Influencer marketing may be big business, but how do you know whether your campaigns are delivering results? Influencer marketing must be measurable and have a demonstrable ROI if it's going to work as a viable marketing tactic. This useful article from Search Engine Journal can help you learn about the challenges in calculating influencer marketing ROI, as well as a formula for calculating Return on Marketing Investment (ROMI).
- Spending on influencer marketing in the U.S. will increase 33.6% from $2.76 billion in 2020 to $3.69 billion in 2021.
- 67.9% of US marketers will use influencer marketing this year, up from 62.3% last year.
- Clear recently paid Cristiano Ronaldo, one of the most popular football (AKA, soccer) players in the world, an estimated $619,497 to $1 million for a single Instagram post.
Should You Measure ROI?
The trouble with ROI is it's hard to know what to measure and even trickier to tie influencer marketing efforts directly to business results. That's why ROI is the wrong metric. It measures money that is "tied up" in plants and inventories (which are capital expenditures or CAPEX). The right metric to use is Return on Marketing Investment (ROMI). That's because it measures money spent on marketing, which is typically expensed in the current period (which are operational expenditures or OPEX).
How do you calculate ROMI?
[Incremental Revenue Attributable to Marketing ($) * Contribution Margin (%) - Marketing Spending ($)] / Marketing Spending ($) = ROMI
How do You Track Influencer Marketing Results?
One way is to use the free Campaign URL Builder tool, which allows you to easily add campaign parameters to URLs so you can measure Custom Campaigns in Google Analytics. All you need to do is:
- Enter the URL of the landing page.
- Enter a term like "Instagram" in the box for the campaign source.
- Enter another term like "influencer" in the box for campaign medium.
- Then enter a term like "Ronaldo" in the box for the campaign name.
- The Campaign URL Builder tool will generate a campaign URL for you - and you can even use bitly to shorten the URL.