So, you've heard of ambassador marketing. You're interested. Maybe you've even started. But you're still wondering what running a successful brand ambassador program really entails, particularly when it comes to the cost of running an ambassador community for your brand.
A lot of people turn to ambassador marketing as a cheaper alternative to paid ads. And it's true that it can be less costly than traditional online ads, but that doesn't mean that ambassador marketing is free.
Because of the unlimited potential of your ambassadors' social reach and the opportunity to generate more sales than you would for the same money with a paid ad, ambassador marketing can be an excellent alternative or complementary strategy. But it definitely still has a cost.
Nobody wants to fail, especially when money and the credibility of your business name are on the line. When brands give up on ambassador marketing, it's usually because they aren't seeing the return on investment that they'd hoped. Often, this ROI is lacking when brands underestimate the resources needed to start and maintain a successful ambassador community.
Are you wondering how much it costs to run a successful ambassador community? Stick around!
Understanding the Cost of a Brand Ambassador Program
Investment Affects Return
In order to see a decent return on your investment you first have to invest. Sounds obvious, right? But you’d be surprised how many brands are hesitant to spend money on their ambassador community.
In a sampling of five brands that left our platform due to their ambassador community not delivering on the required outcomes they needed to see, investments were markedly lower than brands that saw success.
These five brands averaged just under 1000 ambassadors each but invested an average of $2.1k per month on those ambassadors. Their revenue over an 8-month period averaged $3.5k per month. This means the average ROI was just under 67% per month.
In contrast, we compared the five brands that left, to five brands with similar-sized communities that have seen great success with their ambassador communities.
These medium-sized brands aren't necessarily able to invest the large sums like our strategic partners with larger budgets are able to. However, they continue to report back with happy results on their ROI and marketing goals.
They had an average of just under 750 ambassadors but invested about $3.4k per month into their communities. Their average revenue was over $9k per month, with an ROI of just over 165%.
Let’s Break it Down by Engagement
Rewarding your brand ambassadors fairly for the work that they put into social engagement and sales means better results for everyone.
When looking at how you reward your community, consider dynamic reward structures that pay out based on engagement. For example, for high-quality UGC posts on Instagram set the reward like this:
$0.40/like with a minimum cash payout of $10 and a maximum of $200.
For a more simple post on the same platform, consider halving the reward:
$0.20/like with a minimum cash payout of $10 and a maximum of $100.
You can also base your rewards on views, rather than likes. An in-depth YouTube video might have a reward similar to this:
$0.04/view with a minimum cash payout of $10 and a maximum of $1000 + a freebie.
What Matters Most? Fair Rewards
When directly comparing two brands with similar-sized communities. The brand that saw better revenue at nearly $100k spent $35k on rewarding their ambassadors for the tasks they performed. The cost to the brand per ambassador per month was $5.43.
On the other hand, the brand that spent just $2.00 on compensating their ambassadors only generated $15k in revenue over 8 months.
The brand that performed better, rewarded ambassadors more generously with gift cards or store credit to their webshop. By keeping their rewards within their webshop - they increased their chances to generate revenue.
Does the Number of Brand Ambassadors Matter?
It sounds like a no-brainer: more ambassadors, more revenue! But that’s not always the case. And more ambassadors most definitely does not guarantee a higher ROI.
Let’s take another look at some of the brands we sampled. We’ll call this first brand, Brand A.
Brand A had 484 ambassadors and brought in $53.9k in revenue over the 8 months we sampled. Brand B had a similar size community - 461 ambassadors. But they only brought in $12.9k.
Similarly, where Brand C brought in $15k in revenue with 766 ambassadors, Brand D brought in $98k with only 707. The difference? Investment.
Brand A invested about $2.3k a month into their community, achieving an ROI of 149%, whereas Brand B invested less. While spending $1.8k per month on their community, they actually lost money with an ROI of -10%. Brand D invested $3.8k a month into their community and enjoyed a 183% return. Similarly sized Brand C invested only $1.7k each month. Their return? Only 15%.
|
Brand |
Investment/month |
Number of Ambassadors |
% ROI |
|
A |
$2.3k |
484 |
149% |
|
B |
$1.8k |
461 |
-10% |
|
C |
$1.7k |
766 |
15% |
|
D |
$3.8k |
707 |
183% |
Why does this happen?
Well, there are likely factors that the data doesn't show. Perhaps the time investment wasn't there either. Maybe these eCommerce brands weren’t creating regular marketing tasks for their ambassadors or keeping them engaged.
But one factor we consistently see in the data is that it's less about the number of ambassadors you have and more about how willing you are to reward them fairly and make your community a fun and engaging place through regular interaction. When ambassadors realise that the rewards they're being offered are valuable, they are more willing to participate and willing to put in the effort to create quality content that gets better results for your brand.
If you’re investing appropriately in your community and still not seeing results, you may want to check out these 5 reasons you may be struggling with your program.
Other Costs
Financial costs aren’t the only things you invest in your community. Personnel resources and time are crucial factors in having a thriving ambassador marketing program.
