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Are marketers doing enough to prove the ROI of influencers? Do they even need to?
Econsultancy has just published a discussion of the topic, titled Measuring the ROI of Influencer Marketing, in association with Fashion & Beauty Monitor.
Let's look at some of the issues.
Influencer marketing is now at the top table
The first point to make is that spending on influencer marketing is not insignificant. The past couple of years have seen high profile campaigns, particularly in fashion and beauty, but also in travel, food and beyond.
Sponsored social posts from the most influential stars can now command fees of up to $100,000. In 2016, according to Linqia's State of Influencer Marketing report, most marketers (33% of respondents) say they spend $25,000 - $50,000 on an influencer marketing campaign.
What's more, these figures are rising. 59% of survey respondents for Econsultancy's 2016 Rise of Influencers report said they planned to increase influencer marketing budgets through 2016.
Humble beginnings have led to little or no measurement
Both Econsultancy and Linqia's surveys identify measuring ROI as one the biggest challenges for marketers working with influencers, selected by 65% and 78% of respondents respectively (as one of their three biggest challenges). In the Linqia survey, this is by far the most common challenge amongst respondents, and in the Econsultancy survey is beaten only by finding the right influencer (73%).
Maddie Raedts of the Influencer Marketing Agency suggests that this inability to measure ROI stems from influencer marketing's roots.
“It all started far more basically with little giveaways or barter deals," she says, "but now, after all these years, brands are investing far more and really want to see ROI. Is it really driving consumer buying behaviour, or boosting brand awareness or actually pushing traffic to a particular website? These are the questions we need to be answering.”
This naivety about ROI is confirmed by influencers themselves. Hayley Carr, author of the London Beauty Queen blog, admits that, “A lot of the time I find I’m better equipped to deal with measurement than brands or agencies. I have a booking sheet which asks the brand what their objectives are and what they’re looking to achieve, and nine times out of 10 it comes back blank."
Hayley continues, "There’s no measurement thought process from a brand or PR point of view. They don’t know how to measure success and they don’t know what they’re looking for. There’s a lot of money going round in the blogosphere but no one’s really measuring it to see what ROI they’re getting."
Marketers need to prioritise engagement over reach
74% of influencers surveyed in The Voice of the Influencer report say that brands they work with are looking for reach/numbers when choosing who to collaborate with. 57% of influencer respondents said this was their greatest challenge, being judged on their number of followers, over and above context and content.
Even in the world of print and TV advertising, it's obvious that reach is just one goal of any campaign. Advertisers also want to ensure the best context for their ads, to ensure they get cut through with their audience. Display advertising shows us how misleading potential reach can be, if the format, the targeting and the context don't work properly.
This is perhaps even more apposite when it comes to social media and influencers. Large numbers of followers sometimes aren't all they seem, particularly on Instagram. A study by Markerly looked at over 800,000 Instagram users and showed diminishing returns in terms of engagement rate as follower total rises.
Those accounts with fewer than 1,000 followers had an average 8% rate of engagement, whereas those with more than 10m followers averaged a 1.6% rate of engagement. It's this phenomenon that has led to many brands beginning to work with micro-influencers to target longer term and more valuable engagement with fans.
The theory here is that though influencer marketing must prove its value as a way to market, proving ROI is more nuanced than counting Likes or shares.
Darby Barton and Nichole Brandt from influencer marketing agency XOMAD say traditional marketing metrics such as traffic and conversions generated can lead to "inaccurate expectations and campaign planning. Cost per engagement models will provide more accurate pricing and greater ROI for influencer strategies."
Influencer content has lower CPM than standard social advertising
Though brands are spending more on influencer marketing, they may be getting more bang for their buck when compared with traditional advertising.
The cost of seeding influencer content is relatively cheap when judged against traditional social media advertising on a cost-per-thousand-impressions (CPM) basis. Ed East, CEO of BillionDollarBoy.com, writing for MarketingTech says: "There are figures all over the internet looking at specifics but on average social media advertising is three times more expensive than influencer marketing.”
In addition brands working with micro- and mid-level influencers could stand to make significant savings on content production as influencers' production skills improve. East writes that "the influencer is largely replacing the role of the model and photoshoot for product campaigns. Influencers have become so advanced in their production skills that brands no longer need to hire professional photographers, models and locations to create beautiful content for their brand as they would with a traditional advertorial shoot. Influencers include all production costs within their fees, which are impressively lower than a traditional production."
These dynamics mean that brands see influencers as an affordable way to create compelling content that can improve advertising effectiveness and lower costs of using big stars and big above-the-line budgets.
Marriott's recent Snapchat campaign with Jen Levinson
But standard biddable media metrics cannot be easily applied
However, as Barton and Brandt allude to, there are softer (or at least more difficult to measure) metrics that are most pertinent to influencer marketing.
Though sentiment analysis and brand awareness measures are fairly straightforward, taking stock of authenticity, quality of content and long-term relationships (with influencer and consumer) is more difficult. Doubtless though that these more touchy-feely metrics correlate with some firmer KPIs.
The Kendall Jenner Pepsi advert fiasco is one example of how traditional advertising, when attempting to aspire to authenticity, can go horribly awry. This episode alone shows how influencer marketing potentially represents less of a risk than trying to achieve the same goal through big brand creative.
Yeah.....but what about sales and revenue?
The title of this article is designed to get the goat of old school marketing and advertising types. "Of course we should be able to prove the ROI of influencer marketing! That's what we do - we sell stuff."
I agree with this sentiment, of course. And where influencers are used to feed into a publishing strategy or social advertising, there's no reason marketers shouldn't be aspiring to the same multi-touch attribution models and advanced causal-impact analysis.
However, disassociating influencer marketing from its more genuine/authentic roots is a recipe for disaster, and to that end, brands must understand the role of influencers in developing their brand, particularly its appeal to younger demographics.
Big campaigns should lead to an uplift in sales, just like TV advertising, but let's leave the last word to Julia Munder, International Marketing Manager at Maxwell Scott Bags, who says, “Revenue is a bonus, but it doesn’t always work that way."
She continues, "From a brand perspective, if I allocate budget, I always need to make sure I get something out of it. So that could be newsletter signups, it could be followers, it could be subscribers on social channels. As long as we see an outcome that could result in something that brings us revenue or get the brand out there, then I consider it to be a successful cooperation with the influencer.”
See the Econsultancy report for more debate and tips on measuring ROI from influencers