A survey that Traackr conducted with Glossy found that 30% of marketers don’t know how influencer marketing ROI compares to other marketing strategies. Similarly, 32% stated that they are unsure of how influencer marketing ROI had changed from year to year.

If this sounds at all familiar to you, you’re in the right place. 

It can feel daunting to tackle the problem of influencer marketing ROI because of the sheer amount of elements that factor in. In the article below, we’ll detail how spend efficiency can help you get a clearer understanding of your ROI, and, more importantly, improve it. We’ll cover what spend efficiency is and why it matters, how to measure spend efficiency, and how you can use spend efficiency to not only identify your best investments but find opportunities to further optimize your influencer program. 

After you've read the guide, download Traackr's influencer program budget template that you can use to improve your influencer marketing ROI.

Influencer Marketing ROI: Using Spend Efficiency to Make Every Dollar Count

What is spend efficiency?

While reach, impressions, engagements, and video views are great metrics to track, they don’t actually give you an understanding of whether the performance of a post was worth the cost. This is why sophisticated marketers use spend efficiency! 

Spend efficiency helps you evaluate performance metrics, relative to your budget. When used correctly, it can help you measure the effectiveness of your influencer marketing investments, identify key areas of weakness/strength, and maximize results. Some spend efficiency metrics include:

• Cost per Post (CPP) = total cost of contract / # of static posts
• Cost per Video Post (CPVID) = total cost of contract / # of video views
• Cost per Video View (CPV) = cost of video / # of video views
• Cost per Engagement (CPE) = cost of post / # of engagements
• Cost per Click (CPC) = cost of post / # of clicks
• Cost per VIT (CPVIT) = cost of post / # of VIT points

These metrics help you understand your influencer marketing ROI at the campaign and influencer/post level, because they give you a way to tie the amount you spent to the actual performance of the content created. Next, let’s talk about the impact that a spend efficiency audit can have on your influencer program.

Tip: If you want to learn even more we have a video that dives deeper into spend efficiency and influencer marketing ROI.

What are the consequences of bad spend efficiency and how does it impact influencer marketing ROI?

Ok, so now that you know what spend efficiency metrics are, why should you care?

In short, failing to track and analyze spend efficiency can lead to a significant decrease in influencer marketing ROI. Even scarier? It happens all the time.

Here is an example that’s been anonymized but is from a situation that a real skincare brand experienced. In 2022, this brand increased its influencer program spend and its budget breakdown looked something like this:

During this period of time, the brand’s awareness campaigns included a majority of mid tier influencers with YouTube deliverables. Why did the brand make this particular strategic decision? Perhaps the team heard that mid tier influencers are impactful (they often are), and that YouTube was seeing a resurgence in popularity (it is).

However when the year came to a close, although the brand invested more in its influencer program, its campaign saw a decline in ROI. 

When Traackr did a spend efficiency audit of this brand’s program, we discovered two things. First, top tier influencers (not mid tier) had typically driven the lowest CPV, meaning they were historically the most efficient for the brand.

Second, TikTok turned out to have the lowest CPV for the brand out of all the platforms. And, YouTube actually ended up being the most expensive platform for the brand in terms of CPV. 

‍

If this brand had done a spend efficiency audit first, it probably would have gone with a completely different strategy. The data would have indicated to the brand that it should lean into its top tier partners on TikTok, and it would have likely resulted in being able to drive greater influencer marketing ROI, ultimately allowing the brand to drive greater awareness more efficiently.

This is the kind of clear direction that a simple historical spend efficiency audit can give you and your team! The truth is there is no single winning strategy in influencer marketing. What works for one brand may not work for another, which is why it's important to approach everything with a performance-driven mindset. By spending a little time evaluating the data, you can define a clear and tailored path to success for your specific brand. 

How do I use spend efficiency to set goals and evaluate influencer marketing ROI?

The first step is to make sure that you have the right data so you can conduct an audit. As we mentioned above, the power of spend efficiency is that it is based on a performance-driven mindset. If you’re unfamiliar with this term, performance-driven influencer marketing is an approach where budgeting and decision-making are driven primarily by the measurable results of campaigns. In the end, it’s an iterative feedback loop: you run campaigns, see what works, double down, and repeat.

So, the first step in utilizing spend efficiency to make better decisions is to collect the right information! Your host of information and data should help you understand:

1. What the objective of the influencers’ content was and corresponding KPIs
2. Your total spend across a campaign for a set time period
3. The cost per each influencer – not total blanket cost, but the cost per each deliverable and usage rights
4. Any boosting investments that may have been applied to influencers’ content
5. The performance per deliverable (views, engagements, clicks, reach)

Once you have all of that information in one place you can use it to conduct a spend efficiency audit and systematically answer critical questions about your campaigns (FYI if you didn’t know, Traackr is great for consolidating this type of information and can help you get rid of all your spreadsheets). Some possible questions (and answers) include:

• Which campaigns drive the best return? Group campaigns with their corresponding objective and spend efficiency metrics. For example, you could compare CPVs (cost per views) for awareness campaigns. 
• Which platforms should I invest in? Evaluate average spend efficiency metrics, per objective, across platforms. For example, if you see your lowest CPV on TikTok, prioritize TikTok for your next awareness campaign. 
• Which influencers perform best in a campaign? Map your influencers based on campaign objectives, and evaluate cost vs. performance.

Last, it’s important to set spend efficiency benchmarks for your brand. If you are just starting out, you can think of a benchmark as an ideal target or goal that you are aiming for. However, it’s ideal for these targets to be based on the reality of your market, your brand, your business model, and past performance that you’ve seen with your partners. When setting up spend efficiency benchmarks:

• Begin by evaluating your brand, market, business model, and past performance. Spend efficiency targets will look different for different brands. There are a lot of elements that factor in like brand size, industry type, existing brand awareness and influencer program success, and more. If you have access to Traackr you can also use the data we provide in the spend efficiency section of your account to understand past performance and understand your benchmarks. A great starting point is to look at the average CPV of your top 5 performing influencers, and use that as your target CPV.
• Set specific goals for each spend efficiency metric. What is the CPE, CPV, or CPC that you are aiming for influencers in a specific tier and on a specific platform? Before you map out all of your influencers, you want to set a target to help you understand what “good” or “bad” looks like.
• Map your influencers based on your objective to help you optimize your strategy and your influencer marketing ROI. When is it worth it to go above benchmarks? That is up to you and your business objectives. For example, some influencers may have higher rates, landing them outside your “good” benchmarks. But, if they are helping you tap into a new audience that your other partners aren't they might be worth the investment!
• Make sure you have the full investment picture. Content boosting is becoming a more common best practice. That being said, if your brand is boosting sponsored influencer content you need to make sure you calculate that into your total spend (as it will affect your CPE, CPV, and CPC metrics). 

Here is one way that you can visualize your spend efficiency benchmarks:

Once you’ve conducted your spend efficiency audit and set your benchmarks, you can start thinking through how to adjust your strategy. Some common adjustments we’ve seen brands make include:

• Reallocating into better investments. Brands reallocate budget from their most inefficient influencers’ fees, to additional deliverables with their most efficient partners. This not only helps them solidify relationships with strong partners, it also provides them with the potential to receive more impact (views, clicks, engagements, etc) from each campaign.
• Pouring fuel on the fire. Brands that see success and strong efficiency from influencer content recognize that there is an opportunity to further snowball that success via boosting the content. In order to allow for this they give themselves some cushion in their budget so they’re ready to amplify high-performing content even further.
• Testing new partners. Out with the old (and inefficient) and in with the new! Brands should avoid re-investing dollars in partners that aren’t proving to be strong performers. Instead, they could use the budget they would have spent on those previous partners to test a new pool of talent and see who could be a rising star. 

‍Tip: Curious to see how performance data and spend efficiency can help you make better decisions? Here’s a video that walks through how to choose the right influencers, decide on budget, report on success, and allocate future budget for your influencer program.

How do I continue to optimize spend efficiency and influencer marketing ROI?

A big portion of optimizing spend efficiency and influencer marketing ROI comes down to how you allocate budget. The cool thing about spend efficiency data is that it doesn’t just help you audit past campaigns, it can also help you budget and plan for future campaigns. Before you decide on how much budget to allocate for a campaign, you can do a quick cost forecast using spend efficiency metrics and techniques. 

This is easiest if you have historical data on influencer fees (think average costs per post for different influencer tiers, social platforms, and content types). If you don’t have historical data of your own, try asking your network of fellow influencer marketers or develop a rough estimate based on what you know. Once you have that data lined up, use this formula to develop an estimated cost of your campaign:

• Your total cost per tier = Avg. Cost * Quantity * Deliverables + (rights usage, agency fees, etc.)

Alternatively, if you’re short on time you can also plug in your information to this template which comes with pre-filled formulas.

As you continue to hone your skills in setting goals and allocating budget, it's important to perform regular spend efficiency audits. Look at your spend efficiency over time, and evaluate whether it is getting better over time in a measurable and predictable way. 

‍Here is an example of what your spend optimization efforts should NOT look like…

In this example, spend efficiency is measurable but not predictable. It’s clear that the brand has not been allocating budget in an efficient way, which might be due to a misunderstanding of what influencer, platforms, and content types are most impactful. 

And here is what your spend optimization efforts should look like…

In this example, the brand’s spend efficiency performance is measurable and predictable. It’s clear that the team has a good understanding of where to place its investments, which results in a consistently lower CPV over time. 

To recap, you can use this checklist of items to optimize spend efficiency and influencer marketing ROI:

• Match your KPIs to your business/campaign objectives
• Audit your influencer program with spend efficiency benchmarks
• Optimize your influencer program with your most efficient partners
• Track your progress to ensure you’re improving
• Set goals, but also leave room for taking risks to test and learn!