Episode 1: How to Measure Influencer Marketing ROI
The Ultimate Guide for Influencer Marketing
Influencer marketing is one of the most rapidly expanding advertising channels. One of the most difficult challenges that businesses face when implementing an influencer marketing strategy is determining how to calculate their return on investment (ROI). There are legitimate concerns and a slew of misconceptions about calculating influencer marketing ROI that are preventing brands from adopting influencer marketing entirely.
Brands must allocate a budget for successful influencer marketing programs. For collaborating with a brand on a sponsored post, social media influencers charge a fee. The cost of a partnership is negotiated by both parties based on a variety of factors, including:
- The influencer’s social reach (i.e., how many followers across given social media channels)
- The kind of sponsored content (e.g., Instagram in-feed post, Instagram Stories post, YouTube video, Twitter Tweet, Twitch activation, blog post, Facebook post)
- Duration of sponsored integration (e.g., a one-off Instagram Stories post will cost less than a series of Instagram videos spanning several months)
How can marketers calculate the ROI of their influencer marketing campaigns? Before establishing a budget, marketers must consider all of the costs associated with an influencer marketing campaign. Hidden costs, such as sponsorship fees, can have an impact on ROI when running an influencer campaign.
This series of articles aims to highlight potential hidden costs that have an impact on ROI but are not immediately apparent. Finally, marketers must decide how they will assess campaign effectiveness by determining how they will measure campaign success.
THE INFLUENCER MARKETING ROI FORMULA
Return on investment is usually expressed as a percentage (i.e., the rate of each Rupee investment that will yield a profit).
The following is a simple formula for calculating the ROI of influencer marketing:
For example, suppose a brand spends ₹1,00,000 on an influencer marketing campaign that generates ₹2,00,000 in profit. The following is how the ROI for that campaign can be calculated:
This means that the campaign generated a positive ROI and was a resounding success. By MediaKix, This hypothetical example is straightforward, but calculating the ROI of influencer marketing becomes more complicated in practice.
Conclusion
Return on investment is a widely used decision-making tool. It helps decision-makers identify investments that they should and should not make. At DreamsNama, ROI is a key performance indicator (KPI) that’s often used to determine the profitability of the campaign. It’s exceptionally useful for measuring success over time and we take the guesswork out of making future business decisions.
