Social media can be an effective way to market your small business but how much should you spend on it? Here’s what you need to know.
How Much Money You Should Spend on Social Media Marketing
There are three main steps to figuring out how much to spend on social media marketing.
- Calculate Your Total Marketing Budget - Start by looking at your total marketing budget. If you’re earning less than $5 million in sales per year, the Small Business Administration recommends allocating between 7-8 percent of gross revenue to marketing.
- Calculate Your Social Media Marketing Budget - On average, businesses spend about 13% of their total marketing budget on social media marketing, so to calculate your budget, figure out 13% of your total marketing budget. For a small business, this is a healthy social media marketing budget and can get you pretty far.
- Set Goals and Priorities - Once you have a general budget, think about what you want to accomplish with it. What kinds of social media and content marketing methods do you want to use? Do you need to hire a copywriter who can write blog posts for you? Do you need to hire a videographer who can create social media videos? How much do you plan to spend on Facebook ads or Instagram ads? The bigger your goals for social media marketing, the more you’ll need to spend.
According to the results of the CMO Survey of February 2022, the percentage of the total marketing budget companies plan to use for social media marketing in the following year is as follows:
- B2B Products – 14.7% on social media marketing
- B2B Services – 18.3% on social media marketing
- B2C Products – 21.8% on social media marketing
- B2C Services – 18.7% on social media marketing
The same study also revealed that the total amount of budget for social media marketing is different for different sectors:
- The consumer service sector allocates 28.5% of the total marketing budget to its social media marketing plan.
- Communications and media industries use 25.6% of the marketing budget for their social media marketing plans.
- Banking and finance businesses usually give an 11.7% budget to their social media marketing plans.
How much you should spend on social marketing also depends on knowing what factors affect your social media marketing budget and how to allocate money to the elements of your social media marketing plan. Here are the factors and elements you’ll need to consider.
- Factors - Here are the factors that will affect your social media marketing budget.
- Business Size - Businesses with more employees tend to spend less compared to companies with fewer employees. This is because the big organizations already have more brand identity and recognition, so they do not have to spend as much.
- Industry Sector - Depending on the sector you’re in, you may need to allocate more budget to your social media marketing plan. For example, retail companies spend more money than IT firms on social media.
- Business Objectives - Based on your specific goals, your budget allocation for social media marketing will vary. Some of your particular objectives may include establishing brand awareness, boosting sales, improving customer engagement, and a variety of others.
- Advertising Types - Depending on the type of social media advertisements you choose, your budget will change. There are plenty of social media ad choices to choose from, including Facebook Ads, Instagram Ads, Twitter Ads, influencer marketing, and more.
- Software - Software and marketing tools (SEO keywords, hosting, content editing tools, and more) will also affect the budget of your social media marketing plan.
- Elements - These are the elements of your social media marketing plan that you will need to allocate money for.
- Photos, Videos, And Graphic Content - In general, it’s best to put 40% of your total social media marketing budget toward the creation of:
- Cover photos for all your company’s social profiles
- Logo for your business
- Photos for blog content and social media posts
- Videos for sharing on social networks
- Advertising - You can spend another 40% of your social media budget on brand advertisements across various social media platforms. Facebook ads have a high click rate, followed by Instagram ads.
- Social media management and Analytics - It’s a good idea to allocate 10% of the budget to social media managing tools. You should spend the last 10% of your social media marketing budget on analytics.
If you want to know more about social media marketing, read our article, “5 Things To Do Before Investing In Social Media Marketing”, or contact us.
Tags: social media marketing, budget