A lot of our customers are wondering on how to calculate the Return On Investment of Influencer Marketing. It’s a very tricky thing to do and there are very few businesses that can accurately report ROI for their marketing efforts, let alone report it for influencer marketing. So is there no way of knowing if an influencer is worth investing in? There definitely is! Let’s look at some tips & tricks for setting up and calculating ROI. We will try to make
Keep track of influencers with a ‘UTM code’
When visitors enter your webpage, you want to know if it was an influencer who sent them there. A so called UTM code helps your Google Analytics (other analytics software that you’re using) to figure out where that visitor came from. To create a UTM code, create one on this page from Google.
UTM_source: ‘Influencers’ or another name convenient to you
UTM_campaign: the name of the influencer. Preferably the one used on social media, not their real name.
UTM_content: specific post the influencer is going to place. They can name these themselves, or if you are going to have multiple influencers post the same content, name it for them.
The influencers will have to use these UTM codes, every time they post a link to your website.
The parameters set up in the UTM code (source, campaign,…) will give you an insight in
- how effective your campaign is compared to other campaigns
- which influencer is the most effective (if you have multiple)
- which posts are more effective compared to others
High quality traffic will bounce less (leaving the website without a single interaction), convert more often (ex. buy or subscribe), generate more revenue per user etc., compared to other sources. These will also have an effect on the ROAS and by extent the ROI.
Analysis of effectiveness
You’ll also need to have ‘conversion goal tracking’ set up to track whether the visitors arriving through influencers are buying, subscribing, donating… Once set up goal tracking is set up and UTM codes are in place, you can start to track conversions coming from different sources in your analytics software.
Measuring the ROI will dependend on which goal we have previously set up:
- For subscribers: we will call subscribers acquired through influencers an influenced subscriber:
- Price of one influenced subscriber: Cost of the influencer / # influenced subscriber
- ROI will depend on what one influenced subscriber is worth on average. This can be calculated from the Lifetime Value of 1 subscriber: (Value of one subscriber – Price of one ‘influenced’ subscriber) / Price of one influenced subscriber
- For webshops: ‘influenced customer’
- Price of one ‘influenced customer’: Cost of the influencer / # influenced customers
- ROI will depend on the average order value (AOV) of an influenced customer: (AOV of influenced customer – price of one influenced customer) / Price of one influenced customer
We’ll describe Customer Value (CV) as a marketeers (not in the theoretical economical sense): How much is one single customer worth to your business, on average? A notriously difficult question for any business owner. The costs and revenues being attributed to a customers will give very different results as to how much they are worth.
In very simplistic terms, if a customer’s total variable and fixed costs are €5 and the revenue is €10, the value is €10 – €5 = €5.