When incorporating social media into B2B marketing, the initial questions often revolve around budget and the cost of leads. The answers are complex, as there are many influencing factors. The first step in defining the right media budget lies in assessing the current situation and conducting thorough testing.
Identify your target audience
It's important to recognize that the media budget allocation for social media campaigns varies significantly among businesses in different industries. For example, in campaigns aimed at increasing website traffic, the cost per click runs greatly based on the target audience size and the competition.
For instance, when advertising donuts to consumers, the target audience can be almost Europe's entire population. Within this group, someone will always be interested in donuts, making it cost-effective to show ads and get clicks for the advertiser. However, when selling technology solutions to business executives, the target audience shrinks to less than a tenth, leading to higher click costs.
Even though, in this example, I can advertise donuts at a lower cost per click, B2B technology solutions are generally more expensive products. Therefore, the Return On Ad Spend (ROAS) usually remains good. The key is to find the best possible cost per click for your specific audience.
Define your goals
Before starting to calculate the media budget, the campaign goals must be clearly defined. Goals should always be measurable, achievable, specific, and time-bound.
An example of a well-set goal for B2B Technology Company Ltd. could be obtaining 20 leads within one month. The goal is realistic considering the small target audience, easily measurable, specific, and time-bound. However, the plan can only become real if an adequate budget is allocated.
Test and collect data
Through test campaigns, valuable data about target audiences and their behaviour can be obtained. A/B tests different channels with various content, ad types, and campaign objectives to find the most effective ways to reach the right people. Testing can start with a small budget and be increased as the recipe for success is found. You can begin with a weekly budget of a few hundred euros per channel.
Calculate CPA (Cost per Acquisition)
CPA, or Cost per Acquisition, is an important metric that reveals how much one conversion costs, such as a lead or guide download. Calculate CPA by dividing the media budget spent by the number of conversions obtained. However, each conversion has its own cost, influenced by factors such as the type of conversion and the campaign's target audience or topic. Therefore, it's not advisable to compare the costs of different conversions. For example, a request for a quote from a website likely costs at least four times more than downloading a guide.
Adjusting the budget to fit the goal
Once CPA is determined, setting a realistic budget relative to the goals becomes effortless. You multiply the goal by the CPA, and voilà – you get an appropriate budget. For instance, if the cost per lead (CPA) is €50 and your goal is to get 50 leads, the next campaign's media budget should be at least €2,500. It's important to consider that results often experience exponential growth as the media budget increases, meaning the cost per result decreases as the budget grows. To find the budget's "sweet spot" testing is also recommended.
Landing page matters
Do you know the conversion rate of your landing page? Optimizing landing pages can have significant effects on campaign results. Visitors may easily leave without a trace if the page doesn't function well, its content doesn't engage the reader, or it doesn't align with the clicked ad. Landing pages can be optimized through A/B testing and qualitative analysis.
For example, if the conversion rate of a guide's landing page is 5%, it means that 5% of visitors to the landing page end up downloading the guide. If bringing one visitor to the page through social media costs an average of €2.00, and the goal is to get 50 downloads, a media budget of €2,000 is needed. In this case, the cost per lead would be €40. If the conversion rate can be improved through optimization to, for example, 10%, the price per lead is halved. Thus, with the same budget, double the results can be achieved.
Consider different stages of the customer journey in your social media strategy
It's not advisable to immediately engage in lead generation through social media if your company is completely unknown to the target audience. A savvy marketer starts with broader brand advertising targeted at a larger audience. Afterwards, it's time to move towards more targeted and tactical advertising. Patience and persistence are rewarded in the sales phase. When a potential customer has been exposed to advertising for longer, trust in your brand may have grown, especially through expert content.
Results don't happen on their own
Calculating the media budget for social media advertising to achieve your goals requires careful planning and continuous optimization. It's important to monitor the performance of campaigns and make necessary changes to achieve the best results. Investing in platforms suitable for your business, targeting the right audiences, using appropriate ad types, and optimizing the budget can maximize conversions and achieve the desired results.
Need help with social media marketing? Contact us, and let's discuss the best campaign models and solutions for you.