Why is Influencer Marketing ROI so high?

Influencers have a strong voice because they are viewed as a more reliable source than traditional advertisers. Some data to highlight this:

A Nielsen report shows that 84% of consumers become buyers based on reviews from trusted sources versus all other advertising
Forrester Research released a report saying 84% of consumers become buyers based
A McKinsey & Company study says that word-of-mouth is the primary factor behind up to 50% of all purchasing decisions

To sum it up, a person is more likely to buy from a peer recommendation vs a brand promoting their own product. Using social media like Instagram or video content marketing like YouTube has high returns.

How to Measure Influencer ROI

There are four performance metrics that play a huge role in influencer marketing. Each one amplifies content to a greater audience so getting a balance of everything is best result.

Impressions – A measurement of the number of times a post has been viewed. Impressions are good indicators of campaign effectiveness and a good metric to follow when the scale of the project is large.
Engagements – Each social media has its own form of liking and sharing. This improves the number of overall impressions and provides a deeper insight into how well the campaign is doing.
Brand Mentions – Word of mouth is one of the most powerful forms of marketing and brand mentions are the digital equivalent. Earning brand mentions from a good influencer post is a great indicator of a good campaign.
Conversions – The final measurement is based on both conversions to a website as well as conversions into a customer. Using trackable links or promo codes on visual branding like Instagram, online conversions can be tracked and measured for future improvements.

Influencer Marketing has been a trending topic helping boost brands engagement.

Marketing companies have been switching their marketing campaigns from digital advertising due to ad fraud and ad blocking on the rise. Their budgets are shifting toward earned media. Companies want distribution options where they know their brands can reach the right audiences.

Forrester Research reported in May 2015, Social media spending in the US is expected to reach $27.4 billion by 2020, up from $12.3 billion in 2015, growing at a five-year compound annual growth rate (CAGR) of 17.4%. This represents an over 12-fold increase from 2010, when social media spending in the US was close to $2.2 billion. This forecast estimates both the number of social media users and the social media spending by the type of device: desktop and mobile.

In 2016, 65% of brands have plans to increase their influencer marketing budget this year and, when compared to other strategies, influencer marketing gets the biggest slice of investment.

Influencer Marketing has provided excellent results to Brands

78 percent of brands increased their content output in the last two years but average content engagement decreased by 60 percent. Basically, content marketing really need influencer marketing to succeed. (Source)
47 percent of online customers use ad block technology. The way to reach them is to provide content they want from people they trust. (Source)
92 percent of people trust recommendations from individuals (even if they don’t know them) over brands. (Source)
25 percent of web traffic is driven by Facebook alone. Social is supplanting search for content discovery and Facebook’s 1.5 billion users are helping that happen. Their video play growth is huge, as well. (Source)
50 percent is the pace of Instagram’s annual user growth. Snapchat at 56 percent. Periscope is growing quickly, too, with 10 million users in four months of existence. Multichannel marketing is getting exponentially more challenging. (Source)
74 percent of consumers use social media to make purchase decisions. (Source)
8 in 10 of the most influential people for teen audiences are YouTube stars. That number keeps growing every year, pushing traditional celebrities further down the list. (Source)
81 percent of marketers who have used influencer marketing judged it to be effective. (Source)
51 percent of marketers believe they get better customers from influencer marketing. That’s because the relationship began with trust in the influencer. (Source)
37 percent better retention is reported for customer acquired through word-of-mouth advertising.(Source)
59 percent of marketers will increase influencer marketing budgets in 2016. Make sure you pick the right influencers for your brand. They’ll be in bigger demand. (Source)

Influencer marketing companies are divided into two types

Earned Influencer Marketing
1. Earned marketing are unpaid or existing relationships with influencers — also known as brand advocates or brand ambassadors. For example, Pepsi has thousands of influencer advocates for its soft drink; these people drink the product regularly and endorse the product because they enjoy it.

2. Paid Influencer Marketing Companies (Paid, CPS, CPC, CPI)

Paid- Brands employ a social influencer to tweet about their products or services. Paid posts can range from $500 to $50,000 per post.
CPS-Commission per Sale is based on a social influencer paid for each sale coming from their social media post.

*Most attractive for E-commerce companies with proven Return on Investment.

3. CPC-Cost per Click is based on based on a social influencer paid each time a fan clicks the link they promote.

4. CPI- Cost per Install. Is based on social influencer paid based on a social influencer paid each time a fan clicks App download link they promote.

**Most attractive for E-commerce and Gaming companies with proven Return on Investment.

This type of marketing can happen in several ways

The influencer can write a post or article about the product/service/company.
The influencer can share info about the product/service/company on social media.
The influencer can allow for the product/service/company to be “hosted” on his/her website.
The influencer can follow, like or share the product/service/company, which does not have the same impact of the possibilities above, but can still be interesting.
A mix of (and even all) the items above.

The merits of influencer marketing are almost obvious: on one side, the product/service/company gets a great deal of exposure, depending on the influencer’s popularity, exposure, and social following. The influencer, on his turn, gets paid for doing so.

As an Influencer Marketer, you should execute the following for your campaign

Identify potential earned influencers.
Begin to build your own influence first.
Host Competition and Giveaways.
Social Media Takeover.
Host an Instagram Party.
Offer Affiliate Links and Discount Codes.
Host an Event.
Getting Involved in the Creative.

If you need more information developing an influencer marketing campaign contact us.