How much is a Facebook fan really worth?
By Amy McIlwain
Financial Social Media Marketing
It’s no surprise that Facebook is the reigning social networking giant. At this point, it probably isn’t even surprising that more and more companies are flocking to the platform to expand their social reach and increase profits.
I was watching a Colorado Rockies baseball game recently and heard one of the commentators campaigning for the election of Todd Helton (one of the players) into this year’s MLB All-Star game by instructing fans to go to the Rockies’ Facebook fan page, vote for Helton, and in doing so, enter in for the chance to win tickets and discounts.
Similarly, while watching the afternoon news, I listened to my favorite news broadcasters instruct me to go to their station’s Facebook fan page and “like” them for a chance to win an iPad. Even more enticing? The Facebook Fan Page for trail runners telling me to become a fan and enter in for the chance to win a free pair of running shoes.
From contests to polls to other marketing campaigns, it’s easy to see that Facebook has become the place for brands to see and be seen.
But why? Is it Facebook’s enormously diversified pool of over 750 million active users? Is it the ability to hone-in on specific demographics using Facebook’s target market advertising? Or maybe it’s the platform’s ability to host a community of users that allow content to spread organically and virally extremely fast.
Regardless of why, the better question is how much? How much is a Facebook fan really worth? I’m sure I’m not the only one that has experienced the headaches of attempting to measure the return on investment of social media for businesses. I mean, how do you measure the worth of a Facebook fan? Or a Twitter follower? Or a LinkedIn connection?
Understanding the ROI of social media for your business is an important element in knowing where to allocate your marketing dollars. So, I’ve found the three most influential studies that have broken down the worth of a Facebook fan into dollars and cents. Let’s take a look and see what they’ve discovered.
One Facebook fan is worth 20 visits to a company’s website. Or so claims Hitwise’s new Facebook Fan Acquisition and Analysis Service.
Hitwise combined their data with the data of Techlightenment, which took the top 100 retailers ranked in the Hitwise shopping and classifieds category and benchmarked visits to those websites against the number of fans those brands had on their Facebook page. They then looked at the propensity for people to search for those retail brands after a visit to Facebook using their search sequence tool. What they found was that one Facebook fan equals 20 visits to a company’s website over the course of a year.
A Facebook fan is worth $136.38. About a year ago, Syncapse performed a study that found Facebook fans spend, on average, $71.84 more per year on its brand. They also found that fans are 28 percent more likely to continue using that brand than non-fans. Syncapse came up with the figure by asking 4,000 fans of 20 of the top brands on Facebook — including Nokia, BlackBerry, Victoria’s Secret, Adidas, Nike, Coca-Cola, Starbucks and McDonald’s — why they were fans of those companies or brands, and about their past and future purchasing behavior.
The total value of $136.38 also takes into account the following factors: spending, loyalty, recommendations, earned media value and the cost offset for fan acquisition. The highly-recommended video below breaks down the study and allows Syncapse CEO Michael Scissons to explain the findings:
Facebook fans are valued at $3.60 each in earned media for brands. I’ve included this study because of its much lower worth of fan value. The study from Virtue created a calculation that allows brands to input their respective numbers and discover how much their fan is worth. Here’s the formula Virtue came up with:
1M impressions x 2 posts x 30 days = 60M impressions
60M impressions / 1000 x $5 CPM = $300,000
$300,000 x 12 months = $3.6M
$3.6M / 1M fans = $3.60
So, what do you think? Are your fans worth dollars and cents? A certain number of visits to your website? Can Facebook fan valuation be determined?
The methodologies for estimating the value of a Facebook fan rely on a host of assumptions, but the bottom line is that every audience, brand and program is unique. Personally, I ask myself if I’m a part of these calculations because most of the brands that I’m a fan of on Facebook already have my loyalty and spending dollars.
I’m a fan of Women’s Health because I already subscribe to their magazine. Which begs the question, how much of a factor is fan acquisition? An expert at Forrester Research believes that fan acquisition makes a big difference: “A fan that organically ‘likes’ a brand has more potential value than one that is encouraged to click the ‘like’ button in exchange for a coupon or some Farmville bucks.”
What’s important to take away from these studies is the understanding that Facebook fans matter. Whether you have three fans or 3,000 fans, Facebook should be a key player in your marketing strategy.
Let us know how much you believe your Facebook fans are worth. Have you seen a return in fan interaction? An increase in client or consumer referrals? How about a return in profitable gains? We’d love to hear your thoughts on this not necessarily controversial question, but definitely a question that yields variable results. Give us your feedback by sending me a message or commenting below.