The simple answer is that every single business or person has to approach this question differently. Large or small, companies measure success by profits, leads generated, or potential customers engaged. But it’s no secret that using social media to promote a product or service has become one of the most cost-effective strategies that businesses can use, even if your budget is relatively small.
How much are other businesses spending?
The US Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising.
However, the Business Development Bank of Canada suggests B2B companies should allocate between 2 to 5 percent of revenue on marketing, while B2C companies should be aiming for the 5 to 10 percent range. The same survey from the Business Development of Canada also found that Canadian small business marketing costs average just over $30,000 a year, while those between 20 to 49 employees spend double that amount. Moreover, companies with over 50 employees often exceed $100,000 in marketing costs.
Map your goals
Your overall digital marketing goals play a factor in determining how much gets allocated to social media spending. Outlining your goals and creating an action plan is crucial when deciding how much you need to spend.
For example: if you’re a company that solely sells your service or product through e-Commerce, it makes the most sense to spend more on social media than print ads or mail. This way, you’re able to directly drive users to your website which will increase traffic and generate sales.
Before budgeting for a campaign, it’s important to identify the metrics that are most important to your business objectives; whether it’s driving sales, increasing website traffic, growing brand equity, or something else.
Consider the following
Everything costs money. When mapping out a budget, don’t just think about how much an ad will cost your business; look at the wide range of details that go into executing a social campaign.
- Talent & Production: Whether it’s finding a freelance designer to produce graphics, or hiring a photographer to take photos of your product, the cost of talent may take up a considerable amount of your overall marketing budget.
- Tools & Services: There are multiple tools & services to use when optimizing and managing a social campaign. These tools will help enhance your content strategy, make scheduling a seamless experience, and allow you to connect with your audience in an easier way. Some businesses like to hire agencies with social media services and managers, while others like to do the work internally and rely on scheduling & analytic tracking services like Sked Social or Later.
- Ad Spend: The total amount of money paid to the social platforms that will be delivering your content. This only includes the cost of getting the finished campaign in front of your target audience.
After finalizing a budget that works for you, ensure that you reevaluate your budget on a quarterly basis. This way, you’ll have enough time to make adjustments after bringing in reliable results. Finally, keep in mind that there are numerous free and organic-driven opportunities on social media if your budget is tight.