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How Much Should You Spend on Social Media Marketing?

The old saying is true when it comes to marketing, it does take money to make money. Effective marketing strategies will increase your brand awareness and recognition and drive sales. While marketers have known that social media is an effective tool for years now, marketing budgets have shifted to reflect this.

Social Media Spending On the Rise

A recent study from the Duke University Fuqua School of Business found that social media spending is rapidly rising. They found that social media spending is roughly ten percent of overall marketing budgets. They anticipated that within five years, marketers expect to spend more than 21% of their total budgets solely on social media marketing.

This is a significant shift and has tangible consequences for businesses of all sizes. In general, marketing budgets are growing and more and more small businesses are finding themselves hiring dedicated marketers to develop and implement comprehensive strategies. With this shift, more attention is being paid to budgeting for social media advertising, engagement, and analytics.

Obviously, your social media budget will be a component of your overall marketing budget. Determining the size of your marketing budget will depend on a number of qualities, such as the size of your business, how long the business has been operating, your needs, and the funds that are available for this purpose. Keep in mind that cost can vary across different platforms as well.  What you pay for Facebook advertising may be more cost effective, but perhaps your type of business will get a better ROI from promoted tweets.


Admittedly, these are very vague guidelines that rarely lead to any actionable advice. Taking the idea that around 10% of a marketing budget is being spent on social media, you’ll work backwards to determine the size of the overall budget.

How Much Should You Spend on Social Media Marketing?

If You Are a New Business Prepare to Spend More

Young businesses tend to spend more on marketing than more established companies. That makes sense since in the early stages of operations you need to attract and grow a customer base, which requires a more comprehensive marketing strategy. In general, experts suggest that companies who have been in business for one to five years use between 12 and 20% of their gross revenue (or projected revenue for the year) on marketing. Companies that are less than a year old should expect to spend more.


If that number seems scary or shocking to you, you aren’t alone. It seems like an ironic twist that when your startup is in its infancy, you need to spend considerable amounts of money that you don’t have to attract customers who will hopefully give you the money you need to attract more clients.

Marketing is there to help you carve out a new market share and to develop brand and product recognition with an audience who have no idea who you are. Once your brand has some recognition and you’re able to maintain a customer base, you can start to parse down your marketing budget.


As with most things in life, you get out of marketing what you put into it. There are bare-bones approaches to marketing that are inexpensive, like hiring an unpaid intern, and there are more expensive and comprehensive plans, like hiring a corporate marketing agency.

Neither is necessarily better or worse, but different strategies will have varied impacts on your bottom line. The outcome of your social media marketing investment is your return on investment. While your ROI will ultimately be driven by revenue, you can also use different metrics like the number of new customers, increases in average sales, or unique visits to your social media pages.



Spend Where Your Customers Spend Their Time

When it comes to making your social media marketing profitable to your business, you want to focus your strategy and invest your budget in the platforms that your customers are using. It just doesn’t make sense to spend a third of your social media budget on platforms like Twitter or Pinterest if the overwhelming majority of your customers use Facebook or Instagram instead. The key to a successful marketing campaign is to find out what drives your customers to purchase your product and to generate new leads.


For new startups that haven’t fully established whether their target audience actually matches their consumer base, marketing will take on a more trial and error approach. Within your budget, you’ll need to allocate for any losses incurred for strategies that don’t generate their anticipated revenue. Start with one or two online platforms and build your strategy from there. Facebook still dominates the social media scene, with over 1.7 billion active monthly users, though platforms like Instagram and Twitter have grown rapidly in recent years. Many startups choose to focus their early campaigns here by sponsoring or promoting posts.


You don’t need to be on every single social media site, especially in the early stages where you don’t have a dedicated social media marketer or the budget to hire an outside media strategist. Rather, focus your attention on producing quality content that reaches your targeted demographic rather than looking to increase your follower count as quickly as possible. Remember, a high follower count isn’t nearly as effective if those followers never actually purchase your products.


While keeping your social media marketing in-house offers you more control over the schedule and workflow, you may not have an employee who has the training or experience needed to manage multiple social media pages while producing effective content that engages with a broad client base. At this point, you may need to hire an outside contractor or freelancer, though their rates can vary widely. As your marketing budget grows, hopefully in response to growing sales and revenue, you can designate funds for a social media expert.


Social media has been, and will continue to be, a major part of marketing. By all accounts, social media platforms are expected to continue to grow over the next few years, and your marketing budget should reflect this fact. While bootstrapped startups will likely be unable to designate an employee to only work on social media marketing, the importance of a comprehensive marketing strategy can’t be understated.

Cassidy Welter on Twitter
Cassidy Welter
Staff Writer: Cassidy Welter is a Chicago based researcher at a consulting firm specializing in nonprofits. When she's not working, she's reading anything she can get her hands on, debating politics, watching the Pittsburgh Penguins and eating her way across the city's food scene. See more from Cassidy on Twitter at @CassidyWelter.

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Grow Your Business · Marketing · Sales · Social Media

Staff Writer: Cassidy Welter is a Chicago based researcher at a consulting firm specializing in nonprofits. When she's not working, she's reading anything she can get her hands on, debating politics, watching the Pittsburgh Penguins and eating her way across the city's food scene. See more from Cassidy on Twitter at @CassidyWelter.

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