Whenever someone asks me to be their friend on Facebook, I’m flattered. Who would have thought so many people like me? Then I realize why: the act of friending simulates the ultimate act of opting into a conversation.
No wonder so many brands are obsessed with converting you into one of their "friends" or "fans"; there are even "fan farms" that get paid to generate fans for the lowest dollar amount (though if you take this approach, rest assured you'll get what you pay for).
But what brand wouldn’t want to have an ongoing conversation with loyal consumers, who, in turn, can advocate on behalf of the brand and amplify its reach amongst their own friends? The impressive rise in attention and dollars that marketers have been pouring into social media marketing lately suggests that the answer is "not many." According to eMarketer, social media ad spend grew 55.6% to $5.4 billion in 2011, up from $3.56 billion a year earlier. The total market is expected to reach $10 billion by 2013.
However, are these Facebook "likes" really meaningful and, if so, what is their true value to a brand?
One company, Virtue, a social media marketing platform, took an approach that converted the value of a fan to media dollars by using its data to determine a wall post to fan ratio. On that basis, they arrived at an average value for a Facebook fan of about $3.60 a year. Not so much.
Two other companies, Syncapse and Hotspex, took a different approach and identified five key contributors to Facebook fan value:
- Product Spending - Facebook Fans spend, on average, $71.84 more than non-fans over a two-year period.
- Brand Loyalty - Facebook fans are 28 per cent more likely to continue using a brand than consumers who are not fans on Facebook.
- Propensity To Recommend - 68 per cent of fans are 'very likely' to recommend a product to family and friends (as opposed to 28 per cent of non-fans).
- Brand Affinity - 81 per cent of fans feel a connection to the brand (versus only 39 per cent of non-fans).
- Earned Media Value - Incorporating all of the above factors, the average value of a Facebook fan is $136.38 to an organization.
They calculated the average annualized value of an individual Facebook fan at $136.00.
Even allowing for the fact that all averages are dangerous, $3.60 versus $136.00 is an impressive disparity.
Each of these formulas has merit, but it’s going to be tough to find one that works for everyone. Simply put, in assessing fan value, it’s difficult to know what metric to look for, what to leave out, why it's relevant to the fan equation, and where true causality lies. (Are the babies coming because the storks are nesting on the chimneys? Or are the storks coming because fires are lit for the babies?)
And when thinking of the value of a Facebook friend, isn’t it presumptuous to assume that this value is always positive? Recently, for example, two different consumer brands facing PR crises, Versace and Chapstick, saw significant upticks in their Facebook friend counts. The growth in their fan bases, however, was not due to an outpouring of support. Rather, it represented a groundswell of critics clamoring to voice their discontent on these companies’ very own fan pages. With Facebook friends like these, who needs enemies?
Maybe the better question to ask is: How much can a brand make a Facebook friend worth? That’s because “liking” or “friending” a brand isn’t where the value is; that’s merely a gesture that can easily be bought or gamed. No, the true value of a Facebook friend is in the real-world engagement that may follow. It’s this engagement that unlocks the real value in this equation. Engagement, though, as we all know, is a very fat word.
What matters is the quality of the friendships, not the quantity of friends. At BBDO, our analytics practice “The Worth” has done numerous studies correlating product sales to Facebook activity and our quality-based definition of engagement. Working with Next Generation Marketing Insights (NGMI), we measure the levels of personalization and emotion in consumer conversations, and quantify how individuals feel about the brand on a personal level.
Over the course of 156 weeks, with work for multiple brands, we’ve compared the correlation of sales to Facebook friend counts and the correlation of sales to this particular definition of engagement.
Engagement wins every time. By a lot. Twice as much, in fact.
Our data shows correlations to sales of engagement of 90% versus correlations of sales to friend count of anywhere from -5.3% to 40% at most.
And that’s where the creativity comes in.
Creativity is the magical ability to capture and hold the attention of an audience--to engage that audience--while you give them some information, a demonstration or, more likely, an experience that changes the way they think and feel, and yes, most importantly, act.
When a brand gains a "like" on Facebook and begins to count that consumer as a friend, it’s really only the first step. Each new friend is an opportunity to enter into a meaningful dialogue with consumers that will bring about deep positive engagement with the brand, transforming first-time community members into converted and repeat consumers, preexisting patrons into loyalists and loyalists into trusted advocates.
In the real-world, only a small subset of your universe of Facebook friends will unequivocally vouch for you and be there for you, whatever the circumstance. They are the ones who know you best and stick with you through everything. They are the ones willing to look past a shortcoming because they appreciate how great you are. Those are your real friends.
So the next time you ask me to be your friend on Facebook, think twice about the value of my acquaintance.
COMMENTARY: At the moment, there is much discussion going on about the actual ROI of a social media presence. Many businesses going social are not sure how to measure their social media efforts and this makes them question how much to invest online.
However, making some research on the subject, we found that the Danish company named Digital Works has recently published a great article about the actual value of a Facebook fan in their newsletter. They have gathered some interesting cases where several companies have decided to examine and analyse the value of a Facebook fan.
I’m sure that this is great knowledge for many businesses engaged in an online presence, and that it’s something which might make the end of doubting that social media has a great impact on today’s brands.
Further, I think we can all agree on the fact that it’s a lot easier to relate to exact numbers and results, so here I will go through the studies presented by Digital Works together with including some more information from the research.
In a blog article dated April 7, 2011, I covered the monetary value of a Facebook fan as conducted by Vitrue and Syncapse. Vitrue and Syncapse calculated completely different Facebook fan values. Vitrue and Syncapse calculated Facebook fans were worth $3.60 and $136.38 respectively. See below for an explanation as to how they determined those values.
The Monetary Value of $3.60
According to social media specialist Vitrue, a Facebook fan base of 1 million translates into at least $3.60 million in equivalent media over a year. This result is made on the basis of impressions generated in the Facebook news feed, where your see the recent updates from your friends and pages you fan.
Vitrue analysed Facebook data from its clients with a combined 41 million fans, and they found that the majority of fans yielded an extra impression. This means that a marketer posting twice a day can expect about 60 million impressions per month through the feed on Facebook.
Further, Vitrue reached the conclusion of the exact amount of $3.6 by working off a $5 CPM, meaning a brand’s 1 million fans generate about $300,000 in media value each month. As they use as an example, this equals that Starbuck’s 6.5 million fan base is worth $23.4 million in media annually.
The Monetary Value of $136.38
Another suggestion to determining the value of a Facebook fan is made by Syncapse, a Social Media Management & Technology Partner. This company has created a paper about the subject, where they primarily have studied the variables below to reach a solution. And I think these are some very essential points to take into account in order to understand a pattern of behaviour of Facebook brand fans:
- Product spending
- Loyalty
- Propensity to recommend
- Brand affinity
- Media value
- Acquisition cost
Naturally, this also means that they have made use of fans of some of the big brands on the social network in order to create the most accurate picture of what a fan is actually worth. From examining how much money fans and non-fans respectively spend on a given brand, Syncapse has found that the monetary value of a Facebook fan is placed at $136.38.
What is also interesting to emphasize from the paper, is the following key findings:
- On average, fans spend an additional $71.84 on products they are fans of compared to non-fans.
- Fans are 28% more likely than non-fans to continue using the brand.
If you are trying to evaluate the ROI of your social media campaigns, there are many ways that this can be done. Just check out this interesting infographic by FOCUS.
Click Image To Enlarge
Courtesy of an article dated November 10, 2011 appearing in Fast Company and an article dated August 17, 2011 appearing in MindJumpers
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Posted by: Mac Mass Mailer Guy | 11/12/2011 at 10:45 PM