How to build your social media budget and strategy
Last week, I spoke at the "Latinos Unidos" conference in Tampa - an event sponsored by the mayor of Tampa, with proceeds going to a scholarship fund for Hispanic students in financial need. During one session, which specifically addressed social media tips and tricks, one of the attendees asked how a social media budget should be calculated. The speaker responded, rightfully so, that there isn't really a formula to set a budget, and that it really depends from company to company.
This got me thinking. Over the years, I have been inundated with benchmarks: for revenue generating activities, marketing spend should be anywhere between 15% to 25% of revenue. For Business development activities, marketing spend should be anywhere between 2% and 3% of revenue. Although I would question the validity of these because I feel there is no such thing as a blanket benchmark for all businesses, it seems human beings take comfort in benchmarks, and the fact that there isn't really one for social media spend apparently makes it harder for marketers to motivate increasing spend, something 59% of us plans on doing, according to AdAge.
So, although I don't have a set formula for setting a social media budget, I do have a few best practices that might actually help you get there:
- Before you spend any money on social media, you need to figure out if a) your target audience uses social media, and b) if so, which media they use. I can imagine "The Scooter Store" for example not spending a whole lof of time on social media, whereas a company like Ford definitely will.
- Once you have determined if you are going to use social media, it's a good idea to work out how you will use it, and how that will align with your overall business strategy. On a high level, you can use social media for branding purposes, to build relationships, to improve your SEO rankings, to improve your business processes, and to generate leads and sales. These goals should be SMART (Specific, Measurable, Attainable, Relevant, Time-bound), for example: Your goal is to generate 250 leads through social media, over the next 12 months. You therefore need to drive 10,000 visitors to your web site, which you will convert there at a lead conversion ration of 2.5%.
- Once you have this down, it's time to decide on the tactics you will use. If your goal is to generate those leads, the tactics you might decide to use are advertising on the appropriate social media platforms (where your audience hangs out), and driving engagement which will drive web site visits. Further more, you will need to put in place the mechanisms to convert those visitors to leads.
- Now, estimate your costs, taking into account development, writing, design, technical support, contractors, content production, advertising costs...For those with no historical data to rely on, this will be a bit of guess work. It's important to remember that a good marketing strategy assumes flexibility, where we continuously analyze and correct based on our findings. So if you find out your Facebook advertising is not working, but your LinkedIn group interactions exceed all expectations, you would redirect spend to the LinkedIn group interactions.
- Lastly, map your SMART goals to your budget in order of importance. Social Media is not the only thing you should be spending your marketing budget on, and it is closely tied to all your other only marketing components. Remember to build a flexible budget, as explained in point 4. Also remember to record your results, so next year's budgeting exercising is easier.