Use this framework for maximizing influencer marketing ROI

Influencers and creators have transformed the way we shop and interact with brands. These digital trendsetters help brands establish credibility with target audiences while extending their reach. The 2024 Influencer Marketing Report found nearly half of all consumers trust influencers just as much as they did six months ago, while close to 30% trust them more.

But influencer campaigns aren’t as simple as finding someone with a large following to publish sponsored posts—even mega influencers risk poor engagement if a brand partnership isn’t aligned with their audience. As the creator economy develops, marketers must show how these partnerships are paying off. In this article, we’ll discuss how leaders can measure and maximize their influencer marketing return on investment (ROI) at each customer journey stage. We’ll also show you how to measure influencer marketing ROI.

What is influencer marketing ROI?

Influencer marketing ROI measures the business impact of influencer campaigns. It considers performance by comparing the revenue or profit gained to the cost of the investment. It helps you understand if the collaboration was successful by providing insights into the overall profitability and effectiveness of an influencer partnership.

Why influencer marketing ROI matters

The 2024 Influencer Marketing Report found nearly half of all consumers (49%) make purchases at least once a month because of influencer posts.

But the importance of influencer marketing ROI goes beyond the purchase stage—it encompasses the entire buyer journey and empowers both brand and performance marketing.

1. Influencer marketing encompasses the entire customer journey

People often think about ROI as it relates to sales, confining it to bottom-funnel metrics like downloads or conversions, but influencer marketing drives returns across the customer journey. Influencers can convert customers to purchase, nurture retention and act as brand advocates, but they also build awareness and consideration.

Influencer content often fuels higher engagement than branded content, but consumers also expect businesses to collaborate with influencers beyond sponsored content. The influencer report found 80% of consumers would be more willing to buy from brands that partner with influencers beyond social media content.

2. Influencers can help balance brand and performance marketing

The push and pull between brand and performance marketing is a common experience among marketing executives. Leaders often view performance marketing as a safer bet because it can be measured clearly and held more accountable for business results, making it easier to see how a company’s marketing dollars connect to revenue.

But today’s consumers are savvy and recognize when brands only see them as dollar signs—so balancing brand and demand efforts becomes even more important. For example, through A/B testing, brand and performance marketers alike can determine which influencer content resonates better for their specific goals. For brand marketing, the goal might be to create awareness with a new audience, while performance campaigns will focus on conversion. This A/B experimentation could look like publishing complementary, but different messaging or imagery, and then using the creative that aligns best to your goals for each type of marketing.

Brands can also balance brand and performance marketing by curating an ecosystem that repurposes sponsored content in performance campaigns. Think reusing sponsored posts in Spark Ads on TikTok or Instagram Ads.

Why measure influencer marketing ROI?

ROI is a critical proxy for gauging influencer effectiveness and a jumping-off point for future budget asks. By measuring ROI, marketers can reach their goals, prove impact and command a larger influencer marketing budget for future collaborations.

How to measure influencer marketing ROI (with a formula)

Calculating influencer marketing ROI is tricky. It’s not as simple as saying, “We spent X amount on influencer marketing and earned this many sales so our final ROI is Y,” and ending the conversation there. There are more variables involved.

Engagement (like, comments, shares, etc.) plays a significant role from building awareness and exposure to establishing relationships, trust and social proof. High engagement can also help you identify effective call-to-actions and signal algorithms that your content is resonating with audiences. If you want to understand the impact of your engagement on your bottom line, you’ll need to go beyond engagement KPIs and monitor them with metrics like click-through rates, conversion rates and sales through attribution.

We don’t recommend solely relying on a set equation to capture all influencer ROI, but it’s a helpful framework to understand costs and returns for the purposes of budgeting. We understand that calculating ROI is a common challenge marketers face, so we recommend using this formula:

(Total Revenue – Total Costs) / Total Costs) x 100= ROI (as a percentage)

While the formula (Total Revenue – Total Costs) / Total Costs) x 100= ROI is a straightforward equation, there’s more to measuring the success of influencer marketing campaigns. There are other methods to quantify the impact of influencer campaigns.

Here’s how to get inputs to plug into your ROI formula from attribution across different stages of the buying journey.

1. Collect data

Gather data related to engagement metrics, conversions, sales revenue and costs for your specific campaign or initiative.

2. Set up attribution for your campaigns

Choose and implement attribution strategies that best represent how different touchpoints contribute to conversions. Attribution involves tracking engagement to sales by analyzing various data points to uncover how different engagement activities lead to purchases.

Here are some different ways you can set up attribution for your campaigns:

• Use analytics platforms: Google Analytics, social media tools and e-commerce platforms monitor user behavior and conversion data. Define conversion goals and funnels to comprehend a user’s path from engagement to purchase.
• Create UTM parameters: Add Urchin Tracking Module (UTM) parameters to your URLs for different marketing campaigns to find where traffic comes from that leads to conversions. This lets you track sales to specific activities or channels that people engage with.
• Generate unique promo codes and affiliate links: Generate unique promo codes or affiliate links for specific influencer engagement campaigns. When customers use these during their purchase, you can directly attribute the sale to a code or link.
• Gather feedback with customer surveys: Ask customers questions in purchase surveys about the factors that influenced their purchase to get qualitative and quantitative insights into how engagement affects purchasing behavior.

Here’s how you can use attribution to understand campaign costs and returns over time:

• Integrate with your CRM: Integrate your customer relationship management (CRM) system with your engagement and sales data to understand how customers interact with your brand and how engagement leads to purchases. For example, Sprout’s integration with Salesforce enables you to gain a comprehensive view of your customer touchpoints.
• Use multi-touch attribution models: Use multi-touch attribution models that allocate credit for a sale across multiple touchpoints to get a comprehensive view on how different engagement activities contribute to sales.
• Understand your cost per lead: Collectively calculate the cost per lead (CPL) of any leads generated by your influencer campaigns or posts to understand the total cost of your campaign compared to other marketing methods. If you’re more focused on awareness, consider cost per mile (CPM). You’ll factor these costs into your final ROI equation.
• Segment and analyze audience behaviors: Classify your audience based on how much they interact with your product. Track the sales performance of each group to see if users who are very engaged are more likely to buy.
• Perform a cross-channel analysis: Monitor how engagement on one channel influences behavior on another to determine how one area contributes to overall sales. For example, you can compare social media engagements to website visits and email clicks.
• Track the lifetime value of your customers: Use customer lifetime value (LTV) to monitor the long-term value of customers who engaged with your influencer content before purchasing. This will also help you understand how engagement influences initial sales, repeat purchases and customer loyalty.

Note: You don’t have to use all of these attribution methods and analyses, only select what works best for your goals and campaign. Consider using software tools like Sprout Social Influencer Marketing (formerly Tagger) that can automate attribution and provide more sophisticated analyses and insights within one platform.

3. Calculate total revenue and total costs

Add the total revenue generated from the attributed conversions. Then determine the total spent on the campaign, including advertising costs, content creation, campaign management fees and other relevant expenses.

4. Calculate ROI and analyze additional factors

Use the formula (Total Revenue – Total Costs) / Total Costs) x 100= ROI to calculate ROI as a percentage. Use this number to evaluate campaign performance. You can do this manually or use influencer analytics tools. A higher value suggests a more successful campaign, but remember this simplified equation doesn’t capture all aspects of the campaign’s impact. Consider the other factors like brand awareness, customer lifetime value and long-term effects on customer behavior when reporting on impact to your leaders.

5. Iterate and optimize your strategies

Use the insights from the ROI calculation to refine your marketing strategies. Adjust tactics, channels, messaging, etc. based on attribution results to optimize and inform your future campaigns.

What is the average ROI for influencer marketing?

According to a Tomoson influencer marketing study, businesses see an average rate of return of $6.50 for every $1 spent on influencer marketing. The study also found the top 13% of businesses are achieving an ROI of $20 or more. These influencer marketing ROI statistics reflect lucrative opportunities, but they don’t reveal the full picture. ROI averages also vary widely depending on your industry—along with other factors we’ll cover in the next section.

How to maximize influencer marketing ROI

Now that we’ve explored how to calculate influencer ROI, let’s explore how you can maximize influencer marketing ROI by business goals, cost effectiveness, influencer, social network, content type and campaign timing. You need to consider each of these categories to better understand audience interest, behavior and preferences–these will inform your future influencer selections and campaign execution.

Align influencer campaigns to business goals for stronger ROI

Think about the “why” behind your influencer campaign—what are you trying to accomplish with your business goals? To quantify the ROI of influencer campaigns, balance engagement metrics (likes, shares, comments) with attribution data (sales, signups, downloads) to ensure a comprehensive understanding of campaign effectiveness.

Let’s say you want to improve brand awareness on a related industry topic; pickup trucks. You seek to understand influencer content about pickup trucks in the U.S. You discover that towing capabilities are a popular topic, but another brand is being talked about the most in that category. Your product has better functionality, but your brand isn’t a topic of conversation. Now that you’ve identified the white space, you want to build an influencer campaign to increase brand awareness in this conversation. Along with engagement metrics, you decide to measure website traffic and brand mentions to understand if your new influencer campaign helps you break through in this space.

As you outline your campaign goals, use industry benchmarks and previous performance as concrete tools to set expectations and optimize campaigns. The 2024 Influencer Marketing Benchmarks Report shares benchmarks by industry and social network.

Keep cost effectiveness top of mind for higher influencer ROI

Evaluate influencer overhead because there’s a lot that goes into daily management activities from contracting to creative collaboration and deliverables. It can be an expensive undertaking if teams lack a transparent process for influencer management. Some cost factors include influencer fees, travel and accommodations and production expenses.

Higher fees and costs can reduce the overall profit margin. But with efficient expense management, you can enhance ROI by using your budget effectively to generate maximum engagement and conversions. For example, you might limit your team to working with local influencers to minimize travel and accommodation expenses to get the most out of your spend.

Tracking and analyzing costs from the start will help you optimize the campaign’s financial performance. Some influencer marketing metrics to quantify influencer ROI by cost effectiveness include:

• Cost per engagement
• Return on ad spend
• Conversion rate
• Repeat purchases
• Customer Lifetime Value
• Retention rate
• Referrals

Identify the right influencers who can drive ROI with your audience

When trying to find the right influencers that are likely to drive a higher ROI, hire based on audience fit—your target audience’s demographics, interests and affinities—and historic performance.

But before you begin your influencer search, consider your channel strategy. Reflect on your product category or industry to help determine the most important channel(s) and which influencers to hire based on their social presence. We recommend looking at influencers who talk about your industry and whose content outperforms when they mention your industry or product, then filtering down to target demographics and geolocation.

For example, if your fitness target audience is largely UK-based it may be wise to choose a UK fitness influencer that reviews similar products because their audience will expect that type of content.

The influencer identification process is a manual journey that can take time and effort. But with a database like Sprout Influencer Marketing, you can search based on audience demographics, location, topics and performance.

You can use the People View to discover and organize profiles that interact with your brand. This view ensures you can authentically interact with the people who engage with your brand the most. People View can help foster connections with influencers, manage your VIP lists and view conversation history. This feature helps expedite the influencer identification process because you can see your most active audience members and understand more about them.

Consider which social media platforms will bring influencer ROI

Where you activate your influencer campaigns is equally important as the content. If your brand’s community is more active on one network versus another, that can help narrow down which influencers your brand should partner with to capture share of voice.

Don’t make the common mistake of assuming the platform best fits your brand. Ground your efforts in data—which networks does your industry and audience engage with the most? Also consider network-specific metrics that can vary by platform such as reach and impressions.

Determine the content types that’ll drive a return

Assess the content types that resonate with your target audience. For example, a 30-second makeup tutorial on TikTok may see higher engagement for people under 25, but longer videos may resonate with older audiences. The content type you choose will depend on your brand’s audience, but giveaways, product collaborations and influencer-led advertisements are a few common examples.

When most people think of influencer marketing, they think of content within the purchase stage, like product reviews, tutorials and Live shopping experiences that support sales KPIs, but there are opportunities at every stage. To maximize influencer marketing ROI, incorporate influencer content across the journey and align metrics accordingly. Each phase of the customer journey has different goals and KPIs.

For example, for awareness campaigns, the goal is to boost brand or product visibility so KPIs may include impressions, reach and views. This is when you can use posts on an influencer’s profile and repurpose influencer content for paid media. In the retention stage, you’re aiming for repeat purchases and to increase KPIs like retention rate and customer lifetime value. You could use influencers in exclusive memberships or customer appreciation content. For advocacy purposes, influencers can support referral programs.

Time your influencer campaigns correctly

Campaign timing can make or break your influencer marketing results and effectiveness. Time can be broken down into multiple increments in terms of year, day of the week‌ or even the hour of the day that will yield the highest engagement. Understanding  time periods and the seasonality of your industry is also important as you might get better engagement at certain times of year when people are paying more attention.

For example, a yoga company launching a campaign during the holiday season may not be the ideal time for investment because people prioritize time with family and friends or travel for vacation. But after the holidays, you’ll see a spike in interest because people often focus on renewing their health and wellness rituals in the new year. Spring would be an ideal time as well. Some metrics to monitor for campaign timing include Customer Lifetime Value, retention rate and average view duration of any video posts.

Allocate sufficient resources

Influencer marketing is an expensive market, so ensure you’re investing enough in your influencer program. Along with budget for content creation and influencer fees, include time and personnel to manage campaigns to get an accurate idea of scope and bandwidth to manage your campaigns effectively. Having enough resources is important for quantitative ROI, but also supports effective influencer management by ensuring your partners have an overall smooth experience. We often talk about the importance of paying influencers/creators equitably and on time. Allocating sufficient resources will help you accomplish that.

Integrate an influencer marketing platform into your tech stack

Automate data collection, analysis and ROI tracking through influencer marketing platforms. Make sure your technology stack can measure the impact of influencer efforts on revenue. This involves tracking metrics like social media engagement, link traffic and website traffic during campaigns.

Instead of calculating everything manually, influencer marketing tools like Sprout Influencer Marketing can integrate into your martech stack and enhance your brand’s social strategy by harnessing data and analytics. You can manage social campaigns and content, streamline influencer workflows, collaborate with talent and provide influencer compensation through a dedicated workspace.

Scale your customer care strategy

Develop a customer care strategy that includes handling product feedback received by influencers. You can gain valuable insights from the influencers themselves, along with their followers who may comment or send messages related to their sponsored posts. Incorporating influencers into your customer care strategy also opens opportunities for problems to be addressed, enhancing customer satisfaction and loyalty.

How to track influencer marketing ROI: Proving the impact of partnership

Illustrating influencer marketing ROI is a nuanced process. It involves tying engagement activities to attribution, along with evaluating business goals, costs, influencers, network, content type and timing. Using the influencer marketing ROI equation is a good foundation, but using these frameworks helps bring context to your ROI tracking—and prove your marketing dollars are well-spent. See how Sprout Influencer Marketing can empower you to shape the best path forward for your brand’s influencer marketing strategy.