The last few years have seen a significant increase in influencer marketing investments. In 2019, $8 billion dollars was spent on the practice and this was expected to rise to $15 billion by 2022.
With such growth, influencer marketers entered 2020 with increasing pressure to demonstrate the return on their investments (ROI). Enter COVID-19, and the economic turmoil it’s leaving in its wake. This pressure has turned into pain. Budgets are being slashed and influencer marketers are now finding themselves not only with the pressure of demonstrating ROI but with delivering more with less.
Every challenge presents an opportunity. At Traackr, we believe the time is now for influencer marketing to prove its effectiveness as a marketing channel. To do this, however, influencer marketers need the proper tools to make data-driven decisions.
That’s why, today, we couldn’t be more excited to introduce our Budget Optimization toolset designed to help influencer marketers take control of their budgets by tracking spend, analyzing performance, and, ultimately, optimizing their ROI.
Here’s how it works…
Allocating Campaign Budgets and Negotiating Influencer Fees
When setting up campaigns in Traackr, you have the ability to define your campaign budget and a set of deliverables for each influencer. As you enter in these deliverables, Traackr’s Budget Calculator generates a suggested fee based on the influencer’s historical performance.
This is the first of several opportunities in the Budget Optimization workflow where data is being used to drive efficiencies. Traditionally, influencer marketing has followed in advertising’s footsteps with fees being negotiated based on audience size. However, audience size isn’t the best metric for influencer compensation—impact is.
Take the example below. Traditional practice would suggest the first influencer be paid more than the second given her significantly larger audience. However, Traackr’s Budget Calculator suggests just the opposite as the second influencer’s engagement rate for similar campaigns has historically been much higher.
By providing a suggested fee based on historical performance, Traackr enables you to align your investments with impact and negotiate with confidence. When you agree on fees, you can record your spend for each deliverable to track your overall campaign spend and analyze the performance of your investments. Finally, as influencers fulfill their deliverables, you can make payments directly through Traackr’s integrated and secure payments solution, avoiding hefty agency fees and ensuring your budget is fully allocated to value generating activities.
Analyzing Campaign Performance
During and after campaigns, you can dive into the analytics reports to understand performance. In addition to standard campaign metrics (posts, engagements, video views, etc.), you’ll also find a set of cost-based efficiency metrics for each influencer: Cost-per-Post (CPP), Cost-per-Engagement (CPE), Cost-per-Video View (CPV), and Cost-per-Story View (CPSV). These efficiency metrics enable you to analyze and compare the performance of your investments across your influencers.
For instance, in the example below, although the cost of collaborating with the first influencer was significantly higher than the second (over 60x!), her CPE was actually lower, indicating it was a worthwhile investment.
Analyzing Program Spend and Optimizing ROI
Although analyzing individual campaigns is important, it’s just the tip of the iceberg. The true opportunity lies in analyzing spend across your overall influencer marketing program and identifying the influencers and strategies that are outperforming.
As influencers participate in various campaigns, you’ll see a history of your collaborations in their influencer profile with all relevant campaign information, including spend data and efficiency metrics.
In the example below, you’ll see the influencer’s CPE for the Summer Campaign was less than half her CPE for the Winter Campaign. As it turns out, these campaigns were with two different brands. Perhaps the influencer’s audience has more affinity with one brand than the other. It’s these types of insights that will help you invest in the right strategies and optimize your ROI from the influencer going forward.
Similarly, you’ll be able to track spend and analyze performance across campaigns. For example, below you’ll notice the Summer Campaign had a relatively low CPE while the Fall Campaign had a relatively high CPE. It’s worthwhile investigating further to uncover best practices that can be learned from the Summer Campaign and issues that can be avoided from the Fall Campaign.
Finally, you’ll also be able to track spend and analyze performance across your influencer program. For example, below you’ll see all US influencer spend in 2019. This is useful information to have at your fingertips when building your 2020 influencer marketing budget.
That said, in 2020’s economic climate, your budget may be a fraction of what you had to spend in 2019, so you’ll have to ensure it stretches much further. Once again, you can turn to the efficiency metrics to partner with influencers that have a proven track record of performance, align your investments with impact, and, ultimately, optimize your ROI.
It’s Time to Prove the Effectiveness of Influencer Marketing
It’s not often a global event happens that completely disrupts the status quo like we’re experiencing today. With the right data and tools in hand, we believe influencer marketers have an opportunity to overcome the challenges that lie ahead and, in doing so, prove the superior efficiency and effectiveness of our practice. We couldn’t be more excited to support you in getting there!
For more information, contact us to schedule a demo or keep learning by reading our latest report, Optimize Influencer Investments with Data-Driven Influencer Marketing Software.