According to a recent study, companies are rapidly increasing their social marketing budgets, even as they struggle to demonstrate the impact their efforts are having on their businesses.
The study revealed that the average company will spend 9.4% of its marketing budget on social media. That number is projected to grow to 13.2% over the next year, and upwards of 21% over the next five. This is an increase of 128% based on little more than the perception by chief marketing officers that social marketing presents bold opportunities.
Just around 15% of CMOs believe that they can demonstrate ROI or other quantifiable impact. Seeing as every dollar is a crucial resource, how then should a business determine what to spend on social?
Determining Your Overall Marketing Budget.
Your social media marketing budget will obviously be carved out of your overall marketing budget. Some businesses will offer true but generic advice such as, it depends on how long you’ve been in business, or what kind of expenses you have.
These generalizations tend to be purposely vague and ignore the fact that discernable patterns do exist. Research shows that businesses that earn more than $25 million in annual revenue will spend about 9% of that revenue on marketing.
On the other hand businesses that earn less than $25 million will spend closer to 11% of their revenue on marketing.
This means that right at 10% is the magic number, but there are other variables when it comes to the percentage of revenue businesses dedicate to marketing.
* B2B product businesses spend 10.6%
* B2B service businesses spend 10.1%
* B2C product businesses spend 16.3%
* B2C service businesses spend 10.9%
As the data shows with the exception of B2C product businesses, 10% of total annual revenue is the most commonly encountered marketing budget.
The High Cost Of Social Marketing.
The next question you’ll need an answer for is how much of that 10% should you dedicate to social media marketing?
The average business will spend somewhere between $4,000-$7,000 per month on social marketing, this rounds out to about $200-$350 a day.
If this sounds high to you, that’s because it is. The higher the demand for this kind of service, the higher the cost becomes.
Creating a new Twitter account from scratch will cost you $2,000-$4,000 per month. While reworking an existing Twitter account, businesses will pay $1,000-$2,500 per month.
PR agencies will charge somewhere in the neighborhood of $2,500-$5,000 a month to set up and run a Facebook marketing account.
Creating a social strategy with at least two social networks would cost an average of $4,000-$7,000, and an audit of existing accounts with included coaching costs average $2,000-$10,000.
How You Spend Determines What You Spend.
Naturally these numbers are out of reach for most small businesses, especially once you factor in that those prices don’t even include the cost of content. However creating a truly effective and comprehensive social media presence is so overly specialized, tedious, and time consuming that most business owners can’t possibly shoulder the burden themselves.
Just some of the tasks involved would be, managing pages, writing and editing multiple blogs a week, gaining relevant followers, as well as keyword monitoring, and hashtag alerts.
Companies that pay for ads must also work on ad creatives, ad optimization, analytics and measurements, and quite a bit more.
All in all businesses have five options to choose from, each with their own pros, cons, and drawbacks.
Train Existing Staff. (Affordable Or Free.)
The biggest drawback to this, is that your social media presence will be entrusted to an amateur with limited experience who will require a time consuming amount of guidance, and oversight.
You’ll gain the needed help, but will that help be qualified. How likely are they to make mistakes?
Only consider this option if you have little to no budget, and no other real choice.
Hire A Freelancer. ($900/Month.)
Even though experienced freelancers tend to cost less than full time employees, they will not necessarily be loyal to your company, not to mention you are relying on a single individual.
On the bright side you don’t have to offer them benefits or pay payroll taxes for their services.
Hire A Full-Time Professional Employee. ($3,200/Month.)
On average a social media manager earns between $35,000 and $50,000 a year, and they tend to expect health benefits, and retirement plans.
However on the upside the business owner can control both their schedule and workflow without much time or investment.
Hire A Small Marketing Firm. ($400-$1,500/month.)
Small marketing firms have a tendency to cater more to small businesses, but they usually have multiple different pricing plans and can be written off your taxes.
Similarly to freelancers they require neither benefits nor payroll, with the added bonus of not having to rely on a single person to manage your accounts.
They cost quite a bit less than hiring someone in-house, but it is important that you do your research to ensure that they are not simply outsourcing the work to freelancers and pocketing the difference.
Hire A Corporate Marketing Agency. ($20,000 A Year Min.)
Only the largest and most well resourced companies should consider this, agencies employ large staffs to develop and implement comprehensive, sophisticated, long term social media campaigns.
Remember that although your budget does determine which service you should employ, this doesn’t mean that it should be the sole factor in decisions.