When creating a social media strategy for clients, one of their most frequently asked questions is how much to invest in a social media advertising budget. This is always a fun exercise, because social media channels will ingest however much budget you are willing to pony up, so the discussion really becomes about how much budget the client is comfortable allocating. This can go back and forth a bit, so we find it best to start at the end and work backwards.
By this, I mean looking at your goals for the coming year and defining where you hope to go so you can find out approximately what it will take to get there. Of course, everyone wants more sales. However, as we know with social media, there are a lot of moving parts that must gel together to help nudge consumers down the funnel to said sale.
We recommend that brands break their budgets up into different segments to get a better picture of how much social media advertising budget it will take to achieve their goals, because there are usually varying costs per results.
For instance, we typically recommend that brands focus on building their social communities, generating engagements, and sending quality traffic to their websites. If we break up the concept of social media marketing into these buckets, we are a step closer to figuring out just how much of their advertising budget should be allocated to social.
Before talking about how to set your budget for 2019, it is important to set your goals FIRST. No amount of budget planning will be beneficial if you don’t know where you want to go as a brand. Do you want to increase your social community by 25% year over year? Do you want to generate 40% more engagement or 25% more website visits? Knowing where you want to go is the first step to getting there!
Facebook and Twitter allow you to run campaigns specifically meant to grow your communities. If this is important to your brand, you will want to slice off some of your budget to nurture this goal.
If you have ran these campaigns before, you should be able to determine your cost per follower by looking at the amount spent divided by the amount gained. Now, to project the future, you should take your anticipated budget and divide that by your previous cost per follower to get your projected followers gained. There are obviously a few different ways to determine how much budget you will need to achieve your target community growth goals.
- $100 (Budget) / 250 (Followers Gained) = $0.40 (Cost per Follower)
- 250 (Anticipated Budget) / $0.40 (Cost per Follower) = 625 Followers Gained
The more engagement you can create, the more impressions (awareness) your brand will receive. We highly recommend having a portion of your social media advertising budget dedicated to promoting your content to a highly targeted audience. Don’t leave your 2019 social media strategy to chance by leaving your fate to the feed algorithms! Take control and put some dollars behind your content.
Now, how much budget do you need? Much like you did when budgeting for community building, you will want to take a peek at previous campaigns and determine what your average cost per engagement is.
If you don’t have a history of paid advertising campaigns, this will be tricky but not impossible. With no advertising history, you will want to place a test budget in market to gain performance data for which to base your projections off.
Now, referencing the goals you have set for generating more engagement, you will want to take your average cost per engagement and multiply by the amount of engagements (or target engagements) you are hoping to generate. The result is the amount of budget needed to hit the mark.
- $0.25 (Average Cost per Engagement) x 1,000 (Target Engagements) = $250 (Budget Needed)
Generating website traffic from social media sites is probably one of the most cost-effective ways to get new users to your owned digital properties. Most brands have at least dabbled with website clicks campaigns, so hopefully this element of your social media advertising budget planning should be the most comfortable.
Essentially, you will want to take a peek at your average cost per click and multiply it by the amount of website traffic you are hoping to get (or target visits). The result is the amount of budget needed to achieve that goal.
- $0.89 (Average Cost per Click) x 25,000 (Target Visits) = $22,250 (Budget Needed)
But wait! What if website visits aren’t enough and you need to account for conversions? The answer is quite simple. Take a peek at your analytics and check out your website conversion rate. By looking at your conversion rate, you can determine just how much traffic you need to send to your website to trigger a certain amount of conversions. For instance, if your website sees 25,000 visits per month and has a 2% conversion rate, then you should see roughly 500 conversions.
Now, going back to our previous example on setting your budget for website traffic, if it takes 25,000 visits to generate 500 conversions, you will need a budget of roughly $22,250 to achieve that goal, because your cost per click is $0.89. Adding conversion rates to the mix is also very helpful when you are trying to shoot for bottom-line business impact when creating a social media strategy!