How To Calculate the Influencer Marketing Budget
As of 2019, we all fully understand the real power and of Influencer Marketing. This is not just a trendy thing, but a must-have marketing instrument that drives outstanding results. Influencer Marketing can be good both for your brand awareness and your conversion rates. However, due to the lack of market regulation of this creative niche every advertiser or businessman is experiencing a difficulty in the evaluation and negotiation process. How much money to invest in a single sponsored post of an influencer? What budget do you need to plan for an Influencer Marketing campaign in 2019? We all need to start regulating, measuring and assessing our marketing efforts to predict the outcomes.
At IgFace we are 100% certain that it is possible to calculate ROI and effectiveness from an Influencer Marketing Campaign. And it is one of the many reasons we developed the Influencer Marketing Budget Calculator from IgFace. Let us review what kind of metrics, numbers and information influence over this estimations.
How to Calculate Influencer Marketing Effectiveness
There is a list of important facts that you should consider before starting a campaign:
- The Engagement rate is the most important metric to rely on. Make sure that you have analyzed the engagement rate of an influencer. Pay close attention to the number of likes, comments and comment answers every post has. Double Check the quality of followers, whether they have avatar pictures, content, followers, so on. The engagement rate is a direct indicator of the quality and value of a blogger channel or account. The higher the engagement rate is the more conversions you will get over time.
- The Influencer content niche is an important milestone on the road to the successful Influencer marketing campaign. Your product or service niche must be highly related to the influencer content niche and to what his or her audience is fond of. You can check it with the help of hashtag analysis and a quick lookover of the feed content.
- Check the influencer statistics across different networks: Youtube, Instagram, Twitch, Twitter, Facebook. The real value of an influencer is his or her real follower base. If this media person has a considerable instagram following but shows poor activity on Facebook, then it is more likely that the real popularity is way lower than you expect.
Measuring the Influencer Marketing Budget
- Calculate Potential Conversions from an Influencer channel or account To put it simple, you need to estimate the reach that you will get (how many people will see the sponsored content).
- Calculate the number of unique visitors you get form a sponsored post This number varies depending on niche, size of blogger, his or her engagement rate and so on. But the basic idea is that a 5% CTR (click through rate) is a good result. So this is where you can start your predictions.
- Calculate the number of conversions from the paid content The Conversion rate is another complex metric that relies mostly on the engagement rates, the blogger audience size and content relativity to your business. This is the fundamental points you have to analyze before investing funds in Social Influencer Marketing. But let us dive into estimation figures.
How to Calculate Conversions and Budget for Influencer Marketing
For instance, let’s imagine there is a midzise influencer with 100,000 Unique Monthly Views. Marketing itself is based on assumptions. So, there is a conservative assumption that 3% of this audience will see your advertising (whatever it is, a full video or integrated product placement). We can estimate that 3000 users will see your paid content this month. Now let us move further down the funnel and see how many conversions you will get from this activity. Relying on the same conservative assumption, we may suggest that you will gain a 3% Conversion rate, which means:
3000 Reach * 3% CR = 90 Conversions. You will get approximately 90 Sales or Leads from this investment.
Calculate LTV, CAC and Budget for Influencer Marketing
Lifetime Value and Customer Acquisition Cost are the pivotal formulas for any influencer marketing estimation.
LTV (Lifetime Value) is the amount of money an average customer will bring to the business during his or her lifespan. While Customer Acquisition Cost means the amount of invested funds for this user. There is another marketing truism that CAC must be 3 times lower than the LTV. It is an obvious indicator of profitable business. Now let us simulate a business model.
customer has a lifespan for 2 months. It means that you get $157,5 from every customer during his or her 2 months lifespan. From this model we understand that you can allocate $52,5 per every customer/buyer.You sell some gadget for $450 each, while your margin equals 35% for each Sale and every
Influencer Marketing Budget Calculation
Since you have a $52,5 budget for every customer, you can predict the success of your Influencer Marketing campaign. Just multiply your CAC by the number of conversions you are going to obtain. For instance, $52,5*10 = $525. This is your investment. Now, we can assume that your profit must be as high as 3 times of your investment, which is $157,
Now, LTV_Total - CAC_Total = $1575 - $525 = $1050