Brands are making plenty of money in social media: Dell Outlet’s Twitter account has generated millions for Dell, the Intel Channel Voice community has decreased costs by eliminating the need for expensive in-person events and P&G used media mix modeling to demonstrate that the BeingGirl.com community is several times more effective at driving sales than the brands' television ads.
Many marketers can draw a straight line between investments in social media marketing and financial results, but many more cannot. This doesn’t mean social media marketing is ineffective; it just means that marketers have to recognize benefits beyond dollars and cents. Facebook fans, retweets, site visits, video views, positive ratings and vibrant communities are not financial assets -- they aren’t reflected on the balance sheet and can’t be counted on an income statement -- but that doesn’t mean they are valueless. Instead, these are leading indicators that the brand is doing something to create value that can lead to financial results in the future.
The other day I authored a blog post many found interesting, infuriating or both: What Is The Value Of A Facebook Fan? Zero! I appreciate the great dialogue from the folks who offered feedback in blog comments and on Twitter. Because this is such a hot topic and because the feedback was so thoughtful, this seemed worth further exploration.
In that blog post, I suggested that marketers approach the question of how much a Facebook fan is worth as if the answer is zero. I said, “It is what companies do with fans that creates value, not merely that a brand has fans.” I went on to suggest that marketers should recognize a difference between potential value and real value. Like a coil that is compressed to store energy (an apt metaphor from my Twitter friend, Blair Goldberg), Facebook fans have little actual value until they are activated by the brand, just like releasing a compressed coil.
It is a question I hear several times a week: What is the value of a Facebook Fan? I’ve seen answers ranging from $136.38 to $3.60. I can’t blame vendors, agencies and consultants for trying to answer the question -- the hunger from clients is so great that anyone promising a simple answer is likely to get attention. The problem is that there is no simple answer to such a complex question. In fact, it may be best if marketers approached this question as if the answer is zero -- unless and until the brand does something to create value with Facebook Fans.
There are numerous reasons the question of Facebook fan valuation is problematic: