Are you eager to unlock the true potential of influencer marketing and make every penny count? Curious how much sales influencers can generate and how to close the best deals with high performing influencers? Well, you're in for a treat! In today's blog, we're diving deep into the world of high-performing influencers, uncovering the secrets to reducing costs while supercharging your Return on Investment (ROI).
Get ready to discover the art of influencer collaboration that's both cost-effective and incredibly rewarding.
In the dynamic realm of influencer marketing, finding the perfect influencer to collaborate with is an essential yet often challenging task. The process begins with a deep understanding of your target audience, as this knowledge will guide your search for the ideal influencer.
When the influencer's content seamlessly aligns with your brand's core value and resonates with your audience, you're setting the stage for a potent partnership. This is fairly obvious and you are probably already doing this at this stage. Working with influencers which match your target audience is a prerequisite.
The next stage is to find out which of these influencers are high performing influencers. We typically refer to this process as “testing”. We often work with product seeding & affiliate campaigns to identify top performing influencers.
This is a topic for another post and if you want to learn how to identify high performing influencers access our detailed guide on this here.
Once you have tested influencers through product gifting campaigns, the next step is to determine your budget to continue to work with your high performing influencers. Rather than continuing to offer affiliate deals, moving to fixed payments often enables you to reduce cost. Bundling multiple posts into a larger fixed payment is often a strategic way to make the overall offer look more attractive while reducing cost and thus maximising your ROI. Integrating financial management solutions can further streamline this process, ensuring that your budget allocations are both efficient and effective.
Here's a formula to calculate your budget for fixed packages:
Suppose the influencer generated $3,000 in her or his initial Instagram story post which was tracked using an affiliate link and personal voucher. Your marketing target is to achieve a 5X Return On Ad Spend (ROAS) which comes down to 20% of your generated revenue. The calculation for the fixed payment offer would look like this:
To boost your ROAS (Return on Ad Spend), there are two key approaches: increasing revenue and cutting costs. While it sounds straightforward, let's delve into this with more detail while ensuring the accuracy of the calculations:
Enhancing revenue per post is often influenced by the influencer's ability to persuade their audience to make purchases. You may have limited control over this aspect.
However, there are strategies you can employ to improve revenue, such as using scarcity tactics, incorporating a compelling call to action (CTA), or presenting an irresistible offer. These methods are crucial, but the primary control here rests with the influencer.
We previously discussed the potential benefits of bundling posts into packages. Calculating for a 5X ROAS target, we determined that you could offer an influencer $2,400 in compensation. Instead of immediately offering $2,400, consider starting with a lower offer and gauge the influencer's response.
Based on our experience, many influencers may accept an offer of $1,000 in exchange for providing four casual story posts. If the influencer accepts this reduced offer, your ROAS for this package would be an impressive 12X ($12,000 / $1,000).
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Negotiation is vital in influencer marketing. As mentioned in the previous section, test your waters and try to start with a lower budget and negotiate your way up in order to maximise your ROI.
Try to find a good middle ground if you negotiate too aggressively the influencer might put less effort into the post which could reduce the impact of the post. As with any other negotiation, finding a solution where both parties win is often how the best deals are closed.
Tip: If the influencer shares their rate card which rates massively exceed your budget don’t give up right away. We often ignore these rate cards all together as they include unrealistic budgets which in most cases are nowhere close to profitability. Instead be humble explain that you are a small business and make your offer. influencers often make exceptions to their standard rates if they genuinely resonate with your brand and see a strong fit. Refrain from dismissing collaboration based solely on initial quotes and negotiate instead.
In this discussion we should know the initial post performance of the influencer which puts us in a much favourable position to negotiate. We know what we can expect in comparison to working with an influencer the first time.
Let’s say the influencer still rejects your offer and the negotiation starts to heat up. You want to close this influencer because you know they have the power to refer customers from the initial post you have seen but you also don’t want to exceed your marketing budget. Don’t give up yet. You might be able to spend more than you think. This is why having a deep understanding of the underlying numbers is crucial when leveraging influencers from a performance marketing perspective.
The simplified formula provided earlier doesn't encapsulate the full complexity of influencer marketing ROI. Like any other digital marketing channel, attribution can be more complex; it's rarely 100%. In the influencer marketing arena, the industry average for attributed sales using affiliate links and discount codes hovers around 70%.
This means that the influencer actually sells more than what you were able to see from your affiliate tracking. To create a more accurate formula, let's factor this into our calculations:
From our previous example:
To find your total expected sales, use the following equation:
Total Expected Sales = (Influencer Revenue per Post x Number of Posts) / (Attributed Sales Percentage)
Now, multiply the total sales by your marketing budget percentage (20% of revenue) to determine your maximum budget while maintaining a 20% marketing cost (5X ROAS). Taking the unattributed sales into account your budget to achieve a 5X ROAS increased from our initial example from $2400 to $3,429!
Keeping in mind that your ROAS target is 5X. Most companies can afford a lot more to acquire new customers. According to insights from e-commerce founders, the average ROAS for Meta ads on cold acquisition campaigns tends to hover around 2X. If you are not certain about the outcome of the package and want to reduce risk you could always consider combining fixed payments with affiliate deals. E.g. Offer $2,000 + 10% Affiliate Commission. By optimizing your influencer marketing budget in this manner, you position your brand for more cost-effective customer acquisition and higher ROAS.
To put all of this in perspective below is a screenshot of the top10 highest performing influencers of one of our clients.
The influencer landscape is cast and diverse. So, how do you ensure you connect with the right influencers, especially when resources are limited?
You might be asking yourself isn’t there a way to know in advance which influencers perform well so you don’t have to invest resources in identifying these high performing influencers. Our data scientists put this to task and analysed large data sets to identify which variables correlate with influencer performance. Based on cross statistical analysis we were able to identify key variables which correlate with performance. Access our full research report on this here.
We blended these variables into a conversion enhancing filters which you can access through our Influencer discovery tool. This way you can narrow down your search based on promising influencers when it comes to conversion. If you are interested in accessing these filters to find relevant influencers you can schedule a demo here.
Although our tools help to narrow down the influencers you would still need to put in the work to identify these high performing influencers working on gifting campaigns. Out of 100 influencers you typically identify around 5 - 10 high performing influencers. By building up a long lasting relationship with these influencers result in significant ROI and growth for your brand.
To close of this article when allocating budgets with high performing influencers there are two additional variables you should take into account.
Note whether the influencer’s initial post was during a favourable or unfavourable time of the year. If you are a highly seasonal brand and the influencer posted during your peak selling season, the next post outside of your peak selling season could perform differently. For instance, if you sell sunglasses in the UK the influencer post could perform significantly differently during or before the summer compared to during the winter periods.
Overexposure can exhaust an influencer’s audience. We typically see that the performance slightly wears off if the influencer frequently posts. Keep this in mind when allocating budgets.
A winning approach involves organizing season-specific campaigns and allowing high-performing influencers to craft posts within a package during special events like Black Friday or Mother's Day. Having a special offer in place gives customers a reason to buy which leads to higher conversions. Read our detailed article on how to maximise ROI with seasonality campaigns here.
Here is a quick summary on how to maximise ROI with high performing influencers
Ready to dive deeper and revolutionize your influencer marketing game? Our media experts are here to guide you. Let's make your next campaign a resounding success, schedule a meeting with one of our Media Experts here.
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