Two Fridays ago, Gigaom published the results of a survey by social media marketing measurement firm Syncapse that attempted to assign a dollar value to Facebook fans of brand pages. According to their report, the average fan is worth about $136.38, though Syncapse acknowledges that this number can fluctuate dramatically depending on the brand. The survey results additionally showed that fans tend to spend an average of $71.84 more than they otherwise would on products and brands of which they are fans, as compared to non fans. Furthermore, Syncapse found that fans are 28% more likely to continue using that brand/product and 41% more likely to recommend a brand/product to their friends than non-fans.
In the metrics-driven new media environment, the question of “how much is a Facebook fan worth?” is one that has caused much stress for marketers seeking a foolproof measurement to back up their work on social media. I give Syncapse credit for attempting to put a number to it. That being said, there’s at least one major issue to consider in looking at these results, which I think is best described as the “chicken and the egg” dilemma. Namely, it’s impossible to determine how much of a fan’s spending habits can be attributed to the brand’s Facebook presence as opposed to the fan’s own previously established loyalties; do I spend more at Express because I’m a fan or am I a fan of Express because I shop there often?
If I had to answer my own question above, I would truthfully tell you that I became a fan of Express because I already had a loyalty to the brand – and I couldn’t say with confidence that I spend anymore on their products now on account of their page (though I’m sure there are those who do). But this shouldn’t come as a shock to anyone, because to assign a dollar value to an individual fan is already kind of missing the point. While you can certainly say that social media gives power to the individual, the power of social media itself is in the social graph. It’s the power to rally groups of individuals for your cause, whether your cause is to raise money for disaster relief or to sell the heck out of your brand’s new signature must-have summer cargo pants. When you build a community of enthusiastic brand evangelists and empower them to spread the word, you are tapping into a resource far more valuable than any individual promoter.
So all of that’s nice, but let’s be honest: that doesn’t translate to anything of value when you’re negotiating for an increased social media budget. But fear not! Short of assigning a particular value to an individual fan, the tried and true methods of ROI measurement still work (fan-only coupon code redemptions, tracking all click-throughs from your Facebook fan page to your website, tracking fan activity on your website, number of “shares” of your content, etc.). What I think could be far more useful would be a formula that determines the relative increase in ROI a company can expect as it increases in fans. To be able to determine fan goals based on projected clear, direct impacts on ROI will do a great service to marketers and budgeting folk alike.
Do you see value in assigning dollar amounts to individual fans? Let us know what you think is the most important metric (whether it’s currently possible to measure or not) in determining the value or ROI of a brand’s social media presence!
Yeah, your basic analysis is what I came up with when I originally read the post. It’s a basic statistical population problem: people who are already fans of a brand do not come from the same population as those who are not a fan.
And that ignores any errors in their measurement methodology, which is liable to be substantial.
However, while it may not make sense to assign a monetary value to each fan from a BI standpoint, it does make sense to measure their elasticity to advertisments, deals, marketing, and other promotions.
Or: Are you a fan of Express because you like thier products, or are you a fan of Express because you shop more when they have good promotions (and like Express)?
If Facebook Fans are more responsive to advertising and other promotions, it would make sense to target them as a dedicated group (assuming you have sufficient volume), allowing you to create customized campaigns to target them where they’re weakest.
Another way of putting this is to say: The absolute value doesn’t matter, but the percentage which you can increase their spend does matter. If they spend more already, then even a constant increase in spend relative to non-fans would increase revenue more among that group.
I’ve seen people become fans for a lot of different reasons, most of those reasons aren’t related to spending more with a company. Just this morning a friend asked me to “Like” a page he’d created in order to “juice up his numbers”, another asked for a “Like” just to alert me to the existence of her uncle’s business. Others use “Like” and fandom as a form of networking, they want to make contact with decision-makers at a business or they want to pay someone back for Liking something they themselves had posted. From my anecdotal evidence, I don’t think Liking or Fanning has much to do with spending more at all.
For most companies, I think the most important metric is the number of verifiable fan-influenced sales. This is not the case with national brands, who are more concerned with more subjective measures like brand awareness. But my customers need to ring the cash register, so they want to know how many sales were influenced by fans.
Facebook Fans have little/no value because they *always* capture relationships that exist somewhere else? Am I following your logic correctly?
By the same logic, a customer e-mail address has zero lifetime value because many of those people already visited stores without any marketing through e-mail. That just doesn’t make any intuitive sense whatsoever.
If the author is making a point about ROI, that’s a different case entirely. ROI is one of those metrics that is arguably silly to measure anyhow as nobody knows how/if Facebook Pages will matter in the future, how sticky they will prove to be, what alternatives will exist, etc.
Chris
@Michael – Thanks for posting! We’ve actually tested fan-targeted ads against ads targeted to non-fans for some of our clients here and the difference in conversion rates is astounding. I’ve seen fans be as much as 9 times as likely to convert to shoppers as non-fans, even when clicking through from seemingly impersonal sidebar ads. As I briefly mentioned in the post, I agree that fan-only promotions (fan-specific discount codes, promos linked from the newsfeed, purchases from the newsfeed, etc) are a much better way to measure their spending. This survey seems to have just asked Facebook users “how much do you spend?” – not sure I want to put much stock in the dollar recall abilities of the average Facebook user.
@Lateef – Thanks for the comment! I think all businesses (but especially small businesses) should absolutely look to verify fan-influenced sales. Even a quick in-store survey of new customers that asks “how did you find out about us?” with a “from a friend on Facebook” option would be helpful in attributing actual dollars to your fans.
@Chris -
To say that I suggested a lack of value for Facebook fans as a whole is a complete misunderstanding of my post (and goes against what all of us here at Likeable believe and promote). What I said is that to assign a dollar value to an individual fan is “missing the point” and that the power of social media lies in the power of the social graph. There is much more to take into account than just an individual’s spending habits, especially since you can’t prove which came first (their brand loyalty or their Facebook fanship). As far as ROI measurement goes, it’s far more reliable to track ROI using the tried and true methods I listed above: redemptions of discount codes released to fans only, shopper conversions on your website from a tracking link posted to your fan page, etc. Not really sure that I agree with you when you say that it’s silly to measure ROI now just because we can’t predict the future – but hope this clears things up!