Altimeter study: Set social media priorities first, then do a budget

The average company spends less than $1 million per year on social media, a new report from Altimeter Group found. Of those companies that do spend in the millions—mostly those whose revenue tops $10 billion—about 2 percent of their respective total budgets goes toward social media efforts.

It’s OK for a social media budget to be small, says Jeremiah Owyang, co-author of the report and partner at Altimeter. “These channels are designed to remain efficient and effective,” he says. “The crowd is doing the work for you.”

What’s more important than a big spending amount is homing in on the right priorities: staffing, the right type of messaging, effective measurement and finding worthwhile management tools. The report says a given company should focus on specific priorities based on its social media maturity level: novice, intermediate or advanced.

Knowing what they want

To know how to budget effectively, you have to know where your customers are spending their time, Owyang says. What outlets—social media, print, TV, the phone—do they trust?