You work in the marketing department of a large company, and have been tasked with taking it into the 21st century using influencer marketing. Your boss has been reading about this new form of digital marketing, and she’s gotten pretty excited by all the articles she’s come across that declare “Influencer Marketing delivers 11x ROI over all other forms of digital media.” Before you go full-fledged into this new marketing frontier, you start researching different platforms to find out which will be the best choice to manage everything. Reading software reviews at the internet’s best resource for such things, you narrow your choice down to two of the leading solutions for companies like yours: NeoReach and TapInfluence. The former’s website presents their best case study, showing a 5x Influencer Marketing ROI for a campaign launched by FanDuel using the NeoReach platform. The latter’s website boasts about achieving 11x ROI using their platform. Download the Free Influencer Marketing ROI Guide So who gets your business? They both look like great solutions on paper, but TapInfluence clearly outperforms NeoReach in practice, right? Plus, their statistic looks a lot like the one your boss has been telling you about. You do a quick Google search and find several articles supporting what your boss has told you. Influencer marketing delivers 11x ROI over all other forms of digital media. Bill Carmody over at Inc.com said it. It’s actually the headline of his article. Louis Foong at business2community.com wrote a piece called “Influencer Marketing Drives 11x More ROI.” Jay Baer at convinceandconvert.com called the 11x figure “the shocking ROI of influencer marketing.” Nielsen Catalina Solutions delivered a webinar, archived over at brighttalk.com, that promises to help you “Improve Marketing ROI by 11x with Influencer Marketing Automation.” Suddenly, the choice looks like a no-brainer. Influencer marketing is on record as delivering an 11x return on your money, and Tapinfluence is the platform that can actually reach those heights. Unfortunately, this decision actually turns out to be much more complicated.

In-Depth Analysis of Influencer Marketing ROI:

Beware of “No-Brainers”

While the idea of making a choice that doesn’t require any critical discernment is appealing, it’s just not the best way to make decisions. Stepping in front of a speeding truck is also a no-brainer, so maybe you’ll want to put more thought into how you spend your seven figure marketing budget. And if you do that, you’ll see the claims of IM’s “shocking ROI” start to fall apart. They just don’t hold up when you dig a little deeper. As it turns out, no: influencer marketing, as a practice, does NOT deliver 11x ROI.  TapInfluence does. Or, at least, they did for that one case study they published. Except they didn’t, really. This is what really happened: TapInfluence partnered with NCS to study a single campaign they ran for White Wave Foods. They studied the purchases of two distinct groups of consumers—those who had been exposed to content created around the IM campaign, and a control group that saw only display ads. In a nutshell, the IM-exposed group spent 11 times more money than the control. There are two problems with this:

That’s not ROI. TapInfluence’s campaign was undoubtedly a success, but they’re comparing two sets of results, not the money earned from White Wave’s investment. Even if it were an 11x return on investment on White Wave’s money, that still doesn’t prove influencer marketing as an industry delivers these results all the time. That’s like eating a salad from McDonald’s and then writing an article titled, “Fast Food is Healthy Now.”

If anything, it’s the propagation of the 11x figure—and not the figure itself—that shows the power of influencer marketing. TapInfluence broadcast the results of their case study, and the internet hype machine took it from there. And now that number has become the gold standard to which brands and agencies aspire, a standard which might do more to harm the credibility of influencer marketing than help it. Already, stories like this one demonstrate how marketers and executives are throwing money at influencers, and then regretting it—all chasing what may very well be unrealistic expectations.

From Apples to Oranges: ROI Formulation Has Gone Bananas

Another problem with the 11x Influencer Marketing ROI statistic is that it’s not based on any standard formulation of ROI. We can’t blame TapInfluence for that, though, because the fact is there is no standard. It’s that lack of standard that allows TapInfluence to present their success as a return on investment in the first place. And they’re not alone in this. Let’s go back to NeoReach and their biggest success story: the 5x ROI that FanDuel achieved using their platform. If you read their case study, you might notice something in it. Namely, nothing in the details actually points to a 5x return on investment. It’s clear from the document that the FanDuel case was an unmitigated success. We can safely say this because there are some numbers that stand alone and require little context to understand. FanDuel’s influencer marketing campaign created more than 38 million organic impressions, at a cost that was 10 times less than paying for those clicks through social media advertising. That’s huge. But how do they explain the 5x ROI figure? They don’t, really. What they do say is that, in 2015, FanDuel raked in more than $1.8 billion in entry fees paid by users—up from $370 million the year before. That’s roughly a 5x increase, during a timeframe that coincided with their IM campaign. But their influencer marketing campaign was part of a full-on marketing assault that included billboards and TV ads, along with traditional digital display ads on the web. So, yes, that increase in revenue correlates to using influencer marketing (they didn’t use any the year before), but can we really say that all of their gains came from this initiative? Correlation and causation are two different things. Even if we assume that both success stories can be directly attributed to influencer marketing, that’s where the similarities between the two end. TapInfluence points to better sales from IM than display ads for a single campaign and calls that ROI. NeoReach looks at annual revenue and calls it the same thing. And these aren’t the only differences. While both companies are considered influencer marketing platforms, and both are rightly considered top players in their field, their approaches aren’t even close to being similar.

TapInfluence offers a kind of white-glove marketing service. They conceived and executed the campaign for White Wave, using influencers from their own network of creators who’ve opted in to the platform. NeoReach offers piles of data on over 3 million influencers, and automation tools for managing campaigns. FanDuel’s own marketing people conceived and executed their campaign, using influencers they found through NeoReach’s service. They then managed and tracked the campaign with the tools built for that purpose.

You just can’t compare either company’s claims against the other’s and use them as evidence that one is superior to the other. Think of it like this: A hybrid car is incredibly fuel efficient. A diesel truck can tow massive amounts of cargo. Which is the better vehicle? It really depends on what your goal is. Maybe ROI isn’t the metric we need to be focused on when judging influencer marketing in general. It has its use after the fact, when the campaign is over and a company can look at what they spent versus what they got back. At that point, it makes sense to measure the performance and determine whether it was worth the investment. But in terms of foresight, there’s just no way to accurately predict what the return on your marketing dollars is going to be. There never was a way to do that with traditional advertising, nor is there a way to do that with digital marketing. Predicting ROI is like predicting the weather: we can make some solid educated guesses, but we really never know the truth until it happens.

Views on ROI in 2021

Since we first wrote this article, views have changed somewhat on ROI in influencer marketing. For a start, you generally won’t see many references to ROI in case studies on the websites for influencer platforms and agencies. Even the examples we’ve referred to for NeoReach and TapInfluence are buried within their websites. Newer case studies don’t focus as much on ROI. Other companies also place less emphasis on the exact ROI of the campaigns they run. GRIN refers to a 10X ROI in a case study on their client, Trifecta, but that is buried reasonably deep within their website.  AspireIQ refers to a 242% ROI on their homepage and makes the statement that you can “Drive more ROI with the right influencers for your brand.” Aside from that, though, you will find little reference to ROI in published influencer marketing stats for recent years. That’s not saying that influencer marketing is any less profitable than in previous years; far from it. But as the industry has matured, participants have realized that raw ROI figures out of context mean little and are not helpful to brands considering influencer marketing. Forbes summarized 11 ways you can measure influencer marketing ROI. Not all of these involve mathematics, with some taking a more subjective look at the success of an influencer campaign. The 11 methods Forbes suggest are:

  1. Measuring Channel Performance, using metrics such as sales attributable to specific influencers or increases in web or social traffic. Promo codes and landing pages can help measure this
  2. Reading Direct Comments – indications of reader comments where they show interest in purchasing the product featured
  3. Using Tracking Codes – track everything that contributes to a sale
  4. Looking Beyond Vanity Metrics- e.g., using a brand lift study
  5. Determining the desired outcome – is your main focus on brand awareness or action such as increased sales
  6. Requesting regular reports from influencers on their engagement
  7. Looking at Tracking Links and Conversion Pixels
  8. Utilizing Influencer Analytics Platforms, using specific KPIs you set for each campaign
  9. Implementing Measurable Trigger Points – e.g., UTM tags, unique landing pages, or custom offers
  10. Utilizing Unique Codes – e.g., giving each influencer something like a coupon code or special product only available to their followers or subscribers.
  11. Creating Separate Affiliate Links – you can then track clicks, abandoned carts, email captures, or sales for each influencer

Moving Beyond ROI

If companies want to know in advance whether their influencer marketing campaigns are going to be of value, then a new a metric is required. The success of any marketing campaign is as dependent on the human aspect as much as it is on the technology. You can hire the most popular influencers in the world and reach millions of people—none of that makes a difference if the content doesn’t resonate with audiences. What would make more sense is the kind of metric that can quantify the value of a given influencer for a specific medium. And it’s looking like that day might finally have arrived. To their credit, NeoReach demonstrated their understanding of this dynamic when they introduced a new feature to their platform in March 2017: Influencer Media Value. It’s a metric that took a year of development. The goal of IMV isn’t to demonstrate how your marketing has helped you to earn more money. That’s still important to measure, but it’s not the whole story when it comes to influencer marketing. Instead, IMV shows you how much money you would have had to spend if you paid for those same clicks or impressions on a social channel. That’s a really basic simplification; there are a lot of variables that go into calculating the IMV for each influencer you work with. But what’s important here is that there’s an objective, standardised measure to show exactly how much of the proverbial bang you got for your bucks—a real, measurable, and standard way to understand the return on your marketing investment. Here’s what it looks like in action:

You can see with this campaign that NeoReach’s customer spent $54,600 on a YouTube campaign with multiple influencers. If they were to spend the money directly with YouTube to buy ads, they would have had to spend $184,000 to get the same results (and keep in mind that paying YouTube $184k for those impressions does not include the cost of creating the content; the $54k that was spent does). That’s over a 3x return on the money they actually did spend, a huge savings—and something that marketers and brands alike ought to be excited about. The only time a 3x return on investment doesn’t sound exciting is when you’ve been sold on the idea that the number should be around 11. This is why IMV is something we’re keen to watch develop over the next few years. Nothing devalues influencer marketing more than raising expectations to the point where they can’t realistically be met. IMV shows the true value of influencer marketing without having to add an asterisk, or explain context, or sales goals, or anything that can vary from brand to brand. It’s just a straight up number that shows you what you would have paid if you’d gone a more traditional route. And if you overspent? It shows you what you should have paid. While a feature like this is a feather in the NeoReach cap, it also has implications for the industry as a whole. Beyond the benefit of demonstrating the real value of influencer marketing, it should help to normalise expectations. Jesse Leimgruber, the CEO of NeoReach, has a more realistic view of influencer marketing. He and his team are constantly monitoring the results of campaigns run through his platform, and they know that not every influencer marketing campaign is a winner. Anyone who lives on earth knows success is not a full-time reality for any endeavor, especially marketing. Still, they’ve been able to see that 78% of the campaigns run through their platform deliver positive ROI. (It should be noted that this figure relates solely to the use of the NeoReach platform, not work they complete as a full-service agency. The platform is self-service, and as such NeoReach customers fail or succeed based on their own decision-making and creative visions). Right now, IMV is still an after-the-fact proposition. Companies who don’t see a return on their marketing dollars won’t know that until the campaigns are in effect and they watch the data roll in. If they see a loss at the completion of the campaign, they’ll be able to better identify where they went wrong. Rather than throw their hands in the air and leap to the conclusion that influencer marketing is worthless, they can use the data to make corrections for the future.