How Much to Invest in Social Marketing

Many businesses pour hundreds or even thousands of dollars into social marketing campaigns each year. Unfortunately, unless you have a clear plan and an understanding of what is profitable and what is not, this isn’t sustainable.

Measuring ROI on Facebook or Twitter is notoriously hard, so you can’t dump X amount of money from your budget into a marketing campaign there unless you know for a fact that it will convert to profits down the line.

Creating Metrics

Metric tools for social media services are powerful, but you need to develop your own metrics to truly get a sense of the return on investment you gain from reach lead.

  • Lifetime Value of a Lead – How much is a single lead worth over their lifespan? Does the average customer buy 1, 2 or even 3 products from you over the course of a year? How many people on your list convert to customers? How many stay on the list as time passes? By understanding the monetary value of people who interact with your business, you’ll have a better idea of their value on Facebook or Twitter.
  • Does Interaction Increase Conversions – How much traffic do you receive to your landing pages through Facebook or Twitter? Use and Google Analytics to measure click thru rates and compare those to the conversion rates you enjoy on those sites.
  • Ask People – Feel free to ask people where they heard about you or if they follow you on Facebook or Twitter at checkout. Most checkout procedures have this as an option, allowing you to gather valuable demographic data.

Using Your Data

Once you know the statistics, you can use them to decide how much money can be spent to attract someone to your Facebook or Twitter profiles.

The numbers are never exact, but that’s why you start small and work your way up. So, for example, if you know that approximately 20% of the traffic to your site is through social media, but those hits are twice as likely to convert as the traffic you receive through Google, you can safely spend 40% of your budget attempting to increase the traffic to your social media sites.

Every week, make sure to sit down and reassess this data. The funny thing about social media is that it changes rapidly. While conversion and click thru rates in Google tend to be consistent and change slowly over time, social media conversion rates can change overnight if you don’t post anything to your site or a new trend supplants your recent ad campaign.

If done correctly, a well implemented social marketing campaign will be highly profitable. Be smart about it though, or you’ll risk wasting money on traffic that cannot convert.

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