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Marketing Economics: How to Set an Effective Social Media Budget

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Social media is a burgeoning marketing ecosystem.

It enables brands to connect with the whole army of follower on a meaningful level. Hence, it serves as a powerful catalyst for business growth.

Many business owners are encouraged because you can set up profiles comes free of charge. But, don’t let this fool you. If you really mean business, you have to invest money down the road.

In the process, you want to avoid overspending, but under investing isn’t good either. That leaves us with the objective of striking a fine balance with a social media budget.

We should tell you right away this is rather tricky: you need to spend just enough and spend it well. So, you have to play it smart in order to get the most bang for your buck.

Here is how to pull it off.

Finding the Right Aim

In the world of marketing, bigger isn’t always better.

Nobody should be too happy wasting precious resources in this day and age. For those who operate on a shoestring budget, it’s even a business-sinking risk.

One of the main objectives is to allocate marketing dollars where they matter the most.  In other words, you want to accomplish a maximum return on investment (ROI). In order to do that, you first need to assess your needs and set your goals.

When we say goals, we mean general digital marketing goals and specific social media objectives. When it comes to the latter, they revolve around reaching your likely customers and speaking directly to them.

Consult your online marketing strategy to ensure you’re on the right tracks. You cannot afford to lose sight of this big picture at any point. Disjointed marketing efforts yield poor results more often than not.

The Numbers Game

After that is sorted out, face the million-dollar question: how much to spend in total? 

If you have other digital strategies in place (such as SEO), this step requires you to decide what percentage of the overall budget will go to social media. Well, on average, social media accounts for 15-25% of marketing budgets.

The Content Factory estimates the industry average between $200 and $350 per day, which amounts to up to $7000 on a monthly basis. Of course, these aren’t some hard rules because it all depends on your specific business case.

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When it comes to the structure of a social media budget, it involves the following categories:

  • Copywriting
  • Video content production
  • Design, graphics, and visuals
  • Advertising
  • Strategizing
  • Project Management
  • Tracking

These elements carry different financial and marketing weight.  

For instance, spending on social advertising is growing steadily in recent years. It’s a great tactic to build an initial audience and expand your reach. But, that doesn’t mean it’s a one-size-fits-all solution.

You still need to calculate how much ads would cost per click or impression. It’s also a good idea to forecast their click-through rates to get an idea of expected impact. These steps let you move forward with confidence.

As for visual production, we would say it’s an absolute must-consider. Posts with striking images and videos attract way more social signals than plain text. You also need a professional-looking profile and cover pictures.

Yet, other areas of spending aren’t to be overlooked. Lack of proper management and tracking can seriously hurt your plans. So, before you make any commitments, you have a few more bases to cover.  

Channeling the Spending Power

It’s vital to determine who you want to reach and how to do it.

In other words, you have to prioritize the network that your target audience frequents. There’s no need to target all major platforms, as it would probably lead you to spread yourself too thin.

Many marketers argue Facebook is a no-brainer and for good reasons. It remains the kind of the social media realm. Its penetration is unmatched and alongside Pinterest, it’s a go-to place for social ads.

Still, other channels could hold much promise for you as well.

So, do yourself a favor and perform detailed research. Discover as much as you can about the audience (demographics, lifestyle, online habits, and interest). The more precision you have with targeting, the more power your spending will bear.

Notice you can utilize free tools such as Facebook Audience Insights to create a target demographic.  It’s a good place to start and you can always invest in paid tools later if need be.

Do remember to identify key topics, themes, and event relevant to both you and your audience. These data points will be your guiding light when you start producing content.

One good rule of thumb is to spend money on what you can do well. Outsourcing is a smart way to make up for the lack of internal expertise. It allows you to dedicate your own time to what you do best.

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Wrapping Up a Social Media Budget

The last crucial thing is to accurately measure your efforts.

Namely, social media monitoring, listening, reporting, and analytics are paramount. They help you stay in full control and improve your approach on the fly.

Most businesses focus on following key performance indicators:

  • Leads generated
  • Customers engaged
  • Conversion rates
  • Brand awareness
  • Products sold
  • Click-through rates
  • Volume of traffic
  • Number of followers
  • Social signals spurred

Some of these goals are more tangible than others. But, they can all be relevant and contribute to supercharging your brand online.

The good news is there’s no shortage of social media management tools with built-in analytics. In case you want to save in this department, don’t fret.  Even free options do the trick, albeit they lack advanced analytical and management features. 

Just remember the optimal spending equation isn’t set in stone— it’s in constant flux. Therefore, stay quick on your feet and fine-tune based on fresh insights. You can run A/B testing to work out the best ads, headlines, copy, etc.

Finally, investigate how your marketing campaigns did in the past. Emulate past success and avoid the mistakes you made. That’s the way to navigate the minefield of financial decisions and get ahead of the competition.

Master the Fine Art of Budgeting

Social media gives you an opportunity to take your business to the next level.

Numerous businesses are flocking there to get their share of the market pie. To beat them to it, you must approach your social media budget holistically and strategically.

Start by getting your priorities straight and figuring out how much you can comfortably spend. Identify trackable goals that forward your brand and marketing aspirations. Bear in mind your budget is as unique as your company is.

Thus, narrow down the focus to specific tactics, channels, niches, and audiences. Gather a wealth of information about your followers. Test to see what works and what doesn’t.

Following these steps, you should be able to maximize ROI and delight your customers. Check out our social media section for more tips and insights. More power to you!