How Much Should I Spend In Social Advertising

Budgeting adequately for marketing expenses can be deceptively challenging. After all, many of the most effective approaches to digital marketing, like blogging and social media, are fairly low cost, creating the illusion that little, if any, cash should be allocated to online marketing spend. However, this can be a serious misconception.

Any strategy that can cause an increase in sales and revenue growth is worth an investment, so these kinds of activities should certainly be factored into your calculations. But how much is enough for social advertising?

Determine Your Budget

The allocation of your budgeted expenses overall will play a large role in social advertising spend. For example, the money needed to actually operate your company, like paying for salaries, rent, utilities, and cost of goods sold, can’t be spent on promoting articles on LinkedIn.

There are a few ways to determine an appropriate breakdown for marketing needs. For many businesses, the percentage-of-sales method is favored. For small businesses, this number is usually less than 10%, often around 7% to 8%. This means that if your revenue is $100,000 per year, approximately $7,000 to $10,000 will go toward your marketing efforts.

New companies without a sales history likely can’t employ these techniques. In this case, it’s helpful to use projected revenue, industry trends, and cash flow expectations to find a logical path.

Measure Success

To determine how much of your budget will go toward each facet of digital marketing, a value-based approach can ensure you aren’t throwing your money into failing tactics.

A return on investment (ROI) analysis can help allocate funds in the most beneficial way possible. To reach this figure, subtract marketing costs from measured sales growth and divide by total marketing costs. If your Facebook ads have driven 20 new customers to your page who spent $30 each, your sales growth is $600. If you spent $500 to launch your ads, your ROI is 20%. The higher your ROI, the better.

High ROI isn’t the only way to evaluate success, however; other metrics, like customer engagement, mailing list enrollment, and customer satisfaction can play a role as well. No matter how you choose to measure, be sure your most beneficial campaigns receive the most funds.

Hone Your Strategy

Rather than simply chalking up a low ROI to a poor approach, fine-tuning your marketing can help you see bigger yields without a change in spending. For example, if your promoted Twitter ads aren’t resonating, it may not be Twitter as a platform; it may be your methodology. Before scrapping a strategy or pumping more money into it in an effort to see a turnaround, carefully review the factors in play and consider making other changes, like a better use of keywords and more accurate audience targeting, to increase your chances of positive results.

In setting a budget for your social advertising, there’s no one right answer. How much you spend, from dollar value to percentage of total costs, will vary greatly based on your industry, your favored tactics, your customer base, and the ROI of your campaigns. However, with a knowledge of your successes and an understanding of the value of your efforts, you can move forward with your budget with confidence.

Making the right decisions in marketing doesn’t have to be a challenge. Read our recent post on how social media can impact your Search Engine Optimization efforts.

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