The ROI of Influencer Marketing

Martina author

Martina Petrina

Content Writer

⏱ Reading Time: 6 minutes

Regardless of the ever-changing trends and influences in marketing, there is one phenomenon which doesn’t go out of fashion – word of mouth marketing. A whopping 92% of consumers trust a personal recommendation from a friend. And that is a number that hardly any advertisement can beat.

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With the rise of social media and social networks in general, the circle of people we trust has slowly but surely spread to our role models, celebrities we look up to, or individuals who somehow share our opinions and practice similar lifestyles. This is where marketers recognized an opportunity to use word of mouth marketing in a slightly different way. Consequently, they coined the term influencers and a separate branch of marketing called influencer marketing.

Let’s define what influencer marketing is and go through some examples for starters.

What is Influencer Marketing?

To put it in simple terms, the process goes something like this:

Rather than marketing directly to a large group of consumers, you pay influencers to get out the word for you instead.

Influencer marketing involves using key brand advocates to drive your message to the larger market in an organic way.

Hence it helps small businesses to scale bigger by giving them more publicity, but also large businesses to reach out to more people.

Most importantly, it provides a better Return On Investment (ROI) than other marketing methods. It pinpoints people with large social followings who have sway over your target audience. It also focuses on marketing endeavors featuring those key influencers.

Consequently, influencer marketing has grown over the last few years. Over 60% of brands – especially those targeted towards millennials – have adopted some form of the modern advertising method.

Let’s show it in the following example.

Starbuck Teams up with NYC Influencers

In order to promote the new Starbucks Reserve roastery opening in New York, the coffee-giant partnered with 3 NY-based influencers famous for their style and taste to run an Instagram campaign.

All posts tagged @StarbucksReserve and included the hashtag #StarbucksReserve. The images were from the roastery displaying warm atmosphere, wood, modern furniture and of course, a Starbucks drink. The captions were to include a unique offer of drinks and a special atmosphere. Finally, the goal of the campaign was to present the Starbucks Reserve’s brand and drink offers and to encourage people to visit it in New York.

The result was thousands of likes and comments on the posts and an engaging rate reaching up to 6%. In this way Starbucks managed to reach relevant audiences about their premium brand and gain local endorsements.

Starbucks Roastery Influencer Marketing

Picture 1. Starbucks Reserve partnered with NYC influencers to promote their new roastery

The Growth of Brand Influencer Partnerships

With the popularity of influencer marketing on Instagram, brands are keen on discovering how and who to partner with for effective campaigns.

People trust what other people have to say, rather than corporations or advertising. This is why influencer marketing has become such a powerful and effective marketing strategy.

Four trends are converging to make influencer marketing an important part of any B2C or B2B marketing program:

  • There is a glut of content available. Breaking through the noise is more difficult than ever.
  • The decline of organic reach on Instagram makes social media promotion of content a trickier proposition.
  • Ad blockers make amplification of content through display ads less appealing.
  • Americans trust recommendations from real people more than advertising and promotions from brands.

Influencer marketing is one of the best and fastest growing online customer acquisition channels.

Forecasts made by Mediakix data suggest that a total of $15 billion dollars will be spent on influencer marketing by 2022. 

Influencer marketing global spending by the year 2020

Picture 2. Influencer Marketing global ad spending by 2020

This begs the question: With investing so much money, what sort of returns can you expect from influencer marketing? Let’s take a look.

1. Revenue

As you already know, ROI is used to see if a campaign’s return has been positive or negative. The formula is simple.

ROI = (Profit – Investment / Investment) x 100

A good way to keep track of ROI is to look at impressions. The number of posts created, the different kinds of content and number of viral posts are some of the other things you should look at.

According to Influencer Marketing Hub, for every $1 that brands spend on influencers, they are getting an ROI of $5.78.

Sponsored blog posts alone have proven to yield up to 11x more ROI than standard banner ads. That’s counting the increase in revenue.

2. Brand awareness and sentiment

Iceland Foods collaborating with influencers made a huge difference to their approval ratings.

It’s a frozen food retailer who exposed their audience to vlogger-backed content. As a result, they saw an increase in approval ratings from 10% to 80%.

Influencer-created videos have reportedly garnered a 55% retention rate on Facebook and 59% on Youtube.

Read Branding in the Age of Social Media

3. Earned media value

Affiliate links and social media tags help the followers of influencers reach a brand. This means they can be redirected to your brand’s website or social media pages.

Beyond revenue, clicks, and engagement, EMV gives you a dollar amount for the value of impressions your influencers created.

So, influencers often use affiliate links and social media tags along within their posts. These can provide a way to redirect followers to your brand’s website. So, marketers can expect an increase in website traffic and engagement.  

Keep an eye on page views, daily visitors, likes, shares, and comments to keep track of this ROI.

4. User-generated content

Most influencer marketing contracts give the brand rights to the content created. Savvy brands are repurposing this UGC into social media content and advertising.

Working with influencers will help you diversify your content feed as they know what kind of content goes along with their audiences.

From reviews to social media takeovers and tutorials, you can experiment a lot. Influencer testimonials can, among others, help you gain more credibility.

Read What is User-Generated Content? 

How Do We Determine The Value of Influencer Marketing?

There are several ways to do it, either tangible or intangible.

Tangible ROI

is the more traditional form of return and deals. It has concrete information and provides profitable financial outcomes for specific amounts invested

Most social media platforms offer in-app data insights for businesses. They include Facebook, Instagram, and Twitter. As a brand, you can request this information from bloggers, or track how traffic is being driven on your end.

By implementing a tracking pixel or URL, reveal details about the actions of an influencer’s audience and conversion to customers.

Reading comments is also a great way to gauge how people feel about your product or service.

Intangible ROI

Deals with the success of the business and employees’ satisfaction, so it’s more difficult to predict.

The reason influencer marketing works well is that it’s less contrived than traditional marketing methods.

It’s all about trust, authenticity and – organic conversation.

Real-life buzz sparks when online influencers mention your brand. It evokes a domino effect because those who engaged with an influencer’s posts will remember a brand and spread the word about it.

If you invest in influencer marketing, you will receive quality creative content tied to your brand’s name. For example beautiful visuals and honest feedback about your products or services.

Posts in cooperation with influencers tend to live online long after the campaign is complete. Thus, if an influencer enjoyed your product or service, they continue to use and recommend them.

To Summarize

On the one hand, ROI is and will continue to be an important element in making a decision about cooperation with influencers. But, calculating ROI is not always pure science or measured in straightforward dollars and cents.

Here are some values on how the best ROI should be:

  • 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 using word-of-mouth

To improve your SEO and broaden brand reach at the same time, give a try to influencer marketing. They are in a position to help no matter what your main marketing strategies are. It’s a fast-growing business strategy in which both businesses and influencers are set up to benefit from these relationships.

So think outside of the box and reach out to new customers! One thing is for sure, this trend isn’t bound to change any time soon.

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The ROI of Influencer Marketing was last modified: May 27th, 2020 by student@paldesk.com
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