What is a facebook fan worth?What is a facebook fan worth?

The other day a client posed the question “What is a facebook fan worth?”  His reasoning was to determine how much to invest in recruiting fans versus spending money elsewhere trying to drive people to the brand site —to sell products.  A reasonable concern.

The question is intriguing.  Marketers struggle with the valuation of social initiatives.    While no one questions the value of someone advocating your brand,people question the impact of a social campaign because …

• Social programs do not fit in a media model.
• Social is one discussion at a time,where traditional is about a mass broadcast.
• Social programs are about effectiveness not efficiency.
• It is difficult to relate social interactions to a sale.
• Social programs are about fueling a conversation,not controlling the message.

  … therefore we often ask the wrong valuation questions,because we are comparing social campaign to traditional campaigns – traditional measurement.  It is interesting people are not asking what a television viewer is worth.  Although we know what it costs to reach the viewer (CPP), we do  not valuate the viewer.  In other words,with traditional messaging we look at efficiency of distribution not a valuation of target impact.  When we gauge the success of a traditional campaign,we point to shifts in funnel measures,and there is nothing wrong with this.  However,we do not point to a specific commercial airing nor try to correlate it’s impact.   Enough about television,let’s get back to facebook.

I believe there is merit in the social valuation or what a facebook fan is worth.  The worth of a fan can be evaluated by looking at the cost incurred to generate a facebook presence and the brand value received from fans.  To accomplish I would recommend a three tier approach:recruitment,engagement,and advocacy.

Recruitment
Recruitment is the cost to attract people to your facebook page.  Some brands have the luxury of fans building their fan presence on Facebook (for example the two Coca-Cola fans who built the initial coke presence on Facebook).  However,

The value in recruiting can be assessed by the quality of fan.  Are you attracting people who have an emotional connection with the brand?  Or are you attracting people based on a non-brand premise like a contest or shared passion point?  Many brand run contests or sweepstakes to attract fans.   The value proposition for a contest is a false value rarely within a brand’s DNA,therefore most fans attracted in this manner are less likely to be engaged —unless there is another contest.

A shared passion point between the brand and fan (e.g. sports,entertainment,fashion).  An example for many marketers is their NASCAR sponsorship.  M&Ms sponsor a Kyle Busch’s Toyota car,and they also have a facebook page for the sponsorship.  It is no surprise the comments on the page center more around the driver than the chocolate covered candy.  Lucky for M&Ms the fans on the M&Ms Racing page  (6,653 fans) pale in comparison to the M&Ms page (545,688 fans).  

Measuring recruitment can be measured in Cost Per Fan Acquired (cost incurred /  fans added).  The CPFA will vary when you consider the following:

• Zero cost assuming fans are attracted to the brand.
• Cents per fan by using  an email campaign soliciting fans from an existing brand email list.
• Dollars per fan using a targeted online media campaign to attract fans.
• Cost of an item to attract fans.  For example Outback treated facebook fans to a free Bloomin’Onion last year to fans and more recently Babies R Us offered a $5 gift card to attract fans (per BlackFin 360 nice blog entry about the campaign).

In general the less you pay will equate to a higher quality of fan,but it is still difficult to assess the quality of fan during recruitment —quality will be defined by engagement and advocacy.

Engagement
Engagement is the cost(s) to reach and engage the fanbase.   Reach is simply the cost to update your facebook presence.  The benefit of a facebook reach strategy is keeping the brand top of mind with fans —a tactic shared by other social channels like  Twitter or other direct channels like email.   The value of the facebook message (or call to action) will dictate whether the message will result in additional awareness or purchase. 

If reach is your only goal,then you might want to rethink your facebook strategy.  Facebook is about community.  It is about engagement.  The better facebook pages are built around engagement or getting fans involved.  Engagement is fueled by persistent community content and activities to get fans to take action —to respond —to feel.   Some examples include Dunkin Donuts (1,228,000 fans) or Tide (354,000 fans).   If you look at both facebook pages,there is nothing really profound —no “ah-hah”moment,because both sites do the little things well.  They pepper content with activities to keep people engaged with the brand,and fans respond.  Intermingled between the brand posts you will find fan shout outs about their affection for the brand.

Engagement should be measured through effectiveness of the facebook interaction.  Effectiveness can be valued through interaction rate or transaction. 

Interaction rate is the participation level relative to total fan base.   If a brand has 100,000 fans and in a given week 1,000 participate on the page then the interaction rate is 1%.   The interaction rate is an indicator to the health of the brand engagement.  Different factors will effect the interaction rate including how much natural brand conversation exists;the brand participation on the page;and the emotive attachment fans have to the brand.

A second measure is transaction.  Transaction can apply to a purchase or customer service response.    A non-intrusive to measure transactional impact for a purchase would be using coupons to determine if fans purchase the product (think about Outback’s Bloomin’Onion coupons).  Another method to determine purchase frequency would be to survey purchase habits of fans.  For high-consideration purchases (e.g. autos,electronics) you would survey purchase consideration instead of  purchase frequency.

Customer service transaction incorporates facebook into your customer service strategy.  The goal would be to reduce the number of customer service calls by providing an interaction method on facebook.  Best Buy has been playing with this idea on Twitter (e.g. TwelpForce) and is using their facebook page in a similar manner.  The advantage of a customer service facebook page is the power of the community would assist in answering a customer’s question (instead of crowdsourcing you could call it “Crowdservicing”). 

Advocacy
Advocacy is a desired result for a facebook investment.  It also may be the toughest to measure.  The desire of any brand would be to have their band of fans spread how greatness of the brand/product.  Advocates are people we know.  They are people we trust.  The power of the advocate can be the most influential marketing force (nothing new – this is a Word Of Mouth fundamental truth).  However,measuring facebook advocacy impact is not easy.

Advocacy can be measure through brand exposure and purchase impact.  Brand exposure are the social impressions in a fans news feed that are generated from a page interaction.  They can be as simple as fanning a brand to ”Like”something to generating comments on the brand page to using a brand app. 

The brand exposure would be computed by taking the each fan interaction times the social exposure to their feed.  For example,if four fans comment on a topic we would calculate as follows:fan 1 has 110 friends;fan 2 has 150 friends;fan 3 has 300 friends;fan 4 has 250 friends.  The additive value for this brand exposure would be 810 brand impressions.  The likelihood of 810 friends seeing the interaction is remote,therefore this should be seen as an opportunity. 

Looking to the future,facebook should supply brands a threaded brand exposure view.  This is defined as the real brand exposure as oppose to the calculated opportunity as described above.  Facebook should be able to tell how many people are exposed to a friends brand interactions,and better yet,how many people acted on their friend’s brand interaction.   Friend to friends actions can include becoming a fan of the brand or ”liking” / commenting on their friend’s interaction.

The residual value of advocacy’s impact on purchase can be difficult to measure —but not impossible.  Many people are studying the effect of social buzz to purchase.  For example,a study done by Northwestern University’s Kellogg’s School of Management with Motivequest examined the link between online buzz and sales relative to cellular phones (“When talk matters —A Study of Online Performance and Firm Performance”).  The study found a correlation between online buzz and sales.  From this analysis Motivequest (with Northwestern University) created an Online Promoter Score.

What’s the right measure for your page?
These measures outlined will vary by brand,by page,by client.  Therefore I have to add the appropriate measure will depend on the objectives of the site.  A best practice would be to break measures into what you can effect and what is good to know.  Focus on measures that are actionable —that help you achieve you objectives.