When social media first morphed into a productive advertising platform, it was a different world. Facebook had just launched brand pages and introduced the Like Button. Instagram was blowing up, and Snapchat—despite all of its hype today—was still nothing but a dream in some developer’s eyes. And the best part? It was all more or less free.
In the days before the so-called “Reachpocalypse,” budgets were similarly small. Businesses didn't have to drop much cash to make an impact. In those days, Internet ad money was devoted to things like banner ads and email. Now, social media requires significant investment in order to generate significant results. Between business loans, customer management, and the many other parts of running a business, it’s hard to know how much money to set aside for social media.
Social media engagement is an inexact science, but with its significance in the business world continually growing, there are more factors to consider when it comes to your social media strategy. We’ve created a step-by-step guide to help you figure out the right social media budget for you.
Every business and operation is different. Depending on the end goal, some businesses can exist with only a fraction of the budget another would need. Budget requirements can depend on many factors including brand development, promotional materials, and graphic design. These are the elements that will make up your marketing budget.
Many small businesses start with a rough baseline of about 20 per cent of their total sales. That’s a substantial sum. If you run a really tight ship, you may be able to get away with a bit less. Also, if your business isn’t just starting out, you’ve probably already invested money in expensive items, such as graphic design, and can save in those areas now.
Reallocating funds to fit a more immediate need doesn’t necessarily mean you’re downplaying the importance of a vital part of the company. For example, companies that are somewhat active on social media won’t need to need to develop a digital marketing strategy from scratch.
This is an important step, because it really requires taking a careful look at your business model and how you expect to bring in money. Depending on the industry, social media can make up all of your marketing, or it may just be a small chunk. Just what falls under this umbrella? Facebook and Twitter marketing for starters, but also email, blogs, and certain kinds of content marketing also fit this category.
If you run an online-only business with no brick and mortar presence, then your marketing budget will be more heavily weighed toward social media. But if you’re an exclusively brick and mortar store with only a perfunctory Internet presence, you may spend less time ensuring your local search engine optimization is the best it can be.
Though estimates vary, recent reports place the proportion of digital to regular marketing at about 25 to 35 per cent. However, as the digital field develops and matures, this number will likely increase as social media becomes ever more important.
Even though it is 2015, some business owners are just realizing the possible gains to be made in digital marketing—gains that seem to promise enduring success instead of temporary revenue boosts. When it comes to establishing a budget for their social media strategy, all too often businesses run their company’s social media like they run their personal social media. Alternatively, they hire someone familiar with social media, who may only satisfactorily meet their social media needs.
Take a holistic look at your operation. Examine where your business comes from and where you want it to go, and then decide how much to allocate. While most businesses allocate about one third of their total marketing budget to digital marketing, this figure may be different for you.
It is clear that search engine optimization is very important: 61 per cent of global Internet users research products online. But in a modern digital marketing budget, there’s room for SEO and social media marketing. Both are vitally important parts of a marketing budget. Treating the two as separate entities will allow for more effective management of each. If you do it right, SEO and social media marketing will feed into each other, a loop that works double time to help you. Businesses are expected to increase their investments in social media, SEO, and content marketing in the coming year. The Content Marketing Institute expects more than half of business owners to increase their spending, and with good reason: It works.
Content and social media are natural partners in the marketing business. Depending on the implementation of one or the other, it’s a matter of the chicken or the egg. Is social media engagement driven by shareable content, or is great content more respected because of a well-established, solid social media engagement strategy?
The answer to that question is simple, but not as cut-and-dried as you may be led to believe. Great content and great social media management work hand in hand and play off the strengths of the other. Social media marketing should probably take up about 25 per cent of your digital marketing budget. But keep in mind, these categories are interlocked and social media coverage will suffer if you don’t also pay attention to content marketing. Remember—people need something to share!
Each business has different fans and primary customers, and many demographics use the Internet differently. The intended purpose of each company varies depending on the product or service it provides as well as the intended audience. Some age groups are constantly online and can be reached at any time, so Internet marketing may be particularly effective in this scenario. Other groups don’t log in that much, don’t use Facebook, or simply don’t respond to social marketing at all. While more people of different ages are becoming more social media savvy, the Internet may be daunting or inaccessible to a segment of the intended audience.
Charities have gained great esteem for their deft use of social media promotion, partially because their stated purpose is to help people. While they ask for people to support their non-profit, the benefits for the donors are immediately apparent: If I donate, I will feel good and know at least a portion of the money will go toward making the world a better place. To see the power of social media for charities, look at the ALS Ice Bucket Challenge. When people see their friends donate to a cause, they are encouraged to do so themselves. Research shows peer pressure (or encouragement) is one of the most powerful tools in the charity marketer’s toolbox. The ALS Ice Bucket Challenge enhanced this by asking participants to nominate friends, which effectively boosted the level of peer pressure.
However, social media marketing is not for everyone. Even some Internet-only businesses may find very limited success on social media. For obvious reasons, business related to private healthcare issues may find their organic reach on Facebook isn’t very effective—people want to keep some things private. The solution is to shift your digital marketing budget away from social media and put more into SEO and paid search advertising.
The real lesson: Every business is different and every marketing campaign has unique considerations that make it more or less effective. It’s very important to consider your market, who is involved and interested, social media habits, and, vitally, social media habits with regards to your brand. It’s a bit of a guessing game in the beginning, but that’s the way it goes.
Social media in 2015 is more important than ever. Though the rare business in an esoteric industry may find their money better spent on different areas of digital marketing, it is still necessary—more so than ever before—to be active on social media. The potential rewards greatly outweigh the risks. And at such a low price point for entry, social media marketing is worth a try for anyone with the intention of sticking it out. Social media marketing is a great way to get in touch with your customers and up brand engagement, increasing the likelihood of repeat conversion. It’s not a magic pill to double profits, but it’s an important way to get your foot in the door and prepare your business for the future, despite an unpromising economic climate.
In the end, you have to think about what appeals to your intended demographic. More than anything else, it’s a statement of purpose to potential customers that says, “We want to speak with you.”
This article was written by John Siegel and Nick Rojas.