The ROI of Influencer Marketing

The following is republished with the permission of the Association of National Advertisers. Find this and similar articles on ANA Newsstand.

 

By David Ward

Though it’s been available for last several years, influencer marketing has shot to the top of the marketing stack for a growing number of savvy brands, especially those in the fashion, beauty, gaming, and lifestyle sectors that are looking to lend more authenticity when they engage their audiences.

Spending on influencer marketing is increasing, but are marketers using the right measures to track its success?

The reason for the surge in spending is pretty straightforward: Consumers trust the influencers they follow for brand and product recommendations. “Consumers are frequently discovering new products and brands through influencers, with as many as 41 percent of consumers saying they find at least one new brand or product from an influencer weekly, and 24 percent saying they did so daily,” according to Rakuten Marketing’s recent “2019 Influencer Marketing Global Survey — Consumers.”

But as marketers boost their spending on influencers — sometimes at the expense of other digital and social platforms — they want to better understand not just how influencer marketing works, but what can be done to make it more effective.

Influencers continue to suck up a lot more of the marketing oxygen and command more attention — and budget. Some influencer marketing programs, of course, have morphed into pay-for-play, in which transparency from both sides of the table is key. Another area to watch more closely is the proliferating number of bots posing as followers of brand influencers.

Indeed, the growing interest in influencer marketing has led to more demand for better metrics so brand managers can determine not just which set of influencers are best for their products and/or services, but to benchmark and predict how influencers will perform relative to other digital advertising channels.

Sharp Learning Curve

When many brands first approach influencer marketing, their focus tends to be on finding the right influencer specialty agency and then working with a small set of influencers who can serve as brand ambassadors or brand advocates.

Take USPA Global Licensing, the for-profit global licensing/apparel division of the nonprofit sports organization, the U.S. Polo Association. The brand was already a bit of an under-the-radar global success when fashion industry veteran J. Michael Prince took charge as president and CEO in early 2018. But he quickly realized something was missing.

“We have more than 1,000 of our own retail stores around the world, and most of the advertising was occurring at the retail store level, with billboards and local ads,” Prince says. “We didn’t have a strong presence on social media and influencers can have a strong impact in that space.”

Prince turned to Marina del Rey, Calif.–based HelloSociety to launch the U.S. Polo Association, in which influencers share brand storytelling and engage with the product. “They helped us sort through influencers throughout the U.S. and come up with a core group who complemented influencers we were already working with, polo athletes, who were brand ambassadors with their own followings.”

Prince admits that this strategy focuses more on storytelling and building global brand awareness rather than completely focusing on the granular metrics of influencer marketing. However, during the 18 months the USPA influencer campaign has run, the brand has added hundreds of thousands of followers around the world while driving double-digit revenue growth reaching a record $1.7 billion in retail sales.

USPA branded clothing saw double-digit sales growth during the past 12 months, reaching $1.7 billion in annual revenues. “Down the road we’ll start looking at the ROI and which influencers are driving consumers to our web site, but for right now our focus [is] on brand awareness,” Prince adds. “If I know when I put $1,000 into an influencer and I get 150,000 likes behind it around the world, that’s good for me.”

Pamela Kaupinen, senior VP for strategy at HelloSociety, says her company’s Campaign Impact Study tool found that among the organic audience exposed to USPA Global Licensing influencers, the campaign generated 88 percent content recall and a 95 percent improvement in how the audience perceived the brand. “The study was also able to put metrics behind actions taken, demonstrating that 33 percent of respondents made an immediate purchase, and 56 percent intended to purchase,” Kaupinen says.

The Evolution of Influencer Metrics

In many ways USPA Global Licensing reflects the path many brands take when it comes to engaging influencers. To wit, early success leads to more budget, which inevitably leads to calls for more metrics with more sophistication to better compare influencers with other digital and social spending.

“The metrics are starting to evolve,” says Jim Tobin, president-founder of Cary, N.C.-based influencer agency Carusele. “Sophisticated marketers know that follower numbers don’t align with actual views of content.”

Tobin stresses that what CMOs and brand managers need most is an understanding of exactly how many of an influencer’s followers engage in a brand’s content. That’s driving demand for tools that can spike revenue, including Carusele’s free “True View Calculator,” which calculates what percent of an influencer’s followers will actually see the influencer’s posts on various social networks.

“Clients are also looking for measurements for things like saturation rate, which is the percent of an influencer’s content that is sponsored versus organic, as well as the click-through rate for the e-commerce links on an influencer’s page, and even the conversion rate per influencer and per each piece of content,” Tobin says.
 
Moving Beyond Impressions-Based Metrics

Daniel Schotland, COO of Linqia, a performance-based influencer marketing company, says a recent study the company conducted with Altimeter determined that influencer marketing should be roughly 25 percent of a brand’s overall digital spend. But for that to happen metrics have to go beyond impressions, the study says.

“What we’ve found is that impression numbers don’t really mean that much,” he says. “We work with brands to provide the proper levels of consumer incentives and then align those incentives with what the brand wants and what the influencer delivers.”

Linqia recently launched its Intelligence Suite, which can measure an influencer marketer’s ROI and ad effectiveness for both upper funnel and lower funnel campaigns, including brand awareness, ad creative impact, consideration, purchase intent, offline store visits, in-store sales, TV tune-in, and the likelihood to recommend. Linqia’s partners in the Intelligence Suite include Dynata, for ad creative impact; IRI, for sales lift; Foursquare and Placed, for store visits; and Samba TV, for TV tune-in.

These tools work best when marketers establish clearly defined objectives well before the campaign launch, Schotland says. “Brands have to know what they want to accomplish and then choose the right set of influencers and find a way to drive that particular action,” he adds. “We focus on making the influencer accountable so they have an incentive to make great content that resonates with that audience and drives a specific response.”

Clorox’s marketing efforts via companies like Linqia help to illustrate where influencer marketing is headed. Clorox CMO Stacey Grier says that with the right tools in place influencer marketing can do a lot more than simply drive awareness and affinity.

“On the strategic level, influencers provide guidance on everything from the new products we create to how we shape our messages,” she says. “Executionally, influencers help us tell our stories credibly in the digital space by bringing their authenticity and creativity to create a connection with people.”

Compare Apples to Apples

Tobin, from Carusele, says that the good news for advertisers is that many of the tools, metrics, and terminology already used to measure digital and social campaigns can be ported to influencer marketing programs — albeit with some caveats.

“To the extent we can get apples to apples data, that’s a big win,” Tobin says. “Having said that, there are measurement issues that come about when you’re using a bunch of third parties to deliver a message, and more issues that come about because the social networks don’t let you use any pixels, other than their own, to track exposure. It gets complicated, but a lot of existing metrics can be replicated or tweaked for influencers if you do it right.”

Stephanie Stabulis, VP, senior strategy director at Houston, Texas-based HireInfluence, agrees that most metrics from digital/social/mobile can be applied to influencer campaigns, but cautions that some metrics may not be defined or measured the same way.

“For example, reach is often referred to as audience size when talking about influencer marketing but, to some in social media, reach is the actual number of unique people a piece of content has reached,” Stabulis says. “There must be understanding of the differences and industry terminology to properly assess effectiveness across entire industries.”

Stabulis also stresses that a reliance on quantitative digital and social measurements ignores the qualitative value of influencer marketing. She states, “Things like third-party approval, creative content for releveraging, the ability to use influencers to innovate product/services and improvements or gather feedback or sentiment around thoughts and ideas, these are high-value benefits not applicable to other advertising methods.”
 
AI infiltrates Influencer Marketing

As influencer marketing matures, both brands and marketing agencies want to bring some predictability to such programs by setting benchmarks and leveraging emerging tech such as Artificial Intelligence (AI). “There are millions of content creators out there and finding the right ones that can help a brand drive their objectives is definitely harder without AI,” Schotland of Linqia says.

Schotland says Linqia guarantees the performance of its influencer marketing and AI helps ensure that performance by analyzing how consumers interact with every post, including evaluating image recognition, logo detection, topic analysis, and sentiment analysis.

Stabulis of HireInfluence points out that, as of now, AI can’t be applied to harder-to-quantify metrics such as believability and authenticity, but adds, “We are seeing a lot of AI directed at improving the audience’s experience with influencers, such as allowing them to better locate products, especially in fashion.”

Fraud and Influencer Pay Standards

Akin to most every other category in digital, social, and mobile advertising, influencer marketing has its share of bad actors, especially as influencer compensation is generally tied to the amount of followers they have — or claim to have.

Instagram, the leading platform for influencer marketing, per the Rakuten Marketing Survey, provides Instagram branded content tools for brands that partner with influencers.

However, Instagram has also started to clamp down on fake followers. The Facebook-owned platform launched an initiative earlier this year to remove inauthentic likes, follows, and comments from accounts that use third-party apps to boost their popularity.

Points North Group has been at the forefront in alerting the advertising industry about the problems of fake, often non-human bot, followers eating into the effectiveness of influencer marketing. It noted that of the $744 million spent by brands on influencer programs it studied, $102 million was wasted on bogus followers.

Sean Spielberg, co-founder and CEO of Points North Group, says that when it comes to fraud, the amount of influencers a brand uses can make a huge difference in its ability to detect and combat bad behavior.

“If they’re only working with a few influencers, brands can do a deep dive into the influencer’s content, posts, and engagements, especially going back maybe one to two years ago, because back then fraud was a lot more obvious,” he says. “Old posts with usernames that are gibberish is good evidence that the influencer may have been boosting their numbers.”

Spielberg adds that having third parties validate both followers and engagements is one way to combat fraud. Ditto for requesting that influencers provide screenshots showing each post’s impressions and/or reach. “If an influencer is reluctant to share their screenshots, I would consider that a strong sign that there is something there that they’re hiding,” he says.

Spielberg adds that his company also helps brands determine the proper compensation for influencers now that influencers are no longer settling for free product.

“The word-on-the-street benchmark is that influencers are paid 1 cent (per follower, per post),” Spielberg says, adding that, in reality, that rate should be lower, closer to .3 cent per follower per post. “Influencers should really be negotiated down.”

An industry standard for influencer compensation would go a long way toward making it easier to calculate ROI, but that ignores that fact that not all influencers are created equal.

HelloSociety’s Kaupinen, for instance, argues that rates should be customized-based variables that factor in influencer expertise and content creation, follower count, engagement rate, and the scope of the influencer’s overall work for the brand. “The custom, unique nature of influencer partnerships is part of the inherent value, which is why rates are not standardized,” she says.
 
Accelerating the ROI of Influencer Marketing

While it is possible to coach and guide influencers to better deliver messages and showcase products, that could backfire by taking away the authenticity of their recommendations.

Rather, it is up to the brand, working with their influencer agency and third-party analytic firm(s), to establish specific goals and KPIs for the influencer programs — and then measure against expected benchmarks.
 
“I’m still seeing brands that either don’t know what they want to measure or they want to optimize for everything, saying ‘I want traffic, but also awareness and lots of engagement,'” Tobin, from Carusele says. It’s up to internal marketing departments, he adds, to establish the proper metrics for success for its influencer programs.

“Brands should avoid influencer agencies that talk about ‘max potential impressions,’ which is when a tweet sent from an account with 10,000 followers is counted as 10,000 impressions,” Tobin says. “You want influencer programs that can get the best content in front of the best customers and measure the true views of that content.”

Linqia’s Schotland and others warn against brands looking at influencers as simply a short-term experiment that doesn’t need the discipline and metrics that are baked into its other digital and social marketing activities.

“The biggest mistake we see is brands using influencers as a one-off. They get in, they get out and they’re done,” Schotland says. “Influencers should be part of a brand’s long-term marketing budget because they work really well to support all other channels.”