How to Set Your Social Media Advertising Budget in 2021?

# Last Updated On: February 20, 2021 #

Are you, as a business, using social media to engage potential customers? In today’s digital world, it has become quite easy for businesses to reach their potential customers if social media, as an advertising tool, is optimally utilized.

A lot of businesses understand the importance of social media marketing but when they start the process, the biggest challenge in front of them is to answer – How to set up their social media marketing budget ?

Set Your Social Media Advertising Budget

You need to understand a fact that spending more money on social media advertising is not directly proportional to more success. If you are not planning your advertising properly, you may waste a lot of money on marketing campaigns.

Return of Investment

A lot of companies fail or give up on social media advertising because they are not happy with the Return on Investment (ROI). This mainly happens because you are not sure of the outcome of your campaign and how much exactly you should spend to get those results.

The first thing you have to do is to figure out what you want – whether you want more leads, sell more products or your aim is just customer engagement. Once you know your end goal, you can decide on the budget.

The next important question is how to set the marketing budget. We are going to discuss the same in this article.

The Importance Of Following Industry Standards

If you have no clue where to start with, then the best approach is to follow industry standards. You cannot allocate any random budget for social media advertising because it consumes everything you put in.

You can put 10K and also 100K for your budget. As per studies, B2B companies usually allocate between 2 and 5 percent of their revenue while B2C companies allocate between 5 and 10 percent. These are average numbers and you may probably need more or less demanding the industry you are part of.

What all comes in the Advertising budget?

If you are still not sure how much budget to allocate, there is nothing to be worried about. If you are confused, you are not alone. For an accurate estimate, break down your social media advertising into the following categories:

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Content –

The content will probably consume 50% of your total budget. There are different kinds of content required in social media marketing – you will require professional photographs, graphics that are appealing to your target audience, videos – as no content is complete without videos – decide the kind of videos you require, a movie or an explainer video.

Lastly, you need a lot of blogs and articles to reach out to your audience. You may reach different agencies that provide different services or you may look for a single agency that caters to all your needs. Get the estimates for each service.

Technology –

Technology makes launching and managing campaigns very easy. You will have to buy some paid tools for running social media campaigns or you may need some editing tools to edit the videos or images before you put them on your social media accounts. Discuss with your team and agency to figure out the list of tools and services you need and figure out the cost of the same.

Ad Spend –

If you are starting with social media, you won’t have an existing audience to reach out to. You need to reach your audience through paid ads using Facebook, Twitter, Instagram, LinkedIn, etc.

How much to spend on Ad spend?

By now you at least have a rough estimate of what your industry spends on social media advertising. You also got estimates on the cost of content and technology. So let us say you are a B2B business and you decide to spend 5% of your revenue on advertising.

Your revenue is $10,000 per month so you should be spending something around $500. You checked for the cost of content and technology and it comes out to be $400. So you can allocate $100 for paid ads.

Is it that simple?

No, it is not that simple. As mentioned, you need to know your goal of advertising. Let us say, your goal is to generate leads. From the $100 that you allocated for Ad spend, you are able to generate 200 leads per month ($0.5 per lead). You need to know if your team will be able to handle 200 leads per month.

If it is too much, you have to reduce the Ad spend amount and the number of leads will reduce. If you have a big team, you either need to increase your overall advertising budget or bring down the cost of content and technology.

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Let us take one more scenario – your goal is to get website traffic. You did some search and found a conversion for website traffic is 5 percent and you need 100 sales per month. So you need 2000 clicks.

You did an initial run and figured out the average cost of a click is $0.80. Also, include content and technology cost ($400). Based on this, you need $1600 as a budget to meet your goal. If the cost is high, you can look for ways to bring down the numbers.

Spending the Budget

By now you know how to set up the social media advertising budget. Spending does not guarantee success and success does not come immediately. Reaching your potential customer is easy with so many tools around but getting expected results takes time. You will need time to figure out what drives in maximum output.

In the first few months, you may have to spend a bit more but as your process and results are streamlined you will see the cost going down slightly.


At present, a lot of companies are running social media advertising professionally by setting up the budget for the same. If you are not doing it, your competitors are going to have an edge.

On the other hand, if you are not setting up budget properly, you are underspending; some of your customers may go to your competitors. If you are overspending, you may be losing the money which could be used for business growth by other means. Setting up the right budget is very important and hopefully, you now know how to set it up.

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