How to Set a Social Media Budget for Your Marketing Department

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Estimates suggest the average social media budget is around $250-350 per day.

You might think that's quite high, and you may not be sure if you can hit those numbers. Fortunately, different businesses need different social media budgets, and you might be able to get by with a much lower budget.

In this post, we're going to explore how you can calculate a budget that's right for your business. Read on, and you'll discover how much money you need to spend so that your business becomes a social media superstar.

Let's begin!

How Much Is One of Your Customers Worth?

Perhaps the most important thing you need to consider is how much one customer is worth to your business.

The easiest way to calculate this figure is by working out the lifetime value (LTV) of a customer. This is the total amount of money someone will bring to your business, for the duration they remain a customer.

When it comes to social media spending, you need to make sure you don't spend more than this LTV figure, to acquire one customer. As long as your spending remains under the threshold of the LTV, your social media spending should be profitable.

Now, for this approach to work well, you need to make use of conversion tracking. If you don't do this, you won't know how much of your budget is going towards acquiring a customer.

Thankfully, most social media platforms make it easy for you to track conversions. Most of the time, you just need to set up a special pixel that allows you to track the behavior of a potential customer.
When installing this pixel, you may need to tinker with the code on your website.

This can be a little bit challenging, and so you might want to hire a web developer to help you get the job done. If your website is built on the WordPress platform, you might be able to install a plugin that helps you implement the pixel.

Remember You May Face Different Costs on Different Platforms

Before you run a social media campaign, you need to remember that the costs you face will depend on the kind of platform you're going to be using.

For instance, LinkedIn is much more expensive, when compared to platforms like Instagram and Facebook.

This is because marketing to a B2B audience tends to cost more than marketing to a B2C audience. Initially, this can be a bit of shock, as you might find you're paying $1 per click on Facebook, but $5 on LinkedIn.

Fortunately, with the help of your LTV figure, you should be able to see past the variations in CPC across different platforms. Thus, you can determine whether using another platform is going to be profitable, even if it looks more expensive on the surface.

Optimize Campaigns to Lower Costs

When running a social media campaign, you'll tend to find the cost of your first campaign, doesn't need to represent the cost of future campaigns.

This is because you can take steps to make your campaigns more efficient. Thus, you might be able to lower your budget over time, without having to sacrifice results.

One way you might do this is by improving the relevance of your marketing.

By improving the relevance of your campaigns, you can ensure your ads get in front of people that'll actually take an interest in what you have to sell. This means you'll be able to reduce the number of 'wasted clicks' on your ads, that fail to produce any form of revenue.

A good way to increase the relevance of your ads is by improving the way you target them. You can do this by making use of the special targeting features.

For instance, Facebook offers something known as 'Lookalike Audiences.'

When using this feature, you provide Facebook with a list of people that represent your target audience. This list might include existing customers or people that signed up to one of your newsletters.

Facebook will then take this list, and create an audience of people that are highly similar to the one you've provided. When targeting this audience, you should be able to achieve an ROI that's equal to or better than your existing campaign ROI.

Be Careful What You Spend Money On

Many people spend money to acquire followers for their social media profile, in the hopes that doing so will improve their bottom line.

But it is important to note that when you buy followers, you are not buying customers. If you don't know how you're going to turn followers into dollars in some way, you should review your strategy and go about things in a different way.

For most businesses, a better solution is to focus on creating social media ads that will have a direct impact on revenue. That might include ads that promote a specific product or ads that get people onto an email list.

Once these campaigns produce some revenue, you can use this money to run campaigns that are not designed to produce revenue. That might include campaigns that produce followers or campaigns that simply make more people aware of your business.

Do You Know How to Calculate a Social Media Budget?

Calculating a social media budget isn't easy, but the tips in this post should help you overcome some of the hurdles that trip up most rookies.

The reality is that you will not know what you need to budget for social media until you begin running some campaigns. Upon running a campaign, you can study your data, and use the information to figure out the kind of budget it'll take to get results.

Social media can be an expensive way to promote your business. But if you take action on these tips, you should be able to get great results, without breaking the bank.

Did you know you can use special tools to help improve the effectiveness of your social media campaigns? Check out this post to learn about the best social media tools on offer.

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