28 Feb Developing an Appropriate Social Media Budget
Today I will attempt to answer my last and perhaps hardest question of the Marketer’s Foray into Social Media series, which was “What is the budget?”(for a social media campaign). For this, I will pull in points from Jim’s previous post “How much will a Social Media Campaign Cost“, and aim this direction more on how to develop a social media budget according to your individual company.
To start with, we have found as a social media agency that the amount marketers allocate to social media is very much dictated by a company’s confidence in social media marketing, which likely corresponds to the company’s readiness for change. Companies that aren’t far along this continuum of change aren’t likely to invest much in social media, no matter how much they spend on traditional advertising. In fact a study by Coremetrics on social media budgets revealed the following:
“Seventy-eight percent of marketing professionals polled in Coremetrics’ annual “Face of the New Marketer” survey saw that social media marketing was a way of getting an edge on their competitors. However, just 7.7 percent of their total online marketing spend was allocated to it compared to 33 percent to online advertising and 28 percent on online promotion design and implementation.”
So taking this into account, a social media campaign budget is likely to be formed out of funds that are already allocated to the digital marketing budget, as many people in marketing classify social media synonymous with “interactive marketing”. However, according to Forrester’s US Interactive Marketing Forecast of 2007 to 2012 – this pool of resources is currently only 8% of an advertiser’s current advertising spend (despite the research of the total 29% of media time consumers are spending online).
The other approach is to develop a social media budget from additional funds in the overall marketing budget â€“ usually an amount that is set aside to “test this social media stuff out”. Either way, very rarely does a company rally for additional funds for a social media campaign; so it is likely for a company to pull a chunk of traditional budget out to dabble in the space of social media for a determined period of time.
And so as a social media agency from here we are either a) given a baseline amount and then asked what we can do with it or b) asked our recommendations and then to propose a budget amount from there. Regardless of either, the following are typical questions that we ask to narrow this down a bit (some elaborated from Jim’s previous post).
1) What are your overall objectives and campaign timeframe? If the whole objective is to achieve a drastic spike in sales or promote a limited time offer, we believe more of your budget should be allocated to advertising. Social media is a slower burn, and you will just be disappointed.
2) How much is your overall marketing budget? To put things into perspective. the average cost of TV production for a 30 second spot is around $303,000 just to make it: not to mention media costs to run it. With this in mind, you may want to produce one less spot for a campaign, and re-allocate these funds towards a very decent social media campaign with a longer life-span.
3) What tactics are you using already and how are they working? How your current efforts are working should determine how much you can reallocate to social media. Is your direct mail initiative working? What is your ROI on your current advertising model? What is the result of your interactive budget? Take a hard look at what results you are getting with traditional methods.
4) What are your internal resources? To put it simply- your internal resources will determine your social media budget amount. If you have appropriate staff that can devote time to social media, you may find that you only need the set-up and development of a social media strategy or tools to get the campaign going. If you don’t, a social media budget will likely be higher to include the actual execution.
Again, as we say over and over: a social media budget is developed on a per company basis. Beware of any agency that has set-pricing, as it likely indicates that they will also have canned social media efforts that don’t take into account objectives and target audience.
Feel free to share with us your experiences developing a social media budget, as we can all benefit from this discussion.