If there was ever a holy grail of social media, this would be it: the eternal question – just how much is a Facebook fan worth?
Getting to an exact figure
Those of us well-versed in digital marketing would be used to knowing precise metrics like what our maximum CPC (cost per click) or CPA (cost per acquisition) etc is and this has helped the more strategic of us to be able to moderate marketing spend based on results. We know how many people come to our website and how many of those people convert (to sales, enquiries etc) – and can figure out a rough value from this.
So logic would dictate that we should be able to determine the same thing for our Facebook community – what value does a brand get from each fan of their Page? Those within the field of social media – and perhaps even general marketing – may be fairly familiar with this question. I know I have been asked to provide senior stakeholders with this figure, in order to help determine social media budget.
If you are anything like me, you may have performed a fairly exaggerated eyeroll when posed with this task. Then you may have turned to Google to perform a search on ‘value of Facebook fan’ or ‘how much is a like worth’ or something similar. The chances are you stumbled across some capitalistic article which gave you an arbitrary number – something like $8 or $10 or maybe just $2. Or maybe it was a healthily optimistic $10,189. Then you took this number and proceeded to base all calculations and planning on that.
It’s one way to do it – and I can tell you that the most recent article I have come across places a Facebook like at a value of $8 (though they don’t specify whether this refers to liking of a post or liking of your page) and a Facebook share at $12. The truth is if you cannot be bothered to give a crap about this exercise you can go with one of these completely random figures and be happy. I’m not going to hold it against you (though your budget/boss might).
For everyone else, who seek the true holy grail, I dedicate the rest of this article to you.
Why there is no one-size-fits-all value of a Facebook fan/like
First of all I would like to dash all hopes and dreams that you may have that there truly is one correct figure for how much a Facebook like is worth. There’s not. Secondly I would like to continue to crush your optimistic little soul by also telling you there is no simple formula to determine this value either. I’m sorry, but life just isn’t that easy.
What I can do is help you come up with a) an general idea of how you can come up with a figure and/or b) some reasoning to provide your boss as to why it’s not easy to determine.
The variables of determining what your Facebook community is worth (and why it’s not easy to do)
So, why is there no one-size-fits-all answer to this age-old (or really a couple of years old) question of the value of a Facebook fan? Firstly let’s ask ourselves something: when we consider our other marketing channels, do we try to determine how much each person who views/consumes our advertisement or branding is worth to us? Do we place a value on how much every website visitor is worth? On how much every person who viewed our ad in the paper is worth? Or how much each person who saw our display ad, heard our radio ad or saw our TV ad is worth? Now I’m not trying to define myself as ultra, super, mega marketing extraordinaire here (that’s up to you to declare), but the last time I checked no senior stakeholders were ever asking me these questions.
The reason is we don’t typically define our ad spend/budgets or activity by the value of each individual person interacting with that channel. We define it by the ROI (return on investment) that we get. Hence if we spend $10,000 on a print ad, we hope to god that we’re making more than $10,000 back. We don’t measure our success or future spend based on the fact each newspaper reader who was exposed to our ad was then worth 23 cents. That would seem ridiculous. So why do we ask this question of our social media communities?
Pretty awesome question, if I do say so myself. As a result, I tend to think it’s more useful to come up with a value for your overall Facebook community, more so than each individual person. This figure may be scaleable – for example you may determine that your current Facebook fan community, which has 750 fans, is worth $3,500 to you each year (I am going to provide further detail as to how you can come up with this later), but you speculate that this will increase disproportionately as the community increases (because more people = more discussion = more exposure) so that when you reach 2,500 fans you estimate this community will be worth $10,000 to you annually.
But before we get ahead of ourselves, here are the reasons why the value of your community is going to be different to other brands and industries:
1. How are you getting your fan-base? If you’re running promotions left right and centre that are giving away free stuff, well the chances are a bunch of your fans don’t really care about your brand, they just love FREE SHIT. Hence, the value of your community is likely to be lower than another brand who sources their community from current customers or true potential customers who are interested in their product/service.
2. What are you selling, and how much is it? If you sell shoes the monetary value of your Facebook community is probably going to be higher than if you you’re selling telecommunications products. Firstly because everyone hates telecommunications, but more importantly we tend to buy shoes a lot more frequently than we change our telecommunications provider. Shoes are also a much smaller commitment than locking in our phones to a 24-month contract, and you probably have a highly interested fanbase rather than current customers who just want your customer service. Similarly if you are a premium brand with super expensive products – like for example Audi – you are not likely going to get a tonne of sales through your Facebook community (although sales aren’t the only value you can get, but we’ll come to that later, if I remember/can be bothered). A recent article detailing the difference between Facebook fan values of prominent brands like Coca-Cola and Blackberry confirms the point that values differ depending on brands and industries.
3. How good are you at Facebook? It may seem like a weird question but the fact is you can have all the fans in the world but if you’re doing a crap job of running your Facebook community then they aren’t going to be worth much to you at all. The value of all those people is going to depend on what you do to leverage them. You could have 850 million fans (that would be awesome by the way) but if you don’t post anything, well what would be the point?
4. What budget and resources do you have to devote to this community? Not only do you need budget and resources to attract Facebook fans, but to truly engage with them you’re going to need some more money and man hours. In order to fully leverage the value that they provide, you need to run funky competitions, special offers, say the right things and respond quickly and efficiently. If you’ve only got one person looking after it part-time and no money at all, well these things probably aren’t going to happen, and the value of your community will decline.
5. How do you track success? Do you use a sophisticated analytics suite? Do you know how many people clicked on your Facebook post and purchased your deal? How many people are coming from Facebook to your site? Because if you’re not tracking any of this stuff, it’s going to be difficult to determine this figure.
6. What are your objectives? If you’re a government association your objectives may look a little different to if you sell sports cars, plumbing services or tickets to the movies. Do you derive value from straight sales, or from enquiries, recommendations, awareness or interaction? This will have a huge impact in terms of what value your fans will have, and how you’re going to come up with that figure.
Some ideas of how to come up with an approximate figure for the value of your Facebook community
Ok so now that I’ve waffled on about why you can’t come up with a value, here’s some pointers of how to come up with a value. I love it when I make sense.
1. Use analytics software to determine how many people are coming from Facebook to your website/digital assets and converting (be it enquiry or sale or sign-up). If you are tracking this you may see that approximately 100 people visit your site each month, with a conversion rate of 5% that generates $1,000 worth of revenue. There’s some hard data to use in your overall value assessment.
2. Come up with rough values for exposure/conversion through your other advertising channels. For example, if you pay roughly $2 CPC (cost per click) in your PPC/SEM campaign, you are clearly placing a $2 value on each person who visits your website. Through your analytics software – eg. Google Analytics (it’s free) – you can see how many people are clicking through to your website from Facebook (through your info/posts/ads) – let’s say there’s approx 100 each month, you can x this by $2 and you get $200 to add to your monthly value of Facebook activity. It’s not an exact science, but it’s something. Something is always better than nothing.
3. Think about how much money you’re spending on alternate channels – for example, how much money do you spend on email campaigns that reach say, 1,500 people? Or how much you spend on a newspaper ad that reaches say, 50,000 people. You can then do a rough calculation based on how many people are in your Facebook community to determine what that audience is worth. For example if you spent $10,000 for an ad that reached 10,000 people, you’re spending $1 per impression. Based on this calculation your Facebook community of 1,000 people is worth $1,000. Or something. Yes, it’s 100% foolproof, I swear! Well, it’s at least better than picking $8 because some other person said it with no grounds or reasoning.
4. Run a trial offer that is trackable through your Facebook Page. For example – offer Facebook fans an exclusive 20% off if they purchase within the next 3 days. Make sure you track it via a promo code or a trackable URL and see how many people purchase that deal. This gives you a good indication on how much revenue/sales increase when you promote a deal via Facebook (which is essentially free if it’s to your established community). Another metric to add to the mix!
5. If your objectives are not sales-driven, think about what you spend to get exposure/enquiries/sign-ups etc through other channels and simply apply these same figures to Facebook.
Hopefully these ideas will help you come up with either a figure or at least a rational response to give to your boss – even if it wasn’t exactly what you were hoping for. The key thing to remember is this: if you are obtaining your community by the right methods, your Facebook fans are worth something. They are more likely to recommend you and they are more likely to purchase from you. They are also helping to get you increased brand awareness by potentially exposing your brand (each time they interact with your page) to their friends. The next thing to note is it’s pretty much impossible to establish exactly what they are worth. This is because measuring it isn’t an exact science, but also because you need to take into account that the value of social media communities is not purely monetary – they help to build the immeasurable stuff like brand awareness, brand favourability and referrals too. Not to mention the fact your channel helps in building rapport, improving customer experience and hence increasing customer retention – also not always measurable.
My overall suggestion is to come up with a chart of objectives that show the things that are measurable and the things that aren’t and come up with suitable KPIs for each – even if these are a little ‘fluffly’ for the immeasurable ones. Explain that in monetary terms your Facebook community is worth roughly between $X-$X but that in general terms it’s worth a lot more when you factor in the stuff that you cannot measure, but that will (either short-term or long-term) contribute to your bottom line via customer retention, up-selling and referrals.
And that, my friends, is what I think about the ROI and value of Facebook fans/likes/communities.