The Social Media Budget Question

One of the questions coming up a lot these days, is what kind of budget a company should be investing in a social media program. The answer to this often dictates how - of if - a brand builds out a program.

One good starting point is to look at the rest of the marketing spend. A company with $5 MM in revenue is probably already spending $250-500k in marketing and promotion. Taking 5-10% out of that budget provides about $15-50k for social. Now remember, social is a way to extend marketing programs, not replace them. So going line by line thru the budget should enable you to identify campaigns with lower response rates, so that you can spend resources adding a social component to the effective ones. Also, some of these costs include soft costs and salaries. Looking at your employees' task lists should help you fins a spot where they can re-allocate some of their time.

Now let's say you are a company with around a $10MM Marketing budget. Does that mean you should be spending $500k-$1MM on social? Well, you have to look at what "social" really means. Building applications on Facebook or for mobile may seem to fall into the social bucket, but they are really just traditional online marketing vehicles in a social channel. In fact, I'd argue that trying to build "viral videos" (a term we laugh at) is simply trying to build a TV commercial in a non-traditional medium.

So what's "social" then? We'd say "social" is the engagement part of marketing. And that engagement involves listening and talking. So if you are asking how much money you should dedicate to "social," what your really need to look at is how much time you need to spend on publicly interacting with your consumers and industry influencers. This involves man hours, both amongst current employees and new team members. And it's going to involve content creation. Finally, it's going to involve monitoring and listening tools, and people who know how to effectively use them.

At the end of the day, what number does this equal? Not to sound squishy, but it varies. An effective social campaign is going to stimulate conversation, and facilitate the sharing of content between customers. So you need budget for monitoring tools, budget for content, and budget fro people. The amount of that budget is based on your goals, market size and the size of your customer base.