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Posted by Augie Ray on July 9, 2010
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.
But a compressed coil still has energy, just like a Facebook fan has some value, no matter what my attention-grabbing blog headline said. (I was accused -- quite accurately -- of being sensationalist by Robin Moss and Brian Carter.) After all, if I were to take a brand marketing job in the future, would I want to work at a place with no Facebook friends or 500,000 friends? All things being equal, I’d take the latter job, which means those fans have value. But a marketing asset is different than a financial asset, and that’s why I’m concerned with those who would answer the question “What is the value of a Facebook Fan?” with a dollar amount.
Over at Waxing UnLyrical, Shonali Burke turned to the dictionary to look up the word “value,” and I think it’s a fine idea to explore the concept of value more deeply. Financial value is created in one of two ways -- either an asset produces income or it increases in value; for example, if I buy land, I can see financial value by renting it out or by having it increase in market value. So what is the financial value of a Facebook fan? I’d still argue it’s zero; Facebook fans have no market value since they cannot be sold (thank heaven!) and they cannot produce a stream of revenue in a vacuum. It is only when a brand activates those fans -- with offers, content, promotions, apps, etc. -- that value is created.
In the comments to my blog bost, Brian Hayashi stated that, “Social media is an extension of Six Sigma” and could produce “recurring, predictable value either in the form of increased spend or decreased operating costs.” I am in complete agreement with Brian, but only in as much as that social media -- not Facebook fans -- can produce demonstrable financial value. Brian cited Scott Monty’s great work at Ford that proved "valuation based on the percentage of contacts that shifted away from more expensive call centers toward Twitter.” That’s a great example, but had no one answered the Twitter follower’s question there would have been no value created, hence Ford derived value not by having followers but by listening and responding to those followers.
Just to demonstrate how varied the opinions are on this matter, Kevin McLean and others suggested that the value of a Facebook fan could be negative. He cited Nestle’s recent difficulties with critics on their Facebook fan page as an example. Nestle is far better off for having engaged both fans and critics rather than ignoring them, but Kevin’s point is well taken -- some of the folks who clicked Nestle’s “Like” button don’t like Nestle at all. The varied reasons for “liking” a brand -- from expressing genuine affinity to wanting discounts to wishing to complain -- demonstrate the meaninglessness of placing a dollar value on each fan. As Kathy O’Reilly suggested, when it comes to Facebook fans, there is a difference between “quality versus quantity.”
It’s been an interesting dialogue, and in the end I remain convinced that Facebook fans don’t have value -- at least not in the financial sense. There is no dollar-per-head valuation that can account for the variety of reasons people “like” a brand, the various means brands use to acquire their fans, or the tremendous disparity in how brands engage and activate their fans. This means no one can say to their boss, “We invested $150,000 and acquired $250,000 worth of Facebook fans.” All they can say is, “We invested $150,000 and acquired 250,000 new Facebook fans -- and in the next year here is our social media marketing plan that will generate value from these fans . . ..”
It would certainly be welcome if we could put a dollar value on each fan. Doing so would make marketers’ jobs much easier -- we could simply amass a large Facebook fan base and call it a day. Unfortunately (or fortunately, depending on your point of view), marketing is hard work and a fan base is the start and not the end of that work.