Pricing Guide: Outsourced Social Media Marketing in 2020
Updated: Apr 17, 2020
There are many factors that contribute to the monthly advertising costs associated with each type of outsourced social media management and other digital marketing service in 2020.
Want a comprehensive buying guide that answers not only budget questions, but all common questions people have when hiring a social media manager? Check out the article, How to Hire a Social Media Agency in 2020 (coming soon).
Costs of Social Media Marketing: A Few Things to Consider
There are three things to consider when researching the cost of marketing services:
What social media services the marketing agency will take over for you
The advertising spend required to get results
The monthly management fee charged by the agency
First, let's take a look at the services that marketing agencies can provide for you. Within each one, I'll explain all the factors that will affect the pricing. Keep in mind that these costs will vary greatly from region to region, whether rural or urban, based on competition.
Marketing Services Comparison
There are three distinct types of social media marketing services:
Organic Social Media Management
Paid Social Media Advertising: Customer Database List Building / Lead Generation
Conversion of Leads Database (Follow up / Nurture / Chat Marketing)
Victory Points Social can handle all 3. Let's take a look at each to learn more.
1. 😊 Organic Social Media Management
Writing posts, creating engaging images and videos, sharing Facebook and Instagram stories... there are plenty of ways to grow your business organically on social media.
You can hire a marketing agency to take over any and all aspects of that!
According to Social Media Examiner, "Organic social is when users take advantage of the free elements of social media, such as post sharing on Facebook or two-way conversations with users on Twitter. This may be perfect for independent businesses looking to stretch their marketing dollars. In this scenario, businesses can build their social community and then direct them to websites for further engagement."
Pricing for organic social media management will depend on what level of involvement your social media manager will take on for your business.
I've listed them in order of highest cost to lowest:
High Level Strategy & Planning
Content creation & calendaring
Copywriting (writing your captions)
Graphic design & image editing
Video editing & captioning
Facebook group moderation
Responding to comments
Simply scheduling your content
Organic Social Media Management typically costs between $250-$1000/mo, and the price of each of these sub-services is determined by two things: the experience of the agency and the niche or industry your business is in.
Whether you are considering outsourcing a small piece or your entire organic social media management, make sure to ask what the quoted price includes, so you're sure you are getting what you're paying for.
2. 💵 Paid Social Media Advertising
Customer Database List Building / Lead Generation / Engagement
We're not talking about boosting posts here. You can do that for a dollar. I'm talking about strategic advertising on Facebook and Instagram with the goal of conversions.
So how much do you need to spend on your Social ads?
Short answer: Ad Spend investment will be between $300/mo - $750,000/mo. An agency's retainer will be between $500/mo and $10,000/mo, and many times you will also pay a % of ad spend or have a revenue sharing agreement.
Buuuut... Since this is my specialty... I have soooo many questions for you...
Are you hiring a media buyer... or an experienced, full-service, done-for-you agency?
What's your industry, product, or service?
Who is your audience?
What's your offer? What vehicle are you using to reach your audience with your offer?
How much are your competitors spending?
How much can you pay to attain a customer?
What's the Lifetime Value of a Customer (LTV)?
What type of ads are you running?
This article is just going to tackle cost for now, but first, let's define paid social...
"Paid social involves sponsored, or paid, advertising content delivered on social networks in the form of images, videos, and carousel ads. Depending on the platform, ads can be targeted to users based on location, buying habits, or personal interests. Unlike organic, paid social directly puts your content in front of users who will most likely show interest." Thank you, Social Media Examiner.
When you are looking at how much to budget to run paid ads on Facebook, Instagram, or YouTube, there are several factors to consider:
What industry or niche is your business in?
Local businesses can have a huge range of ad spend. Why? Restaurants and retailers can get away with as low as $10/day to reach their target audience because they are targeting a small radius (1-5 miles) around their business. We start our restaurant clients at just $10/day, and then we scale up from there once we see results pouring in. But realtors, plumbers, roofers, remodelers, cleaning services, carpet stores, etc will need to spend more because they are usually targeting a larger geographic area, so there is more competition. Typically $25-50/day is reasonable.
Online businesses need to reach a much larger audience, therefore the cost is going to be higher. Think about it like this... Say you are a marriage coach. Your audience is typically women ages 30-50, who are married and live in the US. What do those women have in common? They might have kids... they shop online... they watch certain TV shows... so that means you are not only competing for attention with other marriage coaches, but you're competing with ads for purses, kids sports, and Netflix. Expect to spend $50/day at a minimum to see real results.
I even have a client who spends as much as $25,000/day on their ads. Yes, you read that right. We spent $750k in December 2019 alone, and brought back $1.4M in revenue.
How much can you spend to attain a lead?
In my experience and research, CPL (or cost per lead*) can range between 25 cents to $200 each, depending on industry and the experience of your Ads Agency. And converting those leads into customers will be between 1% to 40%. Once you learn your CPL and CPC (cost per conversion), you can calculate your ad spend based on your goals.
*We consider someone a lead once we have at least one piece of contact information for them away from the social platform. So that means at least an email address, a phone number or a Messenger subscription AND their consent to market to them directly.
For example, if you want 25 leads per day and they are costing you $0.40 each, then you should spend $10/day. If you convert 10% of those leads, that gives you your cost per conversion (CPC) of $4.
# Leads Desired x CPL x Conversion Rate = CPC
Ex: 25 leads x $0.40 x 10% = $4 per conversion
But if you want 25 leads per day and your CPL is $4 each, you'll need to spend $100/day. If you convert 10%, your CPC is $40.
Ex: 25 leads x $4 x 10% = $40 per conversion
But how many leads do you need to hit your revenue goals?
You need to figure out how much you are willing to spend to attain a lifetime customer.
I say work backwards to figure this one out. Find out your return rate and average order value. Then calculate Lifetime Value. Then you'll know your Lead and Conversion goals.
Average Order Value (AOV) & Return Rate ... how much does an average customer spend? And what is your profit on that? How many times do they return to spend that amount? How many years do you keep them as a customer?
Then, calculate Lifetime Value (or LTV). This is a very important metric to understand. When you know that one restaurant customer spends $150 over the course of a year, it puts it into perspective when you decide to spend $10-15 to acquire them for that first visit.
Here's an example for a restaurant client of mine:
AOV * Return Rate * Years = LTV
Ex: $25 order * 6 visits * 5 years = $750 Lifetime Revenue
- 40% variable expenses (food costs, supplies & labor)
~$15 profit per visit ... ~$450 Lifetime Profit
Remember, change any of those variables and you get a different outcome.
So... how much are you willing to spend to convert clicks into customers?
If you only had to spend $4 to acquire that customer, you still have $11 to spend on the first visit before you break even, and then every subsequent visit after that is profit.
Whew!! Ok that was A LOT to digest, I know. But you're an entrepreneur. You need to know these numbers for the success of your business, so I didn't want to sugar coat it.
Which brings me to the final service that your social media agency needs to offer...
3. 😎 Conversion of your Leads Database
Follow up / Nurture your List / Chat Marketing / Email marketing
At this point, if you're doing it right, you've spent your marketing dollars to build an awesome database of qualified leads and customers.
I call that fans for your brand. 👫
How do you nurture those leads and customers to make sure they actually become regular paying customers over and over?
I call that bills in your till. 💵
You need a system to convert clicks into customers. A lot of agencies leave this to the business owner. So, when you are researching and comparing agencies, it's important to find out how they help you convert leads. (or worse... they say "oh, I just get you leads"...)
You need a way to follow up with your prospects off of social media because you don't want to rely on Mr. Zuckerberg to hold on to your people.
There are several forms of follow up or nurturing that can be effective, and in my experience, a combined strategy of all 3 is best:
Messenger Marketing (we use chatbots)
SMS or Text Marketing
You can hire an agency or freelancer to create one-off chatbots, write email nurture sequences, or set up text marketing for you.
Or you can ask if they will include this in a package for you for an all-inclusive price. This usually works better for you, the client, and for the agency because when all marketing is held in one place, there is a seamless brand presence, clear strategies are implemented, and all the pieces work together instead of against one another.
Whatever social media marketing services you decide to invest in and outsource, I hope you feel a little more confident in your understanding of what you are paying for and what questions to ask when interviewing your digital marketing consultant.
Of course at Victory Points Social, we start with digital marketing strategy! We will help you make a plan and decide what your customer acquisition costs need to be.
We'll customize a package that works best for you and your situation. Our prices are reasonable and affordable, but we are not the lowest price option. But I can tell you that our clients get a 4:1 ROI on average.
When you are ready to chat about hiring us for any of these services, please schedule a call with me, Tracey Matney, owner and Lead Strategist at Victory Points Social by clicking here: