What Is The Value Of A Facebook Fan? Zero!

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: 

  • Assumptions:  The methodologies for estimating the value of a Facebook fan rely on a host of assumptions, but every audience, brand and program is unique. For example, the value of a fan for big-ticket items cannot be the same as a fan for lower-consideration items. 
     
  • All fans are not equal:  Every individual has a unique social graph and a unique voice.  I might be considered influential on topics of social media and marketing, but my opinion on floor mops might hold little influence within my set of friends and followers. One’s value as an influencer varies from category to category. 
     
  • Acquisition matters:  How a fan is acquired makes a difference.  A fan that organically “likes” a brand has more potential value than one that is encouraged to click the “like” button in exchange for a coupon or some Farmville bucks.
     
  • Cause and effect:  Which came first, the chicken or the egg?   Do Facebook fans spend more, or do people who spend more become fans?  If the former, then Facebook fans are generating new value, but if the latter is true then Facebook fandom merely reflects existing value rather than creating new value for brands.
     

The smart marketer will approach the question of value as if the answer is zero -- there is no intrinsic value to a Facebook fan.  This might sound sacrilegious to social media marketers, but think of it this way:  What’s the value of an email subscriber if the company never uses the database for anything?  And what’s the value of the same email subscriber if the company has a smart, user-focused strategy for email?  It is what companies do with fans that creates value, not merely that a brand has fans. 

If you find it concerning to think of Facebook fans as valueless, perhaps you might consider the difference between potential value and realized value.  There is an appropriate and interesting corollary in the world of high school physics:  If you lift a ball off the ground and hold it stationary, it has no kinetic energy but it does have potential energy; drop the ball, and the potential energy becomes kinetic energy.  Facebook fans are like that -- all potential energy until you introduce something that creates kinetic energy.  As such, the operative question isn’t, “What is the value of a Facebook Fan?”  but “How do I make my Facebook fans valuable?” 

A Facebook fan has one primary value in the absence of activation by brands, and that is for risk mitigation, but even that value is made greater when brands foster stronger relationships with engaged fans.  (Self-promotion alert:  Watch for my new Forrester report on the ROI of social media marketing, due out within weeks.  Risk mitigation is one perspective discussed and, when combined with other measurement approaches conveyed in the report, should assist marketers to assess the value they create with their social media efforts on Facebook and in other social venues.)

What do you think?  Have you found easy ways to value your fans on Facebook?  Or is real value only created when you unleash the potential value of fans via programs, interaction, information and other sorts of engagement?

Comments

Thanks Kent

Great point, Kent. My reason for suggesting that marketers think of the value of a Facebook fan as $0 is this: No one in his right mind would think, "Well, if Facebook fans are work nothing then I'll stop doing it." This approach challenges marketers to think, "If my fans could be worth nothing or could be worth quite a lot based on my efforts, I better consider those efforts carefully."

Conversely, telling marketers their Facebook fans are worth $136.38 has the opposite effect. It can encourage marketers to engage in a game of audience acquisition at any cost and then to overlook the way value is created by that audience.

You and I agree: the value of a Facebook fan is > $0. But how much more is up to marketers' social and Facebook strategies.

I appreciate the input!

Great chatting

Absolutely -- I think we totally agree on the substantive points.

I just worry about busy executives catching the headline and not digging into the nuances of your well-thought-out point of view.

Maybe it's different Stateside (I'm in Canada) but I do still run into budget-owners who are unconvinced that there's >$0 value in social media followers.

- kent

Busy Executives

Hmmm, maybe my next blog post should be "What is the ROI of Only Reading the Headline and Ignoring the Content"?

Love it

I love it!

And there are apparently a few commenters here who might find that valuable.

Cost Versus Value Helps To Create True Valuation

Thank you, Augie, for stirring the pot. I look forward to reading your report.

As someone who has worked hard at attributing a true valuation (or at least a minimum contribution) for my social media efforts, I appreciate you grappling with this as well.

For me, "cost versus value" is an important part of the valuation process.

I touched upon this in my 2009 winning Forrester Groundswell award submission for UPS

http://www.upsjobs-problemsolved.com/groundswell

and have taken it to the next level in 2010.

I will be presenting my methodology in Seattle @ Microsoft's world HQ in September for establishing true valuation by taking the quantum leap to measure Social Media ROI .

I never cease to be amazed by how many people are so quick to dismiss "attempting" to attribute value to their social media marketing efforts. Perhaps it is a poor craftsman who blames the tools or refuses to place a value? I think so.

From the methodology I have put in place and the data I have aggregated, Kent is on the right track. Real value is only created when you unleash the potential value of fans via programs, interaction, information and other sorts of engagement... and that valuation is specific to that overall campaign. I would even take it a step farther by saying the value of a Facebook fan is directly connected to the quality of the strategy and execution of the campaign.

All Facebook fans may not be valued equally but neither should the campaigns used to engage those fans.

Mike Vangel

Vice President, Client Strategy
TMP Worldwide

http://www.linkedin.com/in/michaelvangel
http://groundswelldiscussion.com/groundswell/awards2010/winners.php?y=2009

Thanks, Mike

I appreciate the thoughts. For the record, I am not suggesting there aren't relevant ways to meaure ROI and other benefits from social media marketing; I just believe the question of how much a fan is worth is relatively meaningless.

Any time you care to share more about your methodology, I'm all ears!

Sell 'em all T-Shirts

The way I see it, the fan = customer (current-or they would de-friend you) customer = priceless. These are the people who "come in the door" of any business on any given day. The business should use facebook to give pertinent information about making their purchase experience as informed and enjoyable as possible. There is no better asset to a business than a fan of the brand. These folks are every business' marketing team. I Think that a good way to value the customer or fan, is to track the average sale per customer, you should be able to get a good annual purchase value of each customer/ fan. Plus if you can sell em all a t shirt, there's that.

Interesting point of view

I agree with this article. And it's true that marketers try to "create" values for every action of their fans, or even for the fans, especially when they have advertising campaigns that run on the internet, or on other media. I think it's easier for them to justify their actions in the front of their clients. (excuse me for my english)

This post is classic blogger hyperbole...

...designed to get people like you and me to read it (cripes, I'm even commenting!). Of course it is possible to value a fan/follower for assessment purposes - you just have to know how to do it. And clearly Ray doesn't. Ray may not understand how to measure social media results either - this post sure makes it seem that way. Also Ray apparently doesn't do much relationship marketing, because if he did, he would have noticed that Facebook and other social nets are really no different -in terms of this issue - than other CRM channels. Every client's fan valuation will be unique, and be based on real outcomes. Yes, Ray - it is possible to do that. Sheesh.