How Smartly To Determine A Budget For Online Advertising

How Smartly To Determine A Budget For Online Advertising
Srdjan Kali

Article by

Srdjan Kali

Nov 25, 2019

One of the biggest challenges for your business is setting an online advertising budget.

Whether you continue your campaign on social media or launch it for the first time, there are several questions to answer, from how much you should spend to where you should spend it.

Want to learn more about creating a budget for social media advertising? Keep reading!


How much should I spend to advertise on social networks?

Although the strategy of advertising on the social networks of each company is different, most businesses that have already experienced the benefits of this type of advertising are willing to invest more money.

The more accurate budget amount for advertising on your company’s social networks comes from your annual revenue.

Businesses spend on average about 10% to 13% of their annual revenue on marketing. This budget is invested in advertising, which can include several channels, such as Google advertising and social networks.

Once your company has set a budget for social media advertising, you can use these percentages as a benchmark. Depending on your previous return on investment (ROI) from social networks, as well as your digital marketing goals, you may invest more or less in social networks, relative to other advertising channels.


What does a budget for social media advertising include?

The budget for advertising on social networks should consider the following costs:

  1. Ad Cost
  2. Technology
  3. Talent
  4. Services


1. Ad Cost

Ad cost refers to how much your business wants to spend on ads. This is what you pay directly for social media platforms that deliver your ads, such as Facebook, Instagram, Twitter or LinkedIn.


2. Technology

Technology includes several tools that your business can use to run, manage, and optimize a social media advertising campaign. For example, your company may invest in photo editing software, proofreading tools, or analytics platforms.

Several tools (both free and paid) that companies use to market and advertise on social networks include:

  • Facebook Ads Compass: Free ad campaign analysis tool
  • Canva: Free paid image creation tool on social networks
  • Lightroom: a program for professional editing of your photos on Instagram
  • LicensedFreepik: Website with free photos and illustrations that also has a premium paid version
  • Mobile monkey: Facebook messenger chatbot software

for best results free tools, before investing in paid ones. Even if you don't plan on spending money on technology, it pays to spend a little more of your budget on social media advertising because of unexpected expenses, such as tools or work.

3. Talent

You should also think about work when you consider the cost of advertising on your company’s social networks.

Whether you have an internal team to oversee your campaign, hire freelance designers to create ads or collaborate with influencers, these are all costs that fall into your advertising campaign on social networks.

Depending on the company, your internal team may have other responsibilities besides your advertising on social networks. If this is the case for your business, your internal team’s operating costs may not apply to your advertising budget.

The creative work of talented people implies that you should hire:

  • Copywriter
  • Content writer
  • Graphic designer
  • Advertising person (specializing in paid advertising on social networks)
  • And lastly (this might be the first place), the person who will make the overall strategy for the next period

Hiring all these individuals individually would certainly cost you a lot, whether they are freelancers or you have decided to form an internal team. The best option for companies is to hire a company or marketing agency that already has a well-established team. Agency service is certainly a more affordable and secure option.

4. Services

If your company is partnering with a digital marketing agency to manage your social networks, then you need to consider the costs of management and services. The price of the services depends on the agency as well as the number of platforms on the managed social networks.

When designing a budget for social media advertising that includes agency services, it is critical to note that prices are often associated with quality of service. It is not uncommon for agencies to promote advertising services “cheaply” and then fail to deliver a strategy that delivers results.

So, maybe the price of some agencies seems too expensive for you, but wait. First, look at what you will get if you pay that price. If, for example, you invest in marketing on social networks € 500, and then make a profit that is greater than this sum and still get a lot of new followers and potential customers, then that means that this way of marketing is still worth it.


Where can you spend your budget on social media advertising?

In most cases, companies focusing on social networks use the following platforms:

  • Facebook
  • Instagram
  • Twitter
  • Pinterest
  • YouTube
  • LinkedIn

Although your business can target each of these platforms, it is often beneficial to invest your time, resources and money in several selected platforms. For example, your company can focus on Facebook, Instagram, and YouTube.

Identify the best social networks for your business by researching your audience. The purpose is to advertise your company on platforms visited by your target group. If you focus on a website that no one visits, you won't see the results like the purchases you want.


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