What's the Value of a Facebook Fan? Does It Matter?

Ann All

I understand the desire to assign a value to social media, really I do. Most of us at IT Business Edge use Twitter, Facebook and/or other social sites to help promote our work. We'd like to get a better handle on the returns we're earning for our time. (I didn't say money, because we've made little real investment in dollar terms.) As companies start spending bigger bucks on social media, they want to be able to illustrate the value they are receiving.


That said, when I read about Vitrue's conclusion that a Facebook fan is worth $3.60 to a company, it made me a little crazy. But then, most efforts to assign a value to ad campaigns do. Companies generally pay for advertising based on the number of folks who subscribe (either passively or actively) to the channels in which ads appear. But come on. If X number of people drive past a billboard or listen to a radio station, how many of them pay attention to ads and how many just tune them out completely? Nobody knows. If they pretend to, run the other way.


At least Facebook Fans have had to actively opt in at some point. You can't say the same for most other channels. Of course, companies likely spent some money to get those fans. A commenter on the Vitrue blog alludes to this, wondering if companies can determine how much it costs to acquire a fan. I'd like to see some stats on that, too.


Once they get fans, companies are responsible for engaging them. Similar to other media, companies that work to actively appeal to those receiving advertising messages, with a clever ad and/or a compelling offer, will reap bigger returns. Michael Strutton, writing on Vitrue's blog, makes this point. He says:

Facebook wall posts have social engagement such as clicks, comments, likes, plays and shares. Wall Apps such as a coupon or a poll offer even greater levels of engagement. Brands engaging their Fans stand to earn much more value, potentially doubling or tripling these estimates.

OK, fine. But it's important to remember, as a post on The Future Buzz points out, that Vitrue isn't exactly unbiased, since it sells social-media management solutions. So the bull-o-meter should be on high. The post takes issue with several other things, including the $5 CPM (cost per impression) somewhat arbitrarily used in Vitrue's formula and the use of Vitrue clients across several different verticals to arrive at the figure.


The Future Buzz's conclusion:

These unscientific data points are why companies are blindly chasing bigger numbers for numbers' sake-when in reality they are increasing KPI metrics and not necessarily objectives.

I'll agree that companies often trot out numbers despite seemingly not putting much thought into them. As I wrote earlier this week, it's important for companies to determine their goals for social-media efforts <em>before</em> determining metrics. It's also awfully easy for companies performing ROI calculations for a social-media project to fall into at least a couple of the eight common ROI traps that IT Business Edge blogger Loraine Lawson wrote about last summer.


However, my overall feelings toward Vitrue's calculations are akin to how I feel about Oprah's book club. I can't say I agree with many or even most of the choices made, but I'm OK with it because I think it'll help raise the profile of something that deserves more attention. (Reading in Oprah's case, social media ROI in Vitrue's.)


Matt Van Hoven, writing on AgencySpy, notes that social-media advertising suffers from the same problem as other advertising efforts, the one I alluded to in my second paragraph. How do you put a value on a "service that is capable of helping 'brand x' literally become part of the consumer's cerebellum," especially when you can't conclusively prove the ads accomplished this in the first place? He writes:

One strategist put it to me this way: "If spending a dollar on advertising always yielded $2, brands would put 100% of their money into advertising. But it's never been that way and as communication tools tactics fracture, it is becoming harder to get anywhere near a perfect solution."

Again, agreed. But there's a bigger point. Social media isn't just about advertising. I get a warm (and hard to quantify) fuzzy from interacting with brands I like on social media. Social media is hands-down better at engaging customers than more traditional media. I choose to become a fan of things I like on Facebook and read those posts in my feed. I'm putting my preferences out there for my Facebook friends to see.


I also think social media outperforms traditional advertising -- or at least serves as a valuable part of a larger advertising mix. I'm much more likely to follow direct calls to action from Facebook or Twitter, as they tend to be more timely and relevant than those I get elsewhere. Just the other night, the lure of a sunny patio and half-price bottles of wine sent my family and me to a particular restaurant after I saw it in my feed.

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Apr 16, 2010 1:29 AM Maya Grinberg Maya Grinberg  says:

Hey Ann,

This is a great post! Underlining the arbitrary nature of the metrics used to create the calculation is a confident, necessary, and important assertion. Bull-o-meters aside, however, the study best served to reinforce what you already knew but what readers need to keep seeing-- that social media, especially interactions between brands and users on Facebook-- is dramatically more impacting in terms of engaging consumers with their brands. In this way, we can expect to see more and more businesses, brands, and products hopping on the social media bandwagon.

The challenge for them will become how to compellingly engage their users in an interaction (and then, how to do it often.) One way they can accomplish the creation of this type of dialogue is to create social media marketing promotions (similar at least in part to the half priced wine offer you noticed in your own feed!).

Wildfire Interactive (wildfireapp.com) is a great platform for the easy and quick creation of such campaigns-- you could create a sweepstakes, photo or video contest, quiz, survey, or sign up form in just a few simple steps while guided by the Promotion Builder Wizard. I urge you to give it a try, see what you think!

Thanks for the insights!


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