How Much Should You Spend on Social Media?

This is the big, burning question I’m getting from clients these days. They understand the need, see the value and want to be effective in the space but there’s no benchmark on how much to spend. I’m selfish and want to do as much for my clients as possible so I would tend to err on the high side – concepting and creating content isn’t cheap, nor is the the time spent managing, monitoring and cultivation a community.

Thankfully, Altimeter Research looked at 12 companies with more than $10bn in revenue to give you a quick crib sheet (below).

So how much should you spend on social media, as a company with $10bn in revenue? You should have an internal, soft cost, of about $724,000 (so about 7-10 FTEs) and external software, agency and media costs of $2,021,000.

How much should you spend on social media as an average company? Internal costs should be about $348,000 (3-4 FTEs) and external costs of about $811,000.

Average Spending on Social Media by Companies with Over bn in Revenue

I definitely see some areas of efficiencies: you don’t need two agencies if you hire a boutique practice like Radar DDB within a large integrated agency like DDB and if an agency partner like Radar DDB manages your (external) social media strategy, there would be cost savings on much of the technology as well.

However, nonetheless, this is a really interesting benchmark and one that will scare a lot of clients, many of whom still believe social media is *free*. The truth is social media done right takes time, resources, media and technology. It’s the intersection of the four types of media:

via: Data: How Wealthy Corporations Spend On Social Business « Web Strategy by Jeremiah Owyang | Social Media, Web Marketing.

4 Responses to How Much Should You Spend on Social Media?

  1. Terra McBride says:

    Excellent information, especially for those who are trying to convince senior leaders they need to invest actual dollars in social media to have a real impact.

    Can you define ‘average company?’ I’m not sure what that means.

    Thank you for this post!

    • Ed Lee says:

      Hi Terra – thanks for stopping by. Altimeter performed a survey of 140 corporate social media strategists to get these numbers so “average” would be (total spending/140).
      Ed

  2. Brennan says:

    What do you think SMEs should spend on social media, though? I think this approach works for big accounts, but what about other kinds of companies looking to spend? Do you think these metrics could be scaled?

    • Ed Lee says:

      that’s a dangerous game Brennan. i’d be more comfortable waiting for additional research into the space before making a general recommendation that goes beyond “meeting the business requirement”.
      ed

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: