How to Set a Social Media Advertising Budget.

Roza Tsvetkova
October 7, 2021 - 6 min. read

As marketers, we live and breathe social media, but at the end of the day, we need to prove that our efforts achieve actual results, right?

The days of great organic results on social media are long gone and brands have to pay in order to play and achieve good results. 

Social advertising has evolved a lot through the years and it’s a powerful tool to help you find the right people on the right network.

So, let’s talk about how you can create a smart advertising budget to boost your activities on social media and show an excellent ROI on all your efforts to your boss.

Why do you need a social media advertising budget?

Content is the king on social media. No doubt. But every king needs some support to talk to his target audience. And advertising is his best friend.

According to Ignite Social Media’s analysis from January 2020-February 2021, an average organic post will reach the following percent of your audience:

  • 2.2%  on Facebook 
  • 5.3% on LinkedIn
  • 9.4% on Instagram

But with the right social media advertising strategy you can reach out to a way greater part of your targeted audience and at a lower cost than with any other marketing channel. That’s why creating a smart budget for it is crucial for your marketing efforts.

According to Gartner CMO Spend Survey 11.2% of marketing budgets are spent in 2021 on digital advertising and social media is a significant part of it. 

So, let’s dive into what a social media budget consists of and how to create it efficiently.

What does a social media budget include?

A social media budget is your compass in planning your business results and generating ROI. It gives you a direction and guides you through your marketing efforts. 

Here are some of the main elements you have to consider when creating your social media budget.

  • Ad spend on social media.

This is the actual amount of money you will invest in ads on each of the social networks like Facebook, Instagram, Twitter, LinkedIn, etc. 

Look into your advertising history and which channels performed well so far. 

If you are just starting with social advertising, you can allocate a test budget for a specific market in order to gain performance data that will help you shape up your long term budget.

“100$, 1000$, 100,000$ per month? The amount will vary from business to business. The key is finding the sweet spot of reaching your full potential without paying too high a price for winning a customer.”

~ Kiril Kirov, Digital Marketing Manager, Falcon.io

To learn more on how to plan the exact amount of your ad spend on social media you can find a good read here.

  • Technology and tools.

When planning your budget, you should keep in mind all tools that you’ll need in order to make your ad campaigns successful from start to end. You should consider investing in:

  • Photo editing software
  • Proofreading tools
  • Analytical platforms
  • Automated ad tools

Falcon, for instance, can help you scale and automate your social media advertising efforts with its Advertise module.

  • Talent and workforce.

You need to calculate the help you’ll need from people inside and outside of the company for your projects and ongoing campaigns on social. 

Irrespective of whether you have a dedicated in-house team or are working with freelancers or an external agency, this is an important part of your budget.

When budgeting labor, think of:

  • Designers
  • Copywriters
  • Videographers
  • Advertisers
  • Analysts
  • Developers
  • Project managers

The list can go on and on depending on the essence of your projects and business in general. For example, you may consider adding your costs for influencers in your social media budget.

7 tips on how to optimize your budget.

1. Know your audience.

First, you need to know your target audience. Ask yourself questions like:

  • What is your buying persona’s demographics and behavior online? 
  • Which social media do they use and what for? 
  • What stage of your sales funnel are those leads at the moment?
  • What is your competition’s advertising strategy towards them?

“Social media advertising can be done to different audiences according to where they are in your funnel: Above the funnel people with certain interests, retargeting those who already have an interest in your company, and of course engaging your customers through loyalty ad campaigns. I recommend a social media advertising that includes line items for each of these 3 different campaigns.”

~ Neal Schaffer, Digital & Social Media Marketing Consultant, Speaker & Author

Social listening can be a very powerful tool to help you gain such knowledge no matter if you are just starting or fine-tuning your social media budget.

Having identified your customer persona will help you also figure out what is the cost per lead or website visitor and the lifetime value of a customer. And this is a solid foundation for your budgeting efforts.

2. Set trackable goals.

Identifying clear goals for your social media budget is crucial in order to generate ROI. 

“Any social media budget plan should start with a target. You need a target to:

  • Plan how much budget you need in the first place.
  • Be smart about budget distribution.
  • Optimize your campaigns to reach your goals. 
  • Understand how well you’re doing in retrospect.
  • Establish benchmarks for the future.

You don’t want to miss that step.”

~ Kiril Kirov, Digital Marketing Manager, Falcon.io

3. Identify the social networks to invest in.

You need to get familiar with which channels work for your brand. If you are just starting with social ads, test them before you make a decision on how much ad spend you need to invest in each of the social networks and campaigns.

“Your social media advertising budget should be spent on those social media platforms where your target customers are. For most B2C companies this would include Facebook, Instagram, and TikTok and for most B2B companies Twitter. But don’t forget about some of the other platforms, such as Twitter, Pinterest, Reddit and YouTube where you might find a more effective use of your budget.”

Neal Schaffer, Digital & Social Media Marketing Consultant, Speaker & Author

4. Mind your leads’ sales funnel stage.

In order to create a smart budget you need to segment your leads according to the stage in the sales funnel they belong to. 

Are these leads people who have never heard about your brand? Are they already engaged with it? Or are they returning customers who you want to upsell to? 

Based on that data you can structure a reasonable budget and track your results efficiently.

“A good place to start is with your most engaged audiences — your customers, subscribers, website visitors, fans. These people have signalled that they like and trust your brand. This is a great opportunity to give them more reasons to keep coming back.”

~ Kiril Kirov, Digital Marketing Manager, Falcon.io

5. Create advertising content that matters.

No matter the amount of money you invest, if you don’t offer your target audience good content, you won’t succeed. Fine tune your ads according to the target group and stage of the sales funnel they fall into.

Running A/B tests can help you understand what your audience engages with. Experiment with different headlines, descriptions, images, formats, and more. 

This will give you insight into what motivates your audience to take a particular action like click, visit your website, contact you, or make a purchase.

You should also consider preparing different types of ads for the different social networks depending on your audience’s preferences but also the formats available. 

Here you can read more on the image size dimensions available on each of the social networks.

6. Follow trends on social media algorithms.

There are always two sides of the coin! On social media, the sides are your audience and the social network’s limitations and opportunities. 

You need to keep track on all novelties around the social networks you advertise on in regards to formats, features, and insights on how their algorithms work. 

Find some inspiration on how the Facebook algorithm works.

7. Measure and adjust your strategy and budget.

Test, measure, adjust! This is the formula you need to follow in order to optimize your social media advertising budget.

Understand the main metrics around advertising on social media and find the ones that matter to your business. 

Tools like Falcon’s Measure can help you get insights into what works and what doesn’t for your social media strategy.

That’s a wrap!

Creating a social media advertising budget can be complex, but it is a crucial part of your marketing success. You need to take the time to educate your brand and experiment in order to find your sweet spot.

Happy budgeting!