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The ABC of social media marketing expenditure

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Social media marketing is a trending topic these days. The businesses in the western world are very much familiar with social media marketing and when it comes to invest in SMM, they definitely have a better idea. These companies have also developed various strategies to control it. The influence of the social media made them realize its importance and the need for social media marketing as well.


India, which is the front-runner among the developing nations, seems to be struggling when it comes to social media marketing. Certainly, lack of knowledge is the reason behind the sluggishness. The Indian companies are far behind the western companies in terms of the money spent on social media marketing. From the result of the survey carried out by the Associated Chambers Of Commerce and Industry of India, it is evident that Indian companies have invested an amount of $218 million on Facebook and Twitter. It is estimated that the investment would rise up to $1824 million in 2015. The Internet and Mobile Association of India announced that only 3 percent was spent on Social media advertising in 2012. It also indicated that the percentage would increase in the following years.

Overview of the international social media marketing spending

Analyzing the statistics of the international markets can assist in planning the Social media marketing expenditure. According to the DMA, Colloquy study conducted in US in the year 2010 shows that 17 percent of the marketers who have not started their SMM plan spent one percent for marketing while others spent around five percent. The study also showed that nearly twenty-four percent of the marketers didn’t have a clear idea about the amount spent.

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The CMO survey carried out in the US mentioned that the marketers have spent around 8 percent of the company’s budget on social media and are expected to spend nearly 11 percent in 2014. The survey also indicated that the amount spent on social media marketing would rise to 21 percent in the next 5 years. The study also noted that the social media expenditure on various categories including B2B (products), B2B (service), B2C (products), B2C (service) is below ten percent and it is estimated to rise above twenty percent in five years.

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How much to spend?

The best way to plan your budget is to know about the spending plan of the other companies, but most of the companies refrain themselves from disclosing their plans for the same reason. Certainly, analysis of the social media marketing expenditure in US will be of great help.

Before formulating the plan, it is necessary to know about the ‘Return on Investment’ or the ROI from the social media marketing. Investing one percent of the yearly budget for social media marketing would be a wise decision to start with. Yet another method is to analyze the amount to be spent on getting a new consumer.

The customer lifetime value is the best tool to calculate it. CLTV is based on the frequency of the purchase made by the customer, profit and the time the consumer sticks to your product. It is advisable to spend 1/3rd of the CLTV to get a new customer.

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