Influencer marketing is a powerful tool to reach your target audience. Communication agencies, through the management of influencers or content creators, move masses, from macrocommunities to microcommunities, their followers find in them people they can relate to and perceive as authentic, creating a solid and emotional bond with them. Authenticity becomes credibility and trust, two crucial factors in the purchase decision of their followers, which are called into question when advertising is done in disguise.
Many influencers are considered referents for their community, which allows them to influence the perception of a brand and make their opinions and recommendations highly valued. With the recent “influencer law“, which regulates this activity, the aim is to ensure greater transparency by requiring creators to disclose whether their posts are part of commercial collaborations. This protects consumers from hidden advertising practices.
The power of authenticity and emotional connection
The personal experiences that influencers share every day on their social profiles reinforce the emotional connection they have with their community. A closeness that makes their followers value their recommendations and advice even more.
Therefore, collaborations with influencers have added a personal component to brand strategies, aligning with the main trends in branding and communication. Not only is the product shown for commercial purposes, but also the values that the influencer, on an individual level, regularly shares with his or her community are transmitted. This not only humanizes the brand, but also strengthens the relationship with the public.
How to measure the return on investment in influencer campaigns
How can you be sure your investment is paying off? Measuring the return on investment (ROI) of influencer campaigns is essential to determine their effectiveness and optimize future strategies. Here’s how to do it.
Define your objectives and KPIs
As a brand, before starting any influencer campaign, it is crucial that you clearly define your objectives. These may include increasing brand awareness, generating sales and increasing social media followers, among others.
Once the objectives are established, define the KPIs (Key Performance Indicators) that will help you measure the success of your campaign. Some of the main parameters to take into account are: reach, impressions, conversion rate, traffic generated to your website, and engagement on social media.
- Reach indicates the number of people reached by the content, which can be influenced by the number of followers the influencer has.
- Engagment measures the interaction that the content has had.
- Traffic refers to the number of visitors that arrive to a website
- Conversion rate reports the percentage of visitors to a website who perform a specific action, e.g. buy the product.
- Impressions indicate how many people have seen the content on social media.
Calculate campaign expenses
To measure the ROI of your campaign, you must first know all the expenses associated with the collaboration with the selected influencer or influencers. This includes the payment for services rendered, the products shared with them, the shipping costs themselves, as well as any other additional expenses related to their participation. All of these add up to the total investment of the campaign.
Analyze results and calculate ROI
Once the campaign is over, it is time to analyze the results in relation to the KPIs you defined and the objectives set, based on which you will have to set and analyze some metrics or others.
If your objective was to increase sales, compare the increase in revenue with the investment made. On the other hand, if your objective was to generate brand awareness, you will have to evaluate the reach and engagement generated.
To calculate ROI, use the following formula:
This calculation will give you a clear view of the profitability of your influencer campaign.
Result of a positive ROI
Let’s take an example, imagine you want to promote a service or product through a collaboration with an influencer. Suppose your brand makes an investment of €5,000, which includes the payment of the influencer and the cost of shipping the product.
Thanks to this campaign, you manage to generate €15,000 in revenue, which represents the sales directly attributed to the campaign, such as those made through affiliate links or discount codes.
It is important to remember that this value is an index that must be multiplied by 100 to convert it into a percentage, which will allow you to determine whether the ROI is positive or negative.
To calculate the ROI, we apply the formula:
- ROI formula (%) = [15.000 € – 5.000 €) / 5.000 €] x 100= 200%.
- Revenue generated (return of the campaign): 15.000€ (this includes the 5.000€ initial investment and 10.000€ additional profit)
- Initial investment: £5,000
- Total ROI: 200%.
An ROI of 200% indicates that you not only recovered the initial investment of €5,000, but also generated €10,000 in profit. In other words, for every euro invested, you earned an additional €2. This shows that the campaign was very profitable and that the strategy employed was effective.
Result of a negative ROI
Now, imagine that instead of generating €15,000, the campaign only achieves €4,000 in revenue. In this case, the ROI would be:
- ROI (%) = [4.000 € – 5.000€) / 5.000€] x 100= – 20%
This means that for every euro invested in the campaign, you lost 20 cents. You invested €5,000, but only generated €4,000, resulting in a loss of €1,000. So an ROI of -20% indicates that the campaign was not profitable and that the strategy needs to be reviewed and adjusted.
Measuring influencer ROI is essential to understand the effectiveness of your campaigns, optimize your investment and achieve your objectives effectively. By defining clear objectives, correctly calculating costs, and analyzing results, you can maximize the impact of your influencer collaborations.
Sara Escudero
Account Assistant
