July 16, 2019
Successfully Measuring the ROI of Influencer Marketing
Influencer marketing is one of the hottest channels of the last few years. It’s grown into a multi-million-dollar industry and doesn’t look set to slow down any time soon. Part of its huge success is due to the results that it’s generated for companies around the world. Instead of investing in traditional ads and sponsorships, they’ve found that partnering with key influencers drives incredible results. But not all organizations have mastered the art and science of influencer marketing. The accurate tracking of results and commissions has proved to be particularly difficult for some. In this article, we explore why it’s so tricky and how to measure the channel’s success more precisely.
The Rise of Influencer Marketing
The nature of marketing has changed in recent years. In the past, companies were prepared to invest up front in advertising campaigns based on a hunch that they would generate a return. But since the credit crunch, ROI has become a driving force for marketing decisions at all levels. Businesses are no longer prepared to take a chance on channels that may or may not generate revenue. This is why influencer and affiliate marketing have taken off in a big way.
In fact, influencer marketing is one of the hottest marketing trends of 2019. The number of Instagram influencer posts is doubling year on year and delivering impressive results with Millennial audiences in particular. Companies are looking to grow relationships with customers at upper-funnel stages while also paying on a performance basis. This is why influencer marketing has emerged as a winning channel across the board.
ROI Measurement Challenges
Influencer marketing has not been without its challenges though. One of the biggest hurdles for companies is how to measure its return on investment. Because influencers operate at the top of the sales funnel, their activities don’t always generate sales immediately. They’ll likely introduce new people to your brand and widen your audience so that they can begin their customer journey. But converting them into paying clients takes time, so how do you quantify the ROI?
Measuring return on investment is a crucial part of any marketing campaign. If influencers can’t prove their value to businesses, then they’re unlikely to be partnered with in the future. They need to be able to demonstrate their results and justify the investment made by a company in their efforts. But because they’re a top-of-funnel marketing tactic, it’s incredibly difficult for them to prove their worth, especially in the initial stages of a campaign. So, what’s the solution?
Being Flexible About How We Measure Success
One solution that’s been suggested is to be more flexible about the way that we measure the success of influencer marketing. It’s not a case of saying ‘this is too hard to measure so we’ll track a secondary KPI instead’. It’s about being realistic about goal setting and ensuring that campaign objectives are aligned with achievable outcomes. This will allow companies to measure the results of the channel more accurately and make evidence-based decisions accordingly. Of course, the ultimate goal of every marketing activity is to generate sales revenue. But there are steps towards this goal that need to be taken and against which progress should also be measured.
In the early campaign stages, influencers are most effective at increasing brand awareness and making introductions to your company. They can increase your audience so that you have a greater number of prospective leads dropping into the top of your sales funnel. They can also convert leads into purchasers through educational and promotional content but this comes later and takes time. The role of an influencer is different to that of a coupon or cashback site which are lower-funnel operators known for closing sales. So, it may be more prudent to track ‘attribution’ during the initial stages of an influencer campaign and extend their cookie duration to track long-term sales.
A Practical Solution
If we accept that influencers are primarily ‘introducers’, then it’s clear that a standard cookie duration won’t measure success accurately. Research shows that it takes 6-8 touches before a customer purchase and this won’t always happen within a 30-day time window. The solution is therefore two-fold:
- Track attribution during the initial stages so you know that the influencer is driving traffic to your website.
- Extend their cookie duration to something more realistic, possibly up to 12 months to capture the real value of the traffic they drive.
This requires longer-term thinking but is a much more accurate way of tracking influencer marketing results. This will ensure that businesses can truly quantify the value of their marketing efforts with this channel. It’ll also mean that influencers are paid fairly for the results they generate, making them more likely to maintain promotional efforts long-term. By adopting this flexible approach, your business will have greater visibility of the value that influencers deliver and can make sound strategic decisions based on more accurate data.
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