How Much Should Brands Budget for Social Media?

What percentage of a B2C or B2B brand's budget should be spent in strategies and tactics that we would label "social media-related?" Within that percentage, how should the money really be applied with the big amorphous box we all call social media? Big questions. I find it hard to generalize while at the same time am driven to try and do just that. I want to establish some benchmarks based upon all of the brand work I have seen or touched in my job. Clearly what is right for a Unilever may be very different than what is right for a Siemens. Selling cars (Ford) is dramatically different than mobile phones (LG). Running your business in North America may be very different than China.

All these differences aside. I do see a common trajectory of 'spend' at least as applied to B2C and separately to B2B. That path has more to do with increased experience in social media tactics, the adoption of, what I will call, a social media business mindset and the integration path for social media going forward.

Experience in social media tactics - For simplicity's sake, lets look at what most marketers go through (including this one). Here are three stages of adoption:

• Social Media Experiments - usually the first year or two of unconnected social media programs involving bloggers, video content distribution, cgm/ugc contests and other tactics.
• Adoption and Integration - in the following years, the value or success of social media is felt within and there is a push to do more and integrate it with more people and disciplines.
• Go 'Big' - after some experience and success following integration, brands can't help but want to "go big" either with a substantial facebook campaign or a more impactful integration (e.g. committing to 20 people in social customer care via Twitter and Live chat). usually these brands have sketched out a measurement model that reassures them the effort is smart business.

Social media business mindset - Is using social media an obligation due to outside pressures (your CEO, board, competitors all told you to do it in one way or another)? Or do you see a way - perhaps murky now - but a way that all of the implied qualities of social media may actually change your business? I see plenty of CMOs and CCOs who fit into both camps. So, the choice is between social media as obligation or social media as quest.

Integration path - The future value of social media is integrated in every discipline. Just as all marketers hoped that "digital" would be the new normal in marketing (it pretty much has), we expect that social strategies and tactics will be integrated in many disciplines. Look at Coach's The Poppy Project. Anchored by a microsite and a "Stumble Upon-like" tour of great fashion blogs, how much of this is social media vs. what we consider digital marketing? How much was the whole project spend and what would you label it? You could probably do it if you had the numbers. Now think ahead into the future. As programs get more complex, Facebook Open Graph becomes ubiquitous, brands adopt Social IRM - what can be distinguished as social media and therefore "budgeted" becomes harder and harder.

In many cases, brands will likely embrace the most valuable output of social media - advocacy (or word of mouth) and engagement - as 'must haves' for every program and brand. Key activities will continue to be labeled social media while more and more social elements will get baked into PR, user experience, digital marketing and more. In this way social budgets will be dispersed in the organization.

Rilla Delorier, CMO of Suntrust Bank, mentioned via AdAge:

"The great thing is less than 5% of my total spend is in social media. We've reached over a million customers this year through that mechanism. It's a very efficient way to get feedback on what's working and what's not."

She said this in context of a program called Live Solid. This features a microsite with embedded YouTube videos, a Facebook page and a Twitter handle amongst may other online tactics (SEO? SEM? Display? CRM?) and likely some related offline programs as well.

I don't have an inside view of Suntrust's experience. As a customer, this is the first remotely social program I have experienced. I figure that they are in the Experiments/Quest or Adoption/Obligation quadrant. What I can't tell from her quote is whether Rilla is a believer on a quest or proud of the fact that she only spent >5% to be able to check the "social" box.

Spend Matrix

Here's my view of total spend in single market from a prototypical $10m B2C marcom budget (modest to some, inadequate for big brands)

 

Mindset	Obligation	Quest	Well-Integrated*
Stage
Experiments	1%	5%	na
Adoption	5%	10%	6% (12%)
“Go Big”	7%	12%	10% (17%)
	Percentage of prototypical $10m marcom budget
	*budgets get lower as money is integrated into other functions. Total percentage is in ()

Comments

[David]

I enjoy how most of the figures are percents, it allows the reader to apply value to time, which is the true cost.

[Akash Pai]

Great post John. Just curious on your thoughts on:
1. Middle tier and SMEs
2. How does the breakdown differ per industry vertical. Isn't it true that certain verticals (consumer facing brands - apparel, automotive, hospitality) will have natural tendency to spend a higher % in social media related activities. Are there any numbers out there ...

[Daniel Stoica]

Awesome Post!

The discovery process is ... enlightening!

When we find out that we can connect and engage with our most loyal customer base through a medium that costs us a small percentage of the previous mediums used, we adopt then Go Big!

Thank You for sharing such valuable information!

[twitter.com/JasonCormier]

I like your comment about how key activities will continued to be labeled as social media, while other elements will get baked into PR, user experience, digital marketing, etc.

The perception for most in my experience is that since social is the cutting edge... they are content to hang out in the "adoption and integration" area. One large brand we worked with stated that as long as they could call something a "pilot" the internal company pressures were lifted.

I think the activities that will continue to be labeled "social" will be the items perceived as more experimental (perhaps with the exception of the BI/monitoring side of things).

We know social media typically works best in concert with advertising and PR efforts (not as a silo effort). Those who are ready to "go big" likely also have this understanding.

For that reason, and related to your point, many supporting strategies and tactics will conveniently be baked into areas where budgets already exist. I know this varies by company culture and structure, but some looking to go big in social will be flying as far under the (social) budgetary radar as possible. Oh, the politics ;-)

[Lorraine Ball]

I think the percentages seem low,until you realize you are working with a $10 million budget. 1 - 10% of that goes a long way in the world of social media.