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The Truth About Influencer Marketing ROI

Influencer marketing generates earnings which are 11X higher than the ones generated by traditional advertising campaigns.hand-holding-a-flower-made-by-money We’ve all heard this before and for the most part, it’s true. But one thing marketers can’t tell with complete confidence is whether this number “11” refers to the brand’s ROI or just the gross revenue from the influencer marketing campaign.

 

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Measuring influencer ROI – a challenge

A study by Nielsen Catalina Solutions showed that households which were exposed to influencer marketing campaigns saw a 10% increase in the quantity of items being purchased. Another study of micro-influencer pricing models shows how micro-influencers charge less than $250 for a single branded Instagram advertisement which stays on your profile for eternity. This compared to the $0.01-$100 CPC you need to pay for a single banner ad.

Statistics like these indicate that influencer marketing is a highly-lucrative option for brands. They show us how great the earning capacity, how high the purchase rates and how less expensive influencer marketing campaigns are compared to traditional advertising campaigns. But what they don’t tell you is – the actual ROI percentage.

This is the reality of influencer marketing. Despite making such headway in the arena, companies are still finding it a challenge to pinpoint the exact ROI they generate by collaborating with influencers. This lack of clarity can be highly-problematic as brands won’t know how much to invest in influencer marketing and they won’t be able to pinpoint which quantitative result is directly proportional to the brand’s investment in the influencer marketing campaign.

 

Moving beyond ROI measurement to evaluate influencer marketing success

For years marketers have been on a constant, never-ending quest to find the golden formula to measure influencer marketing ROI. They’ve listed factors like – reach, engagement, social media referrals, traceable links, and landing pages – to come to a definitive formula. While these factors do indicate the brand’s earnings, they hardly connect the revenues to the actual investments made.

influencer-media-valueToday, marketers around the world are looking towards a metric other than ROI to evaluate the effectiveness and success of their influencer marketing campaigns. Influencer’s Media Value (IMV) is the new metric on the block. Developed by media software giant NeoReach, this metric is a spin on the Earned Media Value (EMV) which is used in traditional advertising campaigns.

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IMV helps brands identify the logic behind the revenues and expenditures they generate on influencer marketing campaigns. Basically, this metric helps you identify the amount of investments you’d have had to make, had you chosen another social media promotional solution.

For example, if an influencer-created post on Instagram gets an IMV of 100, it essentially means that it possesses the same high-quality of an Instagram sponsored advertisement that is worth $100 (and is better than say a post that has an IMV of 50). Since we know that expensive sponsored ads on Instagram contain better content, use better software and have a larger audience base, it’s easy to see how a higher IMV is indicative of a worthier investment.

Additionally, IMV helps brands identify which influencers are genuine and worth the investment and which ones aren’t. One of the factors used to calculate a post’s IMV is the past performance of the influencer’s posts. So, a higher IMV indicates that previous posts by the same influencer also performed well on the platform, proving that the influencers have a history of successful campaigns.

 

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Today, influencer marketing companies like Ifluenz are incorporating IMV in their analytics metrics to give their clients a 360 degree view into the effectiveness of their campaigns. With this key insight, brands can take informed decisions which reduce risks and losses and in turn improve their ROI. 

Join the movement of businesses who are already benefiting from Instagram influencer marketing.

Create your campaign in 5 minutes with Ifluenz to enjoy seeing influencers promoting your brand.

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