Social Media Budget Ratio

After my last post on the Media Budget Ratio I got a question out on the Marketing 2.0 community by Scott Zosel about how much should you allocate for Social Media in your budget?

Great question Scott and you inspired me to write this post. So here it goes.

The cost of the technology used for social media is rather low. Take for example – a blog – costs next to nothing, a podcast can cost btw $0 and $2000 on the high end, a video can cost btw $0 and $10,000 – $15,000, a wiki can cost about $6500 a year, a community can cost btw $0 (Ning) up to $100,000 a year for a private branded community.

So unlike traditional media – Print, TV and Radio – which can cost big money. Social media’s upfront costs very little and we actually use money within my team to experiment with so we A) get a better understanding of the technology and B) start to understand how we can use it and measure the results along with all the other media we have.

Ok but the real cost (again unlike the traditional media stuff) is in Content Creation to fill up those social media / new media channels – here is where the cost can get large. I happen to think I am very fortunate since I work at a consulting firm where many people are thought leaders – so we have no shortage of opinions 😉

So to recap – I would say (as I did in my post on the Media Budget Ratio) that traditional media should run you now 2/10s of 1% of revenues and your Social Media Budget Ratio should be at least 25% of your Traditional Media Budget (including content!)

15 comments to Social Media Budget Ratio

  • Martin Edic (techrigy)

    Hi Paul,
    I’d add something else to this. Human costs are the big factor but there is a lot of leverage in social media. You write this post and spend some time on it, however hundreds or thousands of highly targeted social media pros are likely to see it and spread it around if it adds value. So the employee overhead should get amortized against the reach and value of a highly targeted audience.

  • Paul Dunay

    agreed Edic and thanks for posting

  • Tracey

    Hi Paul,
    I’m not sure I understood your ratio right. Is the 25% in addition (or part of) the traditional media budget?

    For example, let’s say you have $50mm in revenues. 2/10 of 1% is $100k. So an additional $25k for social media, or is it a 75/25 split?

    Thanks for the post. I’ve wondered how others have balanced their budgets.

  • whoissecretdubai

    Hello,

    A humble request…

    Do you, by any chance, happen to know who Secret Dubai (the blogger: secretdubai.blogspot.com) is?

    http://whoissecretdubai.blogspot.com/

  • Paul Dunay

    @ SecretDubai – from this looks of your comment and your name – YOU are secret dubai!

    Sorry to break the news to you …

    nice buzz attempt

    PS – your page gave me 404 error

    p

  • Paul Dunay

    @ Tracey – I was suggesting an additional 25% just for social

    thanks for commenting – sorry it wasnt clear

  • b2bspecialist

    Paul, a recent post at Brand Central on marketing spend in b2b.
    http://bawden.wordpress.com/2008/12/05/b2bs-hidden-marketing-budget/#more-1584

  • Toby

    Hi Paul –
    Nice to see a line drawn in the sand when it comes to social budgeting. The big question is how did you/the thought leaders in your organization come up with that number?

    Does that number include technology and human resources and creative?

  • Paul Dunay

    @ Toby

    Yes we were thinking all the soft factors that go into creating content and then including the technology

  • Jeff

    I’ve been playing around with a simple projection tool for clients who want to compare what they might expect in terms of marketing results from social media vs. mass media. This is just a thin layer view, but it’s a start:

    http://tinyurl.com/74ctfl

    Welcome any feedback. I would like to build this out to incorporate the comparative costs that Paul talks about.

  • Paul Dunay

    Jeff

    Very interesting comparison – not sure I can make the leap to sales to directly (agree it is there though)

    But a good template for folks to use as their build out business cases for social media

  • Chase McMichael

    Hi Paul love the post here is my 2bucks
    If your going to do a serious SM campaign your going to need to budget for on going social analysis so you can monitor your growth and map your connections so you can identify who your possible brand maven are “influences” 2nd ongoing social outreach to high socially connected people around your affinities and 3rd ongoing maintenance. To break that down would be $3K for the social analysis, 25K-50K for social outreach $2500 for ongoing support. All and All about $75K+ if you do a user generated content with blogger support $150K doing a target ad buy $25K+. These are all real numbers here.

  • scott

    Paul, I googled myself today out of boredom, and saw my name mentioned on your blog, and a great answer to my question. I guess now I’ll have to reciprocate, because I need to address who SM budget thing on my blog anyway.

    Thanks, your answer was pretty much what I was thinking: human capital being the biggest expense.

  • Ricky

    I would like to build this out to incorporate the comparative costs that Paul talks about.But as we know, Twitter is just one tool. There are tons of ways to publish interesting information online to reach your buyers.

  • […] Zosel about how much should you allocate for Social Media in your budget –  and so I created the Social Media Budget Ratio (SMBR) post back in 2008 which was good but it lacked historical data like I have […]

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