Q: How much is a Facebook fan, er ‘liker’ worth? A: $3.60.
New data shared by Vitrue, the Facebook marketing/sCRM agency with some very big clients (Apple, AT&T, Best Buy, Ford Motors, Kelloggs and P&G) has calculated that the media value generated by the average Facebook fan is $3.60/year (if you post to your wall 2x per day, based on impressions generated in Facebook news-feeds. (As an aside Vitrue found, interestingly, virtually no viral effect on feeds (propagation coefficient – 1:1.04)).
Vitrue did find that assuming $5 CPM, 1m Facebook fans produce $3.6m in media value over the course of a year (AdWeek article reporting findings archived below).
Like any AVE (advertising value equivalency) approach (much used, abused and confused in PR and sponsorship marketing), the $3.60 value should be taken with a pinch of salt, even if you do use Facebook primarily as an advertising medium, as opposed to/in addition to an e-commerce or CRM platform. But it’s a number that will be helpful to many marketers building a business case for Facebook marketing.
The Vitrue data opens the interesting and mildly ironic business opportunity of Facebook Fan Arbitrage; we reported earlier that you can buy Facebook fans from Usocial.net and subvertandprofit.com from $0.15 – and if you can sell them to brands for up to $3.60, surely there’s a new market opportunity emerging in buying and selling Facebook fans. Something to occupy all those hedge fund traders whilst they wait for the market to recover…
AdWeek article archived from:
Value of a ‘Fan’ on Social Media: $3.60
The findings are based on impressions generated in Facebook’s news feed
April 13, 2010 | Brian Morrissey
Brands have rushed to Facebook to build fan bases, with some amassing millions of connections. The nagging question has been: What is the monetary value of these fans?
Social media specialist Vitrue, which aids brands in building their customer bases on social networks, tried to put a media value on such communities.
The firm has determined that, on average, a fan base of 1 million translates into at least $3.6 million in equivalent media over a year.
The company’s findings are based on impressions generated in the Facebook news feed, the stream of recent updates from users’ networks.
Vitrue analyzed Facebook data from its clients — with a combined 41 million fans — and found that most fans yielded an extra impression. That means a marketer posting twice a day can expect about 60 million impressions per month through the news feed.
“It’s important to understand that once you build that fan base, you want to make sure you’re leveraging it,” said Michael Strutton, chief product officer at Vitrue.
Not all brands are created equal. Vitrue found wildly divergent impression-to-fan ratios. Some marketers generated just .44 impressions per fan, while another saw 3.6 impressions. Strutton chalked that up to sexier brands having more engaged connections, giving them access to the news feed more often. The impressions are not unique.
Vitrue arrived at its $3.6 million figure by working off a $5 CPM, meaning a brand’s 1 million fans generate about $300,000 in media value each month. Using Vitrue’s calculation, Starbucks’ 6.5 million fan base — acquired in part with several big ad buys — is worth $23.4 million in media annually.
“It helps [marketers] justify the spend they’re making, especially in acquiring a fan base and engaging that fan base,” Strutton said.
Of course, the figures don’t include perhaps the most powerful incentive for brands building fan bases: social customer-relationship management. Marketers often use their Facebook hubs to inform fans of new products, services and promotions.
“When you start to [add] engagement value, it goes higher,” said Strutton. “We were trying to get an easy-to-understand valuation terminology.”