Inbound Marketing & Sales Development Inspiration

How to Set a Realistic Social Media Advertising Budget

Preston Kendig   by Preston Kendig July 18, 2018

Originally published April 2017. Updated July 2018.

Is your business struggling to achieve social media success? Is your company thinking about taking the plunge into social media advertising?  Are you getting beat by competitors? Companies across the world have had success advertising on social platforms, but others have fallen flat on their face.

When it comes to advertising on social media, it’s best to proceed with caution and with a very specific budget in mind. Never forget that spending more money doesn’t necessarily equate to greater success, and it’s quite easy to waste money on social ads.

Calculating the Return on Investment for Social Media Advertising

It’s easier than you might think for a business to spend a lot of time and money on social media without getting the results they want. If your company isn’t happy with the current Return on Investment (ROI) from social channel advertising, it’s probably time to reassess the budget and clearly define your goals.

In this blog, we’ll touch on a few of these simple social media advertising budget topics:

  • How to measure success
  • How much to spend
  • What % of my budget should be devoted to social?
  • Which social media channels allow advertising?
  • Can creativity impact cost & ROI?
  • Cost of video vs. static image advertising
  • Ad spend Is only part of the cost

How Will You Measure Success in Social Media Advertising?

Every business is going to approach this question a little bit differently. Many businesses measure success by the number sold products, the number of leads generated, or the number of potential customers engaged.

Paid advertising on social platforms, as a branding play, is a bit more challenging to track, but could be the right play if this strategy aligns with the company’s overall digital marketing goals. Social media is a great place for businesses to connect with large numbers of people.

How Much Should Your Business Spend on Social Media?

Step one in budgeting for social advertising is to determine how much you’re planning to spend on all your digital marketing efforts. Next, you’ll need to decide what % of that budget is going to be devoted to social media.

  • Most companies spend about 5% to 15% of annual revenue on marketing
  • Of the total marketing budget, approximately 35% to 45% should be spent on digital marketing activities
  • Of the digital marketing budget, about 15% to 25% usually gets spent on social media marketing efforts (organic and paid)

Your overall digital marketing goals should also play a factor in determining how much gets allocated to social media spending. Be careful not to cannibalize the budget for content marketing, SEO budget, paid search advertising, display advertising, and other high priority digital marketing activities.

Never Forget Your Audience When Advertising on Social Platforms

Target Audience.jpgThere’s a lot of front end work that needs to be completed before purchasing a single penny’s worth of ad spend on social media, regardless of whether you’re purchasing advertising space or paying to boost relevant content to audiences.

We recommend figuring out who you want to reach and how you want to reach those people before deciding how to spend a social media advertising budget. Once you know the answer to those two questions, it’s time to figure out which social media channel your specific audience is using (or if they’re using social media at all).

Which Social Media Channels Allow Advertising?

social media use


Can Creativity Impact the Cost of Social Ad Spend?

While it takes a bit more time, energy, and money to add creativity to advertising on social media channels, many businesses find these efforts are worth the investment in the long run. Typically, creative and engaging advertising efforts connect with audiences better, gain organic momentum, and are more likely to get comments, likes, and shares.

Free Cost Artwork.jpgTry to align your content with the sort of content people have come to expect from that particular social media channel. Avoid constant selling with newspaper-style “Buy, Buy, Buy” ads. Ask yourself, is this something you would enjoy having in your own news feed?

Creativity Pays off in the Long Run (and the Short Run)

Over time, social media channels, like Facebook, are likely to pick up on which advertisers produce quality content and which advertisers miss the mark. While most of the social networks want to make money, most refuse to do so at the expense of user enjoyment. Creative, high-quality content in advertising efforts on social media is a win-win for everyone involved.

Facebook, for instance, will even help an ad perform better at auction if people appear to be enjoying the content. Enjoyment is primary measured by likes and shares. In other words, good quality content has to potential of reaching more customers at a lower cost per interaction.

Social Advertising with Video Vs. Static Images

There are a few different ways to go about advertising a business on social media. Most businesses are familiar with advertising through static image ads, but there is also a growing segment of advertisers that are utilizing video ads.

Video is typically more challenging and more expensive to produce than a static image, but a business is likely to make a bigger impact and drive more engagement with a video advertisement, something all the social media channels seem to want.

The great thing about video is that a piece of video content can often be used across multiple platforms and tends to have a longer shelf life than images. You can even break video content up into different length clips to use in various capacities.

Many of the social platforms, like Facebook, give some degree of preference to video content, even paid video content.

 Street Art.jpg

Ad Spend Is Only Part of the Cost

When breaking down the overall cost of social advertising, try to think holistically about what’s really involved. Even if you’re handling the work in-house, people have to spend time coming up with strategy, designing ads, placing the ads, writing the copy, tracking the results, and managing that entire process.

Below is a rough estimate of how much to budget for each of the various activities involved in social media advertising:

  • Strategy 10%
  • Project Management 5%
  • Design, Graphics, Videography, Visuals 30%
  • Ad Spend 40%
  • Copywriting 10%
  • Tracking Results 5%

As you break down how much is being spent at each stage, don’t let the peripheral activities eat into the ad spend portion of the budget. Most small business aren’t going to hit a significant number of users, especially on platforms like Facebook, without coughing up some money.

By spending even just a few hundred dollars a month, a small business with few social media followers can potentially reach thousands of users.

Social Media Isn’t for Everyone

For some businesses, there are better ways to reach potential customers than social media. B2B companies often fall into this category. However, it’s also easy to assume your customers don’t use social media. According to the Pew Research Center, nearly 7 in 10 Americans use Facebook.

Demographics of people using Facebook.jpg

The trick is separating your audience out from the rest of the people using that social network. For instance, installing a Facebook Pixel on your website can help you learn more about the demographics and interests of the people actively visiting your business’ website, but it can also help you create target audiences for advertising campaigns.

Having a few narrow focuses on specific audiences can help maximize the spending power of a social media budget.

Trying to be everything to everyone rarely works, especially on social media. The narrower you can get in targeting a specific audience, the more success you’re likely to have in the long run.

What Does the Future Hold for Social Media Marketing Budgets?

In the future, there will likely be even more emphasis on creativity and quality in social advertising, so be sure to start budgeting for creativity if you aren’t already. Would you find the ad funny, engaging, or interesting? Be willing to spend a bit more on creativity and on producing video content, and you’ll have greater success in the long run.

Most of the social networks, and their artificial intelligence systems (AI), will probably continue making improvements in the realm of targeting. While this will advance our ability as advertisers to put the exact right ad in front of the exact right person at the exact right moment in time, expect these relevancy improvements to come at higher costs.

Contact us if you have questions about setting a realistic social media marketing budget. Or download our free Digital Marketing Budget Calculator.




Preston Kendig is a Content Specialist with WebStrategies. With nearly a decade of marketing and client management experience, Preston brings a passion for helping B2B clients create content that drives leads, improves SEO and helps convert leads into sales.


Topics: Social Media, Marketing budgets

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