s why we’ve broken down the term into a quick ROI FAQ and explained step-by-step what ROI means in influencer marketing.
What is ROI?
ROI measures the financial performance of an investment , taking into account the cost of the investment and the revenue generated by it. A positive ROI means that the investment generated more revenue than it cost, while a negative ROI means that the investment cost more than it generated in revenue.
How to measure ROI for influencer marketing?
There are several metrics that brands can use to measure the ROI of influencer marketing, including:
Cost per engagement (CPE) : Cost per engagement measures the cost of generating a certain type of engagement , such as a like or comment, through an influencer’s content. Brands can use CPE to compare the cost of engagement generated through influencer marketing to other forms of marketing, such as paid social media advertising. To calculate CPE, divide the total cost of the influencer campaign by the number of engagements generated.
Cost per acquisition (CPA) – Cost per acquisition measures the cost of acquiring a new customer as a result of an influencer marketing campaign . CPA takes into account the total cost of the influencer campaign and the number of conversions generated by the campaign. To calculate CPA, you divide the total cost of the campaign by the number of conversions generated.
Return on ad spend (ROAS) : Return on ad spend measures the revenue generated by an influencer marketing campaign relative to the cost of the campaign. ROAS takes into account both the cost of the campaign and the revenue generated by the campaign. To calculate ROAS, divide the revenue generated by the campaign by the total cost of the campaign .
Lifetime Value (LTV) – Lifetime value measures the total revenue generated by a customer over their lifetime. Influencer marketing can help by introducing a brand to new customers and encouraging repeat purchases. To calculate partners email database LTV, multiply the average purchase value by the average number of purchases per customer per year and the average customer lifetime value.
Measuring influencer marketing ROI is undoubtedly important for brands to evaluate the effectiveness of their campaigns and make data-driven decisions . By using metrics such as CPE, CPA, ROAS, and LTV, brands can gain valuable insights into the financial impact of their influencer marketing campaigns and optimize their future campaigns for better results.
How can you track influencer marketing activities?
Your influencer marketing activities can be tracked using various metrics and tools to measure campaign effectiveness. Here are some ways to track the activity triggered by influencers:
Tracking URLs and Promo Codes – One of the easiest ways to track the performance of an influencer marketing campaign is to use unique URLs or promo codes. This method provides influencers with a unique URL or promo code that they can include in their campaign-specific content. By tracking the traffic or sales generated by these unique URLs or promo codes, brands can measure the performance of their influencer marketing campaigns.
Track social media metrics – Social media platforms offer various metrics that can be used to track the performance of influencer marketing campaigns. These include likes, comments, shares, and saves . Brands can use these metrics to measure the engagement generated by influencer content and track the growth of their social media following. Plus, networks provide this data automatically and for free.
Use analytics tools – This brings us straight to the fact that there are different tools that track campaign performance. These tools can track the traffic and conversions generated by the campaign and offer insights into the demographics and behavior of the target audience. Some of the most popular analytics tools for influencer marketing are Google Analytics, Hootsuite Insights, and Sprout Social.
Monitoring brand mentions : Monitoring brand mentions across platforms can help brands track the reach and impact of their influencer marketing campaigns. This includes monitoring social media channels for mentions of the brand or campaign-specific hashtags and analyzing sentiment around the mentions.