Salesforce.com's recent acquisition of social media monitoring platform Radian6 may ultimately be viewed as a tipping point for the sector. It could be the moment when Salesforce, the company that helped make CRM mainstream, brought social media marketing to the masses as well.
Could the time also have come for your marketing department to go all in with its investments in social media, spending, not only on more advanced tools for tracking and engagement in social conversations but also in people and processes to get the social media job done right?
If so, the next questions to ask are: Exactly how much are companies that have made the plunge into social media spending on it? What are they spending on tools like Radian6, on help in getting started from agencies, on a community manager to take social media in-house and on related tools and processes?
Social media analyst Jeremiah Owyang, a partner at Altimeter Group recently presented data, based on his company
S online survey of more than 140 marketers from companies of more than 1,000 employees conducted in September and October 2010. That report provided some valuable insights into what an aggressive budget looks like for active social media marketers.
Among Altimer's findings, Owyang said that spending on social media will average about $1 million in 2011, with “advanced users” spending $1.86 million on average.
Altimeter characterized advanced users as those with formal social media programs; dedicated teams and line items in their budgets; and more than 2½ years managing social media activities. B2b companies have actually been bigger early users than their consumer counterparts, the company found.
So how are these advanced social marketers allocating their growing budgets?
- Internal soft costs. In 2011, advanced social media marketers on average plan to spend $406,000 on staff, $66,000 on training and $56,000 on research and development. “We know that social business is drastically impacted by the talent hired, so it's no surprise these companies are outspending the average company on teams,” Owyang said.
- Customer-facing initiatives. Advanced users plan to spend about $238,000 working with boutique agencies; $87,000 with traditional agencies; $195,000 on ad/marketing dedicated to social media; and $50,000 on influencer/blogger programs. “We see a large spend on specialized boutique agencies [that] may focus on longer-term engagements, rather than the traditional campaign-focused digital agencies,” Owyang said.
- Technology investment. While advanced users are spending on such off-the-shelf tools as Radian6, Google Insights, HootSuite and Klout. Social media technology efforts today also require a fair amount of customization. Owyang said that in 2011, advanced users plan to spend an average of $272,000 on custom technology development; $198,000 on community platforms; $150,000 on brand monitoring platforms; $116,000 on social CRM; and $23,000 on the management of social publishing.
The key takeaway from this last point is that social media technology isn't just one platform but rather requires a complete “social software stack,” Owyang said. Those platforms aren't cheap, nor is the IT work needed to customize and glue them all together. In short, as social media marketing becomes more mainstream, marketers can no longer rely on free tools but will need to budgets for technology and IT projects similar to those they've dealt with in deploying sales and marketing platforms.
While the free ride may be over, marketers with better tools and processes will get more actionable results. On the other hand, they'll now have to budget—and pay—for them.
THE CONVERSATION (add your response in the comments): How is your social marketing budget increasing this year?
