At a time when business owners compete daily for online visibility and customer retention, brands can benefit from the expertise of professional social media marketers in scaling business growth. Marketing agencies possess the experience and knowledge to harness online tools to connect with your target audience, nurture leads, and convert them to customers.
Finding and selecting a suitable agency partner requires identifying the factors that affect their fees. After thoroughly understanding these elements, you must compare the costs against the benefits of working with your shortlisted prospects before making a final decision.
This article aims to help you grasp how third-party teams set their fees. Whether you'll outsource all or only part of your social media marketing to an agency, understanding the costs of hiring one can help you make an educated choice that fits your budget.
An Essential Guide to Identifying and Analyzing Social Media Marketing Costs:
5 Factors Affecting Social Media Marketing Agency Rates
Based on the latest WebFX marketers' survey, 66% of today's businesses earmark 5% to 25% of their marketing budgets on social media management. Fortunately, 86% expressed satisfaction with the return on their social media investment. Meanwhile, 94% of business leaders surveyed by Sprout Social said that social data and insights positively support their reputation-building and customer retention efforts. As a result, social media budgets can increase by up to 50% in the next three years, according to 44% of respondents.
Source: agencyanalytics.com
What are the costs that go into social media marketing? Here are the top five factors that determine how much you pay for outsourcing this service:
1. Work scope and contract length
Marketing firms typically set their fees based on the type, number, frequency, and duration of services you expect them to deliver. Social media marketing typically involves the services below:
- Developing a strategy—identifying your brand's target audience and creating a content plan with a cohesive brand message that resonates with that audience
- Conducting competitor analysis and market research for industry trends
- Creating or optimizing social media profiles
- Creating a content calendar and unique posts—ensuring they reflect the brand's verbal and visual tone—for various social channels and conducting performance tracking/analytics
- Running paid social campaigns
- Engaging with followers to understand the buyer's persona and providing customer support (including responding to queries, complaints, and reviews across platforms)
- Strengthening lead generation and creating a sales funnel or flywheel, depending on one's customer journey model
- Connecting with influencers or creators to expand the brand's reach
2. Platform selection
Different platforms have different management and advertising costs. Moreover, each channel requires specific content types, which affects production time and the resources to produce them. Here’s a list of going monthly rates for specific types of social media management:
Service | Basic Monthly Pricing | Monthly Pricing with Ads |
Platform management | $5,000 and up | |
$500 to $3,000 | $2,500 and up with ads | |
$500 to $3,000 | $1,000 and up with ads | |
YouTube | up to $1,000 | $1,000 and up with ads |
X (Twitter) | $500 to $2,500 | $900 and up with ads |
$500 to $4,000 | $2,000 and up with ads | |
TikTok | $1,000 and up with ads | |
$500 to $200 | $500 and up with ads | |
Snapchat | up to $250 | or $1,000 and up with ads |
Content creation | $6,900 and up | |
Blog post | up to $500/post | |
Video content | up to $2,000/post | |
Infographics | up to $80/graphic |
3. Client size
Agencies also consider a company's size when determining its rates. A company's social accounts and followers typically increase as the business grows larger.
Services for small businesses may reach up to $2,500 monthly, while fees for medium-sized firms can be around $2,500 to $7,500 monthly. The asking fee for large entities can run from $7,500 to $20,000 monthly. Marketing firms with enterprise-level clientele generally have more sophisticated tools for managing multiple accounts and bigger teams with members of various specializations. Although some agencies offer to audit your social media—one platform—for free as part of their discovery phase or free initial consultation, others charge from $600 based on your business size.
4. Pricing model
Social media agencies use any combination of these pricing models when billing clients:
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By the hour
Most social media freelancers, one-person consultancies, and smaller agencies bill by the hour. Some full-service digital marketing firms charge hourly rates for customer service support and website maintenance. Consider partnering with a team that offers this pricing model if you’re a startup or small business with fluctuating or occasional needs and a limited budget. This option is advisable when you must identify your target audience, develop strategies, and do other intensive research.
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Every month (monthly retainer)
Hiring an agency on a fixed monthly fee is advisable if you need ongoing support in maintaining a consistent social media presence. This setup typically includes performance monitoring, analysis, and reporting to prove that your campaigns are hitting (or exceeding) targets. Monthly retainers usually involve a package of various social media services done simultaneously.
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By project or activity
Some agencies agree to produce output for a one-off activity instead of monthly or yearly. The project-based pricing works best for new product launches, targeted marketing campaigns, and related tasks with a well-defined end date and budget. Ask your agency about their payment terms if you add something or make any changes to the initial project scope.
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Based on performance
Some agencies agree to receive payment based on meeting your pre-defined goals. While this practice is becoming popular, it's also risky. Be sure you understand and agree on campaign success metrics—engagement rate, follower growth, conversion rate, and others. Also, be ready with an extended payout timeline—social campaigns typically take at least three months before you can see results.
5. Location
Rates may be higher in urban areas and similar locations with a high cost of living. The demand for social media marketing services—therefore, competition—is high in these areas.
Cost-Benefits Analysis: Deciding on the Best Investment
After getting an overview of current service rates and payment schedules, it's time to decide what to invest in and how much you're willing to spend on those services. One effective way to do this is to conduct a cost-benefit analysis. List all the potential benefits of your decision, and then subtract all associated costs. As a data-driven approach, a cost-benefit analysis also identifies the most advantageous endeavors. This way, you can define your project's feasibility—primarily if it’s within your budget—and allocate resources based on priorities. Your analysis should include the following steps:
1. Define your scope of work.
Providing your chosen agency with specific details about your social media marketing requirements enables them to give you an accurate quote. Here are some questions your partner firm is likely to ask you. Discuss them with your staff ahead of your agency’s discovery call.
- How does your target consumer buy online—on what channels are they on?
- How many social accounts would you want to grow?
- How intense would you like your presence to be?
- What is the current state of your existing channels?
- How many social media content experts do you have in your team?
- What content types (written content, videos, images) do you want the agency to create?
- What kind of campaigns would you want to run?
- Do you plan to place social media ads?
- How many social media posts do you want to publish daily?
- Do you plan to collaborate with influencers? If yes, at what caliber should they be?
2. Identify costs and benefits, assigning dollar values to each.
Costs and Benefits of Outsourcing Social Media Marketing | |
Costs of Services Required from an Agency Based on Social Media Goals | Benefits or Potential Outcomes |
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Quantify or determine the cost of each required service and do the same for your expected outcomes. Our listicle of the top 56 social marketing agencies can give you an idea of outsourcing costs. Each listing features the agency's profiles—including their pricing—so you can compare fees, services offered, and specialization.
Some agencies feature case studies break down advertising costs and resulting growth in lead generation and sales. Here is an example from Ninja Promo.
Source: ninjapromo.io
Meanwhile, you can use social media analysis tools to analyze the performance and benefits of your campaigns—particularly ROI estimates. See how Hootsuite and Agorapulse display generated revenues on their user dashboards.
Source: blog.hootsuite.com
Source: agorapulse.com
3. Compare costs and benefits and calculate the net benefit.
Subtract the total costs from the total benefits to get your net benefit. In general, expenses should be less than 50% of the benefits. The payback period (time needed for the benefits to repay the cost) must not exceed one year. An agency’s partnership would be worth it if its proposed service package meets both conditions.
For this step, involve concerned stakeholders in your marketing plan's outcome. Senior leaders can weigh options according to business values, culture, and goals.
4. Conduct a sensitivity analysis.
A sensitivity analysis tests different scenarios or alternatives, as well as the scope of each alternative. You could analyze the impact of choosing another agency or a different set of platforms than what you initially selected. This analysis also considers a project's opportunity cost (the value of the next best alternative) and long-term risks.
Other Tips for Maximizing Your Social Media Marketing Budget
If a cost-benefit analysis is too complicated for you, you can take these other steps to help you verify if you'll be able to afford the services of an agency:
1. Do market research.
You can use your customer relationship management platform to review where your audience spends most of their time. Conducting surveys can also indicate your consumers' preferred channels and offers. Also, research and analyze competitor spending to determine industry benchmarks.
2. Track your content's performance.
Stay updated about your followers' evolving interests by consistently monitoring your social media analytics. Check the days and hours when they're most engaged on a platform using its built-in analytics features. These tools can also help you discover the types of organic and paid content that appeal to your audiences the most.
Manage Costs Through Cyclical Budget Planning
Your social media marketing budget is a dynamic document that needs periodic review and optimization. Monitor trends and insights from data analysis to check whether your strategy still fulfills your goals. Depending on your campaigns' performance, you can scale back and modify your poorly performing approaches. You may also consider investing more in strategies that yield positive results. When you have more funds, you can experiment with new content based on research findings and social listening.
Frequently Asked Questions
What is a social media agency's edge over a social media manager?
Your social media marketing goals and the activities required to fulfill them will determine whether you need to work with an agency or hire an in-house specialist. The top benefit of recruiting specialists is their availability and the in-depth knowledge they develop about your brand as they embed themselves in your organization. Because social media managers focus on your company's social community, they can quickly respond to comments or industry developments. A full-time manager is advisable if you prefer a short waiting period for feedback and more control over the strategy, brand voice, and messaging.
Meanwhile, agencies can give impartial advice and fresh perspectives due to their experience. Moreover, they can do the job at a lower cost, especially if they only need to manage a few social accounts. At the same time, they have the resources and expertise to execute large-scale campaigns. Internal specialists who work on multiple tasks at once might spread themselves thin, resulting in poor-quality output.
How do agencies onboard new social media marketing clients?
To start their relationship with brands on the right foot, agencies conduct an onboarding process using a questionnaire to help them know more about their clients. The questionnaire typically covers:
- The client’s social media history: past social media agencies they partnered with
- The technology and analytics they have access to
- Their current social media strategy
- Any damage control that needs to be urgently implemented
- Their audience or followers' demographics
- The types of posts their followers engage with
- Their brand story
- Their expectations from your partnership
Are there any "hidden costs" I must be aware of?
Hidden costs in social media marketing aren't really "secret." You just need to be more aware of them because they can be easy to overlook on pricing pages. These expenses include:
- Setup or onboarding fees, which are one-off costs to install or integrate the agency's system with your office marketing systems.
- Ad spending or payments for ads don't always appear on retainer fees. They can be worth $50 to $100 daily or over $1,650 monthly.
- Additional channels (verify if your service agreement/agreed payment covers all or one social platform only)
- Influencer fees (check whether you must pay per post or for a longer-term contract covering several months)
- Premium customer support for on-demand assistance from an account manager
