How to Measure the ROI of Influencer Marketing

Updated July 2018

Influencer marketing ROI is so important to understand before you get started with campaigns because it defines your success. In fact, it’s probably the one thing brands struggle with the most. Unfortunately, selecting the blogger with the highest follower count doesn’t always guarantee success. You need to be more strategic than that.

Influencer marketing campaigns take a lot of strategizing, experimenting, and optimization as you go along. In this post, we’ll give you key takeaways for getting started with your first campaigns, how to develop your strategy, how much to budget, how to select bloggers, and what influencer marketing ROI to expect. Let’s do this!

What ROI Can I Expect With Influencer Marketing?

We’re big fans of influencer marketing (i.e. advertising via bloggers or social influencers). First and foremost, working with influencers gives you, as a brand, the much needed validation from the movers-and-shakers within your space. This is huge because consumers won’t just take your word for it when you tell them that YOUR brand is totally awesome and that they should buy YOUR products.  When you tell them anything about YOUR product, it will always sound biased.

Because it is.

And literally everyone out there has been burned by a brand who lies about the quality of their product.  Now, instead of just believing what brands have to say, consumers do their own research by going online, in search of UNbiased opinions from real people, just like them. Adweek reports that 47% of Millennials and 36% of Baby Boomers trust user-generated content over content created by brands. You can grab tons of stats on social media and influencer marketing (we penned 111 of them right here) and the conclusions will be the same: People rely on digital content and social media to help them make buying decisions:

• 37% of consumers use social media as their go-to before making a purchase

• 74% of C-level and executive-level buyers use social media to make purchasing decisions

• Half of Pinterest users have made a purchase after seeing a Promoted Pin

• 34% of consumers don’t even mind if they’re reading sponsored content, as long as the content is useful

 According to the PwC Total Retail Survey 2016, 45% of respondents said that user-generated content like reviews, comments, and customer feedback influences their shopping behavior.

Just to get you caught up, this is the second post in a series of posts that we’ve written, dealing with Blogger Payments, ROI Expectations, How to Set Up Your First Campaign, Optimizing Your Strategy, and more.  If you’re totally new to influencer marketing and you missed our previous post, you should probably read that first.

To give you some context, I’m one of the founders of an influencer marketing platform called The Shelf.  We work with a lot of small brands and startups, many of whom are totally new to this type of marketing.  And after speaking with tons of small brands over the last few months, we’ve noticed a few common misconceptions that cause brands to have a rocky start with influencer marketing.

In this post I’m going to walk you through a step-by-step “influencer marketing kick-off strategy”, so that you’ll know exactly what to do when you roll out your first campaign.

What can you expect in terms of Initial ROI?

When you get started, a great way to think about Influencer Marketing is to compare it to Google Adwords (or any other popular marketing channel) as there are a number of similarities.

1. The first similarity is ROI expectations. When we talk to our customers about their gameplan, the first thing we dive into is their ROI expectations and goals, which, we’ve seen, vary widely depending on the customer. It’s helpful to first understand the ROI of their OTHER marketing efforts (e.g. Google Ads, retargeting, Outbrain, social ads, etc.) Realistically speaking, there shouldn’t be a huge gap between your current cost-to-acquire and the goals that you’re aiming for with your influencer marketing campaigns.

2. The second similarity is the process a brand goes through when jump-starting a new marketing channel. Most new marketing efforts require a little bit of experimentation before you’re able to validate that the ROI is going to be enough to warrant continued investment. One of our personal examples is with Adwords. We started dabbling in this about nine months ago. We started out very slowly and found that after spending 20 dollars every day for one week we had one brand sign up and pay $100. So we actually managed to break even right from the get-go. That customer who we acquired has been on the platform now for eight months, so the $100 investment in Google Adwords really paid off…we’ve made $800 (and counting) from that brand. Despite our initial good luck with Adwords, after a few more weeks we realized that our lucky first week was more of a fluke. Our cost-per-acquisition shot up after that. And we’ve since concluded that we really sort of suck at Adwords. Over the last nine months, we were never able to turn those numbers around. I think at this point we just about break even with our Adword spend. But that isn’t an ROI to really be proud of.

3. That brings me to the third similarity. Google doesn’t guarantee that you’ll get the ROI you’re shooting for with Adwords. All they guarantee is that you will be paying a certain amount of money for every click. Very few marketing channels will come with an ROI guarantee. All you can do is set goals for yourself…run experiments, analyze the results, and then optimize. The same goes for influencer marketing. There are no guarantees… but with a sound strategy, you’ll be able to make the ROI really count!

Even though influencer marketing is similar to all of the other forms of marketing, we’ve noticed that many people don’t treat it like a typical marketing channel.  Expectations for influencer marketing ROI tend to be much MUCH higher for some reason.  Additionally, we’ve seen that many of our customers have really high budgets for Adwords, social ads, pr events, etc., even if those channels are still in the experimentation phase yet the budget for influencer marketing is significantly smaller.  I’m not totally sure why that is.

I can draw on one extreme example that happened a few months ago.  I spoke with a founder who was selling eclectic-hipster-esque pants for men.  He mentioned that up until now, they had only tried Facebook ads for marketing these hip-and-funky pants. And for every customer who put a pair of pants in the cart, it cost them $80 in Facebook ads.  80 DOLLARS!  Plus, he wasn’t even tracking real purchases.  That $80 was just to get someone to put an item in the cart!!  Crazy, right?

Well, that founder then put us in touch with his marketing director because he wanted to explore influencer marketing as a new acquisition channel. The marketing guy was a little nutty…and he was very adamant about the ROI that he would expect if he were to use our platform for influencer marketing.  He wanted a 10X improvement over his embarrassing Facebook returns.  In all honesty, I’m sure that that ROI was totally possible, but our company doesn’t actually make promises on ROI because we’re a self-serve platform (hence the low price).  Anyway, that marketing guy was totally rude, so we wished him good luck with his hipster-pants and $80 Facebook ads…and then we peaced out.

I’m not really sure why ROI expectations for influencer marketing are so much higher than other marketing channels.  But my guess would be that with influencer marketing you’re not working with some huge corporation like Google or Facebook.  You’re dealing with individual bloggers.  And to top that off, most brands are under the impression that bloggers are LOOKING for content to blog about, so when the brand offers to send free products, they’re under the impression that they’re doing that blogger a favor.  But that isn’t really the case when a blogger has a decent-sized following (and we’ve covered the pricing expectations pretty extensively in this post if you’d like to read up on why bloggers charge).  You should make sure you have a handle on the payment thing before proceeding.

We usually try to encourage new customers to set their INITIAL ROI goals to something similar as the results that they are achieving via other marketing channels, like Adwords and social ads.  If you approach influencer marketing with proper expectations, you’ll begin to see the true value of this type of advertising…you just need to get past the experimental stage.  Almost everyone we’ve worked with is able to get their influencer marketing efforts to the point where they’re outperforming all of their other marketing channels.  Influencer marketing is great!!  It just takes a little more work and creativity to get it to that stage.

Start slowly.  Experiment.  Optimize.

As we touched on above, influencer marketing is like any other form of paid advertising, it’s just more trustworthy.  As Rustin Banks says, “Influencer marketing content tends to be more helpful and informative than other types of advertising.”  But here’s the similarity…just like any other form of advertising, influencer marketing is a gamble.  It can be completely hit-or-miss.  Sometimes you’ll work with a blogger who will send you so many purchases that you’re LITERALLY swimming in cash.  But then other times you might work with a blogger who seems like a very targeted bet and your expectations will fall short.  With this being the case,  it’s a good idea to begin your influencer marketing experiments similar to the way you start with Google Adwords.  Initial Adword experiments are nothing more than trial and error…followed by periodic optimizations, over the course of a few months.  Because of this ramp-up period and learning curve, most people start using Adwords with very small, scattered campaigns.  Essentially, the spray-and-pray method.  Or, “throwing noodles at the wall to see what sticks”.  You’ll basically experiment with a few campaigns.  You’ll monitor the results, and then you’ll adjust.  Rinse.  Repeat.

The same goes for influencer marketing.  You need to do a decent handful of initial campaigns in order to test out a few variables.  In these initial campaigns, you might work with a few small bloggers, some mid-sized bloggers, a handful of bloggers with heavy engagement, some who charge, some who are free…you just need to spread out and test the waters in as many ways as possible.  As long as you choose bloggers whose audiences matches your target demographic, you’ll most likely see some pretty decent ROI from your initial experiment.  AND, as you continue working with influencers, you’ll find yourself refining your strategy, and improving your ROI with each set of campaigns.

The worst thing you could do is put all of your eggs in one basket right away (by paying one blogger $5000) and then hoping for the best.  Run this first experiment with multiple bloggers…and just get your feet wet.  (You’d never run just one campaign on Google Adwords and chunk 5000 dollars into it on its first day, would you?)  Influencer marketing requires that same kind of caution.  Then, once you feel confident in your ability to pick out the right blogger for this $5000 investment, go for it!  Bloggers who charge that much are ABLE to charge that much because they’re typically worth it.  Brands wouldn’t be paying them that much if they were losing money on the deal.

Before moving on, let’s just review a few key points.

The goals of your first set of campaigns are going to be different from the campaigns that you’ll run later.  This first set of campaigns has very specific purposes:

1. First, there’s a pretty hefty learning curve with influencer marketing, so your first set of campaigns should teach you the ropes: how to target the RIGHT bloggers that will really drive high ROI…what outreach emails will be successful...what the going-rates are for blogger collaborations…how to streamline your process, etc.

2. Influencer marketing is hit-or-miss. What works for one brand, might not work for yours. So you need to experiment with a range of bloggers, some small, some medium, some large, some with super engaged Instagram followings, some with tons of blog comments, etc. This first set of campaigns is all about that AB testing.

3. After you run campaigns on a variety of blogger types, you then need to analyze the results. What worked? What didn’t work? Where can you improve? Did all blogger types work out in terms of ROI? If not, which types will you target next time, and which ones will you not pursue?

4. Getting a decent ROI is also important. While it’s not your top priority during this first set of campaigns, it would be great if you can get enough ROI to at least break even. If you are very strategic in your planning, this should be more than possible!

Sample strategy for marketers who have never run campaigns

There are many variables that will factor into this initial strategy: budget, time constraints, campaign objectives, and brand type…so stay tuned for another blog post that breaks down how your strategy will vary based on these variables.

For now, to keep things simple, I’m going to walk through an example of what your first-time strategy might look like if you’re a small-ish brand with a budget of $1000-$2000.

Budgeting

First things first, you need to need to figure out your budget for these blogger campaigns.

One thing that many brands forget to consider is labor costs.  Who is going to be setting up these campaigns?  You?  An intern?  An employee?  If you’re paying someone to do this, you’ll definitely need to allot money for their paycheck because this isn’t a quick process.  SO, I’d like to take this opportunity to do a quick plug for our platform.  🙂  If you are planning on paying someone to do the setup, you should use a site like ours, The Shelf.  We shorten this process significantly, and we help you find far more TARGETED people than you would manually because we have 200,000 bloggers listed along with a kick-ass search to help you narrow down to the most targeted set.  And, if you want to look at it from a cost-benefit analysis, our platform will be cheaper than your employee or intern.

Everyone will handle this labor issue differently, so let’s ignore labor costs for now.  For this example strategy, you’re going to be setting up 10 campaigns and your budget of $1000-2000 is reserved for the cost of the actual campaigns.    Since you’re treating these first campaigns as an experiment, you’re going to pick out blogs of varying sizes:  a few small, a few mid-sized, and 1-2 larger bloggers.  Therefore, your budget will not be divided up evenly between these 10 bloggers.

The way that blog-size is defined will vary from one brand to the next.  If you’re a small brand, you might define a large blogger as someone who is charging $500 per post (because that’s a pretty hefty investment for a small brand).  The term “large” is relative.  Your “large” blogs will probably be considered “small” blogs to a large global brand.

Why do you want to experiment with blogs of different sizes?  Well, this goes back to the misconceptions that many brands have when they are new to influencer marketing.  We cover this quite a bit in our previous post, but in short, many brands come in with the notion of “I only want to work with bloggers who don’t charge.”  Then these brands run around like chickens with their heads cut off trying to set up 30 campaigns with very new bloggers, only to discover that only a few of those campaigns actually generate an ROI of any sort.  When brands begin experimenting with bloggers who charge, that’s when interesting stuff really starts to happen.  BUT, you seriously shouldn’t take my word for it.  You should do this initial experiment to see which blogs perform well and which do not.  You might find that the two larger bloggers who you work with wind up sending you 95% of your traffic.  OR you might find that it’s the hyper-targeted mid-sized bloggers who do really well for you.  Your results are going to vary a lot depending on your brand and your specific goals…so it’s best to be thorough with your AB testing right from the get-go.  It will save you so much time, money, and energy in the long-run!

Understanding How Bloggers Come Up With Rates

One thing that makes budgeting difficult is the fact that blogger’s don’t typically broadcast their rates (you have to request them).  And blogger rates vary a LOT!  According to Ajaz Nanji of MarketingProfs, about 60% of bloggers charge fees to work with brands or publish sponsored content. Fees can range anywhere from $25 to $500, depending on the marketing activity (giveaway, review, online event, posting sponsored content or blogging on the brand’s behalf).

In our own experience, we’ve seen that certain verticals have significantly higher rates than others.  Fashion bloggers are generally more expensive than other verticals.  So if you’re in fashion, be prepared for those higher rates.  If you’re in food, or travel, rates are a little cheaper (generally speaking).  If you’re in marketing, or business…we’ve seen that there are many bloggers who don’t charge anything.

Second, bloggers set their own rates.  Many are very fair about this and base their rates off of market-value.  But there are others who drastically overcharge.  And many who don’t realize their own worth and therefore undercharge.  Since bloggers set their own rates, it’s difficult for brands to target effectively.  As an added annoyance, it’s really difficult to know whether or not the rate that you get quoted is actually fair unless you’ve been doing influencer marketing for a long time.  So it just requires extra time from you to understand what’s fair and whether or not your investment will likely pay off.

Conducting Blogger Rate Research

Since bloggers are so secretive about their rates (and often quote on a case-by-case basis), figuring out how to target the bloggers within your price range will usually turn into an annoying little project.  But the good news is that you’ll only need to do it once.  As you start your outreach, you’ll want to cast a wide net.  Find bloggers that cover a wide spectrum of social-following-sizes.  And send them an email asking them if they’d be interested in collaborating with you…For the ones who respond, figure out what their rates are.  Most have a media kit they can send along to you with pricing information or base rates.  Some bloggers will be way outside of your price range.  Many won’t respond at all, so you might need to keep at this activity for awhile until you have enough data to really understand the “going-rate”.

As you progress with your outreach, you’ll notice trends.  If you look at metrics like blog traffic, blog post engagement (comment counts), social followers on each of their networks, and engagement on social posts, you’ll start to see that certain thresholds will indicate a certain price range.

These trends might look something like this:

• Bloggers with a social following of less than 2000 followers might charge around $100 or nothing at all.

• Bloggers with 15-30 comments might charge around $300.

• Bloggers with 50+ comments might be well over $500. Some cross into the thousands.

• Bloggers with more than a million followers are probably out of your league.

• Bloggers with more than 50,000 followers on a social platform typically work with agents and charge over $1000.

But there can be tons of outliers…for example: a blogger that does professional photography and editing might charge you more for their time even if their follower count isn’t skyrocketing…in this case, you might even be getting two professionals for the price of one (blogger and photographer). Or perhaps you stumble across a blogger who has a really small social following and charges more than you’d expect. It might be that the followers she DOES have are die-hard groupies of her blog and whenever that blogger mentions a product, her 1000 followers immediately ‘add to cart’. So, if a blogger’s rate seems outside the ‘norm’ it might make sense to dig a little deeper. There might be a good reason for the charge.

Again, the trends I’ve listed above are going to vary WIDELY so don’t base your assumptions on the ones I’ve outlined!!!  Depending on your particular vertical, as well as the bloggers who you are targeting, your results will be unique to your own outreach.  So do your research.  And just keep track of these metrics so that you can identify trends like those listed above.  These trends will help you target more effectively as you continue your outreach.  *Many newer brands will come at this with follower requirements already sort of mapped out.  For example…you might be inclined to pass over any blogger who has less than 20,000 followers on any of the social networks.  But this can be shortsighted.  You could be overlooking quality people…and you might be setting yourself up for failure.  Instead, cast a wide net at first, until you have a firm grasp of what you’re looking for.  Once you’ve gathered data on the space, as well as the going rates, you’ll be able to really hone in on the bloggers that will make the most sense for your budget and campaign goals.

Blogger Selection and Outreach

When you start setting up your 10 campaigns, you’ll quickly discover that bloggers aren’t the most responsive bunch.  Most brands experience response rates of around 1 in 10 (on average).

Knowing that response rates are low, it’s a good idea to start out with a pretty large list of targets.  And the word “targets” is key!  It’s super important to make sure that your chosen bloggers are the right match for your brand, from a demographic standpoint.  If you’re a high-end maternity store, you’re not going to want to work with a punky teen whose favorite brand is Nasty Gal, would you?  Her audience would not be receptive to your products at all.  You can read up more on targeting in our next post.

With the average response rate of 1 in 10, you can estimate that you’ll be sending out 100 emails when you’re setting up those 10 campaigns.  It’s important to NOT send out an email blast to all 100 bloggers at once.  Setting up this first set of campaigns is a great time to learn and refine your influencer marketing skills, so pace yourself.  And be observant. One thing that many people forget to do is AB test their outreach emails.  As with any emails, certain subject lines will just resonate better.  The same goes for the actual messages.  So test these out.  Try some longer emails, some shorter ones, some with a product shot, some with a vague and inspirational subject line, etc.  You can also check out another one of our posts about Outreach Do’s and Don’ts here.  It was written by an actual blogger about her experiences and preferences when it comes to brands contacting her.

As you get responses back, you’ll start making your selections, and these selections will be made according to how you break down your budget…so it’s really pretty easy.   Using our example budget of $1-2K, you’ll be setting up some campaigns with a few smaller bloggers who don’t charge you anything, then you’ll select a bunch of mid-sized bloggers (charging between $50-$200 per post), and then, with the remainder of the budget, you’ll select one or two larger bloggers (who might charge $400-$500).   Again, breaking these bloggers down into groups will ensure that you thoroughly test out your options…because it’s important to figure out what groups to concentrate on (based on the ROI from these first campaigns).

Final To-Dos

Depending on your goals, you’ll need to figure out how to structure your campaigns.  We have another post here that talks about how to get creative with these campaigns…you can do sponsored posts, giveaways, social media endorsements, etc.  So check that out if you’d like to experiment further. But if you’re really just wanting to keep things simple for this first round, just ask the bloggers who you’re working with for their creative recommendations.  Let them know what ROI you’d like to achieve…and I’m sure they can give you ideas on how to get the most bang for your buck!  They are the experts when it comes to their blog and their audience.

Lastly, after you’ve decided on details, you’ll pay them and send out your product.  Once the post goes up, you’ll need to monitor and analyze the results.  And that’s one of the most important parts of this whole process.  These results are going to dictate what your next set of campaigns will look like.  And even after a small experiment like this, you’ll have meaningful results on which to base your next moves.

Concluding Thoughts

Influencer marketing has a pretty steep learning curve.  And the first experiment is always going to make you feel like a fish out of water.

But if you are strategic with your first set of campaigns, you can overcome that learning curve in one shot.  And you’ll be ready to hit the ground running with your next set!  After that, it’s time to optimize, optimize, optimize, which is the topic of our next post!

If you’re getting ready to run your first campaign, you should definitely read through the first post in this series of articles.  We cover everything you need to know about why bloggers charge for sponsored posts and product placements.  And stay tuned for more to follow.