Social media marketing has proven itself to be a lucrative, necessary, and highly effective channel. Social media connects you to an engaged market, closes sales, and builds brand affinity and awareness. But how much should your business set aside for its social media marketing budget? First, let’s look at industry standards.
How Much Businesses Spend on Marketing and Social Media in 2020
- The average large business spends seven to 10 percent of its gross revenue on marketing and advertising per year
- Spending 7 percent of your annual gross revenue is recommended if your business makes less than $5 million per year
- Spending 10–12 percent of your annual gross revenue on marketing is recommended if you make $5 million or more per year
- According to Entrepreneur.com, businesses spend 46 percent of their annual marketing budget on digital marketing
- In 2018, businesses spent about $200 to $350 per day, $4,000-$7,000 per month, or $48,000–$84,000 per year on social media marketing
Ultimately, your social media marketing budget depends on your goals, cash flow, target audience, and product or service. We recommend spending 10–25 percent of your digital marketing budget on social media marketing (not your entire marketing budget). Here are some ways to help you determine your social media marketing budget and the best course of action for you.
Tips to Determine your Business’s Social Media Marketing Budget and Spend it Well
Step 1: List Your Current Marketing Efforts
What’s going on with your digital marketing already? Does your brand run email or SMS marketing, PPC campaigns, video marketing, or content marketing (like blog and resource content creation)? Determine how much you spend on each marketing tactic, and which delivers the best ROI. Then, borrow money from your bottom performers to reallocate into your social media marketing budget.
Step 2: Iron Out Your Goals
What’s your ultimate goal with social media marketing or your business in general? Do you need to increase brand awareness, get your Instagram following up to enable direct shopping from Stories, start a presence from scratch to modernize and reach a younger demographic, sell on Pinterest, get in on the conversation on Twitter, supplement your Facebook advertising with Facebook posts, or gain more market share? Whatever your goals, sit down with your team to iron out your business and social media goals. Then, move onto step three.
Step 3: Prioritize
Even if you have an unlimited budget, prioritize your goals to bring focus to your social media marketing strategy. Think critically about what will work for your business, its customers, and its unique products and services.
Step 4: Determine What Can be Done In-House Versus Externally
Based on the last few steps, do you need to grow your internal team or hire an agency to reach your goals? While we may be biased, it’s cheaper to hire an agency. We don’t require benefits or a salary. We don’t require overhead like desk or office space. In fact, agencies like Witty Kitty normally cost up to 50 percent less than an employee. Plus, we free up your employees to fill other necessary roles within your company. It’s also important to know if you’re not ready to hire an agency and pump the breaks on your social media marketing goals until you are.
Step 5: Set an Annual Social Media Marketing Budget
We can’t tell you how often clients come to us without a budget. That’s okay! It just means you need to start back at step one to set your foundation before you begin. We’re kind of sticklers for an annual budget. That’s because social media marketing is a long game. Your business should have at least 12-month’s worth of social media marketing funds so you can achieve the results you want. While you can grow your budget from there and start conservatively, you end up wasting money and time in the end if you only budget for three to six months.
Divvying up an annual budget is also easier than throwing random amounts into the pot each month. Why? Because you can look at the year ahead, determine if certain months and sales cycles require more financial backing, and make more strategic decisions with every dollar.
Step 6: Get to work!
There’s no time like the present to start your social media marketing efforts! Aim to post at least twice per week on each channel, integrate video whenever you can, use hashtags, respond to comments and DMs, engage with other influencers and accounts, publish high-quality images and video, and post content that’s relevant to your brand voice, audience, and business. Here are some social media post ideas to get you off to the races.
Step 7: Track Results and Optimize
Never stop improving your social media marketing program. Instead, make the most of your social media marketing budget by using tactics like social listening and insights from Instagram for Business, Facebook, social media publishing platforms, and your website. Also, don’t forget to sniff out the competition see what they’re up to. You may glean some ideas for your own social media pages—from hashtags to contests to content.
Social media marketing won’t go away in 2020 or any time soon. It’s time to set an annual social media marketing budget—no matter how big or small—so you can keep up and gain a lead on the competition. If you have any questions or need help, please reach out!
Editor’s Note: This post was originally published in October 2018. It’s been completely updated with tips and stats for your benefit!