How to Determine the Right Social Media Budget

Rachna Shah

February 20, 20245 min read

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Many marketers and business owners often find themselves grappling with the question: How to determine the right social media budget that results in the desired outcomes without straining finances?

The key to finding success in social media budgeting lies not in having the biggest budget but rather in establishing an appropriate budget that perfectly aligns with your specific goals, target audience and available resources.

In this guide, we'll provide you with practical insights and tips to help you determine the optimal social media budget for your business without overspending.

Table of Contents

What is a social media budget?

A social media budget is a predefined amount of money allocated by a business or organization for financing its social media marketing endeavors.

This budget covers expenses related to advertising campaigns, content creation, monitoring tools and employees’ (who manage social media activities) salaries. It serves as a financial blueprint to achieve social media marketing goals effectively.

Imagine you own a quaint neighborhood coffee shop. Your social media budget would power your coffee shop's online presence on platforms like Facebook, Twitter, Instagram and beyond. This budget is the money you set aside for creating attractive posts, running ads to attract coffee lovers, paying social media experts and getting the right tools.

In layman's terms, it's the cash you're ready to spend to bring more people to your coffee shop through social media.

Also Read: 8 best practices to ace your social media marketing

Why is it important to determine your social media budget? 

If you're wondering why social media budget allocation is crucial to achieving social media success, here are a few reasons.

  • Resource allocation: Having a set budget helps you spend your money wisely. Without it, you might spend too much on one aspect of social media and not enough on another.

  • Goal alignment: Your budget ensures your social media dreams match what you can afford. It keeps your social media goals realistic.

  • Measurement and accountability: Wondering if your social media efforts are working? Your budget helps you see what's working and makes sure everyone on your team is pulling their weight.

  • Adaptability: Budgets can change. If something's working well, you can move money around to make it even better. It's all about staying flexible and helping things grow.

Key stakeholders in defining your social media budget

Setting your budget for social media involves collaboration among various people or teams within your organization. Let's meet the key players who make the decisions on how to allocate your budget.

  • Marketing team: Led by your CMO or Marketing Manager, the team plans and executes your social media marketing efforts

  • Finance team: Your CFO or Finance Manager ensures budget alignment with your organization's financial health

  • Social media managers: These hands-on experts oversee day-to-day activities and provide valuable insights

  • Data analysts: They crunch numbers, offering insights from past campaigns and future forecasts

  • Executive leadership: CEOs and top-level executives may also influence budget decisions, especially in larger organizations

When these players come together, they create a budget that balances your goals, financial capacity and expertise, ensuring your social media efforts are on the right track.

Factors you should consider when allocating budget for social media

Setting the right budget for your social media requires a careful evaluation of various factors.

A bar chart showing the average budget allocations for various marketing activities.


Most businesses set aside anywhere between 10% and 30% of their annual spending as their marketing budget. However, the percentage varies depending on their business goals, industry and target audience.

Here are the key considerations.

  • Business goals: Your budget should match your main objectives, whether it's boosting brand awareness, driving website traffic, generating leads or increasing sales.

  • Target audience: Focus your budget where your audience hangs out on social media. Different platforms attract different people.

  • Competition: Consider observing your competitors' activities on social media platforms to gain insights into industry norms and make well-informed choices.

  • Content strategy: When developing your social media content strategy, it's important to carefully consider the type of content you wish to create and the frequency at which you'll be producing it. Keep in mind that creating high-quality content may come with a substantial cost.

  • Ad campaigns: If you are running paid advertising campaigns, ensure that you set aside a portion of your budget specifically for ad spending. Using the right AI-powered tool can help increase your return on ad spend (ROAS) by almost 50%.

  • Tools and software: Don't forget about the costs of social media management tools, analytics platforms and advertising software.

  • Human resources: Factor in your social media team salaries, as skilled professionals are vital for executing successful campaigns.

  • ROI expectations: Understand your expected social media return on investment (ROI) to determine your budget size.

Read More: Why is the ROI of social media still so elusive? 

Now that we've covered the factors to consider let's explore where to find reliable data and benchmarks to make an informed decision.

Finding reliable data and benchmarks to inform your budget

Data and benchmarks are essential for making informed decisions when setting your social media budget. Here are some sources and methods for gathering the necessary data.

  • Social media analytics: Most social media platforms provide built-in analytics tools that offer insights into your performance. You can also use a trusted unified marketing analytics platform to track engagement, reach and conversion metrics.

  • Competitor analysis: Study your competitors' social media strategies. Tools like SEMrush and Sprinklr can help you analyze their performance and budget allocation.

  • Industry reports: Look for industry-specific reports and studies that provide benchmarks for social media spending. Organizations like Pew Research Center and Statista often publish relevant data. We have a guide on social media benchmarks; check it out & learn different benchmarks across industries.

  • Surveys and market research: Conduct customer surveys or market research to gather data specific to your target audience and industry. This primary research can provide valuable insights.

Also Read: What is market research and how to do its analysis?  

  • Social media marketing platforms: Many social media marketing platforms, such as Sprinklr, offer reports and industry benchmarks to help you compare your performance.

  • Consulting firms: Consider hiring a consulting firm specializing in social media marketing. They can provide tailored insights and benchmarks based on their expertise.

  • A/B testing: Conduct A/B testing on your social media campaigns to gauge what strategies are most effective. This data can help you refine your budget allocation.

Social media budget allocations across industries

The allocation of budget for social media can vary significantly across industries. Therefore, understanding how businesses in your industry allocate their budgets can prove valuable.

Here's a glimpse into how different sectors typically allocate their budgets for social media:

1. E-commerce and retail

E-commerce businesses often allocate a significant portion of their budget to paid advertising on platforms like Facebook and Instagram. Content creation and influencer partnerships are also common expenditures. 

2. B2B services

B2B companies often focus on leveraging LinkedIn and Twitter to generate leads. They typically invest in content marketing, webinars and paid advertising as ways to connect with their desired audience.

Related Read: A complete guide to LinkedIn advertising

3. Hospitality and travel

The hospitality and travel industry often focus on visual platforms like Instagram and Pinterest. Their budgets may include influencer collaborations, user-generated content and promotions.

4. Technology

Technology companies tend to invest in platforms like LinkedIn and Twitter to showcase thought leadership. They allocate substantial budgets for content marketing, webinars and product launches.

Read More: 5 tech brands that are leading in social media marketing

5. Fashion and beauty

This industry relies heavily on visual platforms like Instagram and TikTok. Budgets go toward influencer partnerships, product launches and creative content production.

6. Food and beverage

This industry thrives on platforms like Instagram and Pinterest. Budgets go toward food photography, influencer collaborations and promoting new menu items.

7. Real estate

Real estate businesses often use Facebook and Instagram for property listings. They allocate budgets for professional photography, virtual tours and targeted advertising.

Now that you have a good understanding of how various industries allocate their social media budgets, let's shift our focus to evaluating the return on investment (ROI) of your budget allocation.

How to measure the ROI of your social media budget allocation

Measuring the ROI of your social media spending is paramount to understanding the effectiveness of your efforts. Here are some methods and metrics for assessing ROI.

  • Conversion tracking: Use conversion tracking tools provided by social media platforms to monitor actions such as website visits, sign-ups or purchases directly attributed to your campaigns.

  • Customer lifetime value (CLV): It is the total expected revenue generated over the entire relationship with a customer acquired through social media marketing. This metric helps you understand the long-term impact of your campaigns on revenue.

  • Click-through rate (CTR): Your CTR is the percentage of users who click on your ad or content's link, indicating engagement and interest. Monitor the CTR of your ads to gauge how effective they are in driving traffic to your website.

  • Cost per conversion: It is the average cost incurred for each desired action (e.g., purchase, sign-up) because of your ad campaigns. This metric reveals the efficiency of your spending in generating desired actions.

  • Social media engagement: Track metrics like likes, comments, shares and followers gained. While these metrics don't directly measure revenue, they indicate audience interest and engagement.

  • Benchmarking: Compare your ROI metrics to industry benchmarks and your historical data to assess your performance. Using state-of-the-art tools you can save time and analyze competitor social performance at scale.

Sprinklr Social delivered 327% ROI in 3 years

Remember that ROI measurement may take time, especially for long-term goals like brand awareness and customer loyalty. Continuously monitor and refine your measurement approach as you gather more data and experience.

Also Read: Top social media metrics to track

Now, let's discuss when you should review and adjust your budget for socials.

When should you review and adjust your social media budget?

Reviewing and adjusting your budget for social media regularly is essential to ensure it remains effective.  Here are key instances when you should consider making changes. 

  • Quarterly or annual reviews: Conduct quarterly or annual reviews of your social media performance. Evaluate whether you are meeting your goals and adjust the budget accordingly.

  • Performance fluctuations: If certain campaigns or platforms consistently outperform others, consider reallocating resources to capitalize on successful strategies.

  • Competitive landscape: Keep an eye on your competitors' actions. If they increase their social media presence or launch new campaigns, you may need to adjust your budget to remain competitive.

  • Platform changes: Stay informed about changes in social media algorithms, advertising policies and trends. Adjust your budget and strategies accordingly to adapt to these shifts.

  • Seasonal adjustments: For businesses with seasonal variations in demand, consider increasing or decreasing your budget during peak seasons to maximize impact.

Reviewing and adjusting your budget is a never-ending process but ensures that you are agile and responsive to changing circumstances and opportunities. It also helps you optimize your spending for the best possible results.

Ready to manage your social media budget like a pro?

Social media has provided marketers with many opportunities to connect customers with their favorite brands. However, mishandling the social media marketing budget may lead to poor ROI. The right allocation of the budget is the key. By adopting a well-planned approach, businesses can manage costs effectively while still reaping the benefits of their marketing efforts.

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