When it comes to advertising on social media, every company with a brand message and a marketing budget wants to reach the same audience that you do. Not only does this make it difficult to produce results on social, but it also requires you to think through your competitors’ go-to-market strategy.

The key is to create a social media plan that includes goals and objectives, a deep understanding of your audience, a content strategy and a budget.

When planning your budget, it is critical to allocate paid social as a line item. Across brands large and small, a paid social budget usually accounts for about 10 percent of the overall marketing budget. No wonder Forester predicts that U.S. digital marketing spend will reach nearly $120 billion by 2021.

Here are three methods to help you determine how to allocate your paid social budget in a smart way.

Set the right goals

Goals are important. They help you stay aligned and focused.

If you want to drive brand awareness, perhaps you’ll use the share of voice or brand engagement as a data point. If sales are an objective, you’ll want to measure conversions, leads or sales.

Campaigns budgets will always differ based on your goals. In some cases, awareness campaigns may require different budgets than direct response. In other cases, if your conversions are high and cost-per-responses low, you may decide to pool all of your budget in your direct response campaigns.

In either case, once you solidify your goals, you can start to allocate your paid social budgets accordingly.

Assess previous budgets

Data doesn’t lie. Neither do results. By looking at previous campaigns and assessing the outcomes, you can start to identify trends in what you’re spending and make the right adjustments.

For example, if a previous campaign exceeded expectations and delivered a surplus of conversions, you’ll want to ensure that you apply the same strategy, content and budget. This doesn’t mean that you should just put your campaigns on cruise control. You’ll still need to monitor the results daily and optimize as needed.

Research your competition

Unfortunately, there aren’t any tools that will tell you exactly what your competition is spending on paid social. However, if you spend some time researching their social content, you will be able to get a general idea of their strategy.

Are they driving leads, posting general news or creating shareable content in order to engage with the community? These are questions that you’ll need to find answers to. If you have access to a   platform, you can get a more granular view and see more specific data points such as competitor clicks, impressions and engagement.

Final thoughts

2018 is right around the corner. And sadly, there is no specific formula for budgeting your paid social spend.

Every company has different goals, resources and expectations of their social media strategy. What’s important is that you think strategically about your goals, take a look at previous campaign results and research your competitors. Doing so will give you the information you need to make smart budgeting decisions.