It's hard to have a conversation about influencer marketing without someone mentioning engagement rates. For those unaware, engagement rate determines the estimated percentage of followers who 'engaged' with a post (like, shared, commented, etc.), and can be calculated based on reach or impressions. Read our help desk article here for more information.
What does 'engagement rate' mean, exactly?
In essence, engagement rate tells us how many of an influencer's followers interact with their content. But what does that tell us? For those who crave analytics, engagement rate is perhaps the most useful statistic in determining ROI; reach only tells part of the story.
You may have heard that microinfluencers have higher engagement rates, and it generally holds true. Though the science isn't perfect, the assumption is that smaller influencers can interact on a more personal level with their audience, so each engagement feels more sincere. The larger an influencer's following becomes, the less meaningful each individual like or comment becomes.
Julius tracks engagement rates en masse, and uses a proprietary algorithm to effectively price influencers based on their reach and engagement rates to help you best determine the ROI of your campaign. The Julius reporting suite has a variety of features to monitor engagements, trends, and results, which will help us through this article.
Return on investment — is cost per impression the way to go?
Engagement rate helps us calculate returns on media investment in a pretty straightforward way. Take for example, an influencer with 10000 followers charges $200 for a post. The influencer accrues 1500 engagements on 7500 impressions, so in essence you paid roughly $0.14 per engagement. This influencer has a 15 percent engagement rate based on total reach, or a 20 percent rate based on estimated impressions.
If you had an influencer with 1,000,000 followers, charging $10000 for a post, accrue 150,000 engagements on 75,000 impressions, you paid roughly $0.67 per engagement. While the engagement rate is the same, at 15 percent and 20 percent respectively, the cost climbs substantially based on the price of a larger influencer.
Using this example, from a cost cutting perspective, hiring 100 influencers at $0.14 per engagement to achieve the same amount of engagement is nearly double the price of using one. However, the reality is much different.
According to HypeAuditor, influencers in the 1k to 20k range of followers garner, on average, roughly a 3 percent engagement rate per post. 100k to 1 million accrues roughly 1.5 percent engagement rate, with this rate evening out logarithmically as size increases.
Using these rates, the impressions earned, and resulting costs per impressions, paint a much different picture. It is often times more cost effective to hire several smaller influencers with higher engagement rates to maximize campaign effectiveness.
Earned Media Value and the price of conversation
Engagement rate is important because it is the most reliable way of measuring how effective a campaign was in drawing in customers. However, as the industry grows, many have come to realize that engagements are not enough to imply success. Pairing the engagements earned with a campaign with, for example, changes in sales or website visits is just one of many ways to measure success.
However, combining statistics is a dubious at best practice for measuring effectiveness. Any number of factors can be at play, and even if a campaign is successful by virtue of earning engagements, it still might not translate to sales.
One such statistic that attempts to rectify this disconnect is Earned Media Value (EMV). Earned media, or unpaid media, essentially quantifies word-of-mouth conversations about a brand on social media. It consolidates all of the engagements resulting from a social media post, including conversations beyond the post like shares or retweets, and assigns a dollar value to each type. You can read more about how Julius calculates EMV here.
A snapshot of Julius' EMV and ROI calculations in the reporting suite
EMV essentially tells us the price of a conversation starter — how much money went in to starting a conversation on social media about a brand, and how much return can be achieved as a result. While engagement rate alone tells us how many people we can expect to interact with a post, EMV tells us the value of each engagement.
Engagement Rates, EMV, and the power of influence
EMV is what drives the power and cost effectiveness of influencer marketing. Let's assume we use an influencer from the previous example, who has 10k followers and roughly a 15 percent engagement rate. Their stats might look something like this on the Julius platform:
With an average engagement of 1.4k per post, we can expect roughly 1400 to 1500 people to interact with their post in some way. EMV would quantify these engagements to deliver a realistic ROI based on engagement, which would likely be far above the break-even point.
So why do we care?
Influencers are more than just word-of-mouth machines, though. They can do far more than brand amplification, even though there is more than enough value of that in and of itself. Affiliate marketing, brand ambassadors, and public relations can all be done using the power of influencer marketing. And, by using engagement rates and EMV, we can see just how useful — and cost effective — they can be.