Identifying the right influencers to partner with can be challenging, but what is more challenging is calculating the potential return on investment (ROI). In the simplest terms, ROI determines whether you earn more from a campaign than you end up spending.
Estimating Web Leads
So how do you go about calculating influencer marketing ROI? It does involve a bit of math, but I have developed a simple formula that you can follow. For example, I recently looked into partnering with a popular blogger to promote StemVita, an anti-aging facial mask. Using similarweb.com I was able to gather some data on their web traffic. This particular blogger was averaging 20,000 web visits per month with a bounce rate of 49%, with that I was able to calculate their "True Traffic" as 10,200 per month. Using data gathered Google Analytics, I was able to determine StemVita's average conversion rate to be 0.9%, multiplying this with the true traffic gave me an estimate of 91.8 web leads per month from this particular blog.
After determining the estimated web leads, I was then able to calculate the ROI by multiplying this with StemVita's rate of converting leads into paid customers by the average cost of the product. In this case, the 91.8 estimated web leads x 5.7% conversion x $100 = $523.26.
The influencers fee for promoting StemVita on their blog was $4,200 including a 20% agency fee. Subtracting this fee from the estimated revenue allowed me to determine StemVita would actually lose $3,676.76 in the first month of engaging with this particular influencer, but could potentially begin to yield ROI after nine months...assuming the blog post has a long lifespan.
True Traffic = No. of web traffic per month x Bounce rate
Web Leads = True traffic x Web conversion rate*
Return on Invest = No. of web leads x Web conversion rate x Cost of product - Cost of investment