Measurement & Instrumentation


If Social Media is supposed to be cheaper, why the growing budgets?

by Donald Savant 21 Apr 2010
Share this:

 Take a look at a small collection of headlines from a recent Google search on “social media spending;”…Social Media Marketing Spend to Hit $3.1 Billion by 2014… Social Media Spending to Hit $757M in 2010… Marketers Increase Social Media Spending, ROI Not a Concern... B2B Marketers: 490% Increase in Social Media Spend by 2014?... Social media spending to outpace other interactive channels ... Marketers Increase Social Media Spending

 The thing is, marketing, communicating, and engaging with customers through social and interactive channels is cheaper compared to traditional marketing, as most of these interactive venues (Blogs, Forums, Twitter, MySpace, Facebook, Wikis, YouTube, etc.) are extremely inexpensive or free. But let’s look at what is happening through these different venues – “…marketing, communicating, and engaging with customers…” There is a cost associated with performing each one of these through the social channels, and it is significantly higher than a person might think.

 Most companies start by “bolting” social media marketing activities on to the existing roles and responsibilities of their employees. At this point the cost of participation typically involves minimal time and talent—one product marketer actively monitoring micro-blogs, forums, and Facebook for commentary on his or her products. But, next thing you know an insight is gained; customers are influenced, market share increases, successes are shared…the CEO proclaims, “The whole company needs to be doing this!!!”

 Now, the up front costs of social media may be cheaper than those associated with traditional marketing activities; however, what about after that? The on-going cost required for staff to monitor social media, design and develop content, and engage with customers is generally higher than that for a traditional marketing campaign. Additionally, as more conversations are conducted, the groundswell of activity progresses to include chief listening officers ($), agencies of record ($$), chief bloggers ($), technological infrastructure ($$), and professional time and talent ($$), and the budget quickly grows.

 Recent findings in Frost & Sullivan’s survey of ~400 North American and Latin American Marketers supports this phenomenon; especially in B-to-B companies. The survey found that online/media communications account for the second largest portion (staffing is the largest) of marketing budgets (15%). A potential hypothesis is that B-to-B is simply playing catch-up to the social media investments made by its B-to-C counterparts, and that is why it occupies so much of the budget. But we can see from the sampling of on-going cost listed above that it is not hard to get to that percentage of budget in the blink of an eye.

 So, at least for the foreseeable future, you will continue to see more companies venturing into the social realm, more budgets grow, and more headlines like: Beet.TV: Social Media Spending to Hit $1.3 Billion This Year

View Donald Savant's blog

Comments (1)

By  Donald Savant
Research Analyst, Growth Team Membership

27 Jul 2010 09:36

Here is some more information on finding and calculating the hidden costs of social media.

http://econsultancy.com/blog/6296-calculating-the-cost-of-social-media

Social media is here to stay and will soon be considered just another channel that marketers are using to create word-of-mouth and advocacy... without all the hype.

  • page 1 of 1
Login or register to make a comment on this blog post

Help Desk

Full list of offices


For more information and general enquiries, contact Frost & Sullivan near you.

North America
tel: +1.877.463.7678

Select a location near you..