Influencer marketing is not new. In the mid 1960s, when Lee Iacocca was General Manager of Ford, he was preparing to launch the new Mustang onto the American public. Legend has it that as part of the marketing program, Iacocca placed Mustangs in the hands of “big men on campus” types at colleges and universities across the country to jumpstart the new model’s cool factor. Today, influencer marketing is common practice for a growing portion of marketing budgets, with brands expected to spend as much as $5-10 billion with influencers by 2020. You could say that with social media, influencer marketing has been taken to scale. For marketers who haven’t yet taken the influencer marketing plunge, it’s time to ask some basic questions:
- What are the FTC regulations governing influencer marketing?
Why is this the first question? If you have never done influencer marketing campaigns, this is an easy (and potentially costly) point to overlook. The FTC requires all influencers to disclose any sponsorships near the top of any post. The FTC has an online endorsement guide in an easy-to-follow Q&A format. Protecting yourself and your influencers is easy, but you need to understand the constraints.
- How do you find influencers in the first place?
According to the Linqia State of Influencer Marketing Report 2017, 64% of respondents engage dedicated management companies (Linqia being one example) to provide turnkey influencer programs.
- How do you distinguish between reach and influence?
In its simplest form, reach is equal to the number of followers or subscribers that are exposed to an influencer’s content. Some may add secondary reach numbers, e.g.: populations exposed to reshares. But anyone can buy followers, or the appearance of reach. So, neither of those numbers really quantifies influence. To quantify influence, you need to do a little homework beyond the raw numbers:
- What percentage of the influencer’s audience meets your target customer profile?
- What percentage of the content they produce is relevant to your industry and target customers?
- Does the influencer achieve more or less engagement when they are delivering content relevant to your industry or business?
- Do they command a similar presence across platforms?
- How do influencers get paid?
There are a number of methods, each with its pros and cons. Some favor success on the influencer end of the funnel, other favor success on the marketer’s end of the funnel.
- Free products or services—you want the influencer to talk about something, you give them that something for free. This is generally better suited to one-off campaigns, product launches etc.
- Pay per post (PPP)—a set fee paid to the influencer for each blog article or social post linking to your site. Easy to verify, but it assumes all posts have equal value, regardless of their effectiveness.
- Cost per engagement (CPE)—a set fee for every click, share, forward, et al. This model begins to distinguish between the relative values of various posts, but is more cumbersome to track and doesn’t tie back well to downstream business metrics.
- Cost per click (CPC)—a set fee is paid to the influencer for every click through to your site. It addresses the issue of relative value based on effectiveness of the posts to generate clicks, but stops short of rewarding for the quality of the customer delivered.
- Cost per acquisition (CPA)—a fee is paid only when someone an influencer has directed toward the site converts to a customer, e.g. subscriptions or sales. This definitely favors the marketer as it limits the ultimate cost per acquisition.
- How do you measure ROI (Return on Influence)?
So, after you choose a cost model, how do you tie it back to success measures? The short answer: the closer your metrics get to an actual monetary transaction the greater your ability to calculate true ROI. Now, for the longer answer. If your goal is increased awareness, you can run pre and post campaign awareness surveys. But it’s probably impossible to tease out the incremental effect of an individual influencer outside of the broader marketing you’re performing. If you’re looking for something more concrete, like page views, supplying influencer-specific tracking URLs tied into your analytics package, or creating influencer-specific landing pages will do the trick. That will at least get you to understand what those specific clicks and views are costing you.Delving even more deeply into the analytics, you can track specific events to see how deeply the users the influencer is delivering are engaged. Ultimately, if you assign a specific dollar value to specific engagement points, confirmed active leads, or final transactions, and you can review your analytics to track those leads back to specific influencers, you can quickly come very close to quantifying exact percentage returns on dollars spent.
Bonus question: should you trust your brand to a third party?
The simple answer is that your brand is already being talked about online. So, assuming you’re transparent about the sponsored nature of your influencer relationships, proactively guiding the conversation into positive territory can only be beneficial. Just take the time to understand who those influencers are and what the depth of their influence is. Also make sure your compensation method aligns with your business goals and analytics capabilities. The rest should feel like a great conversation.