The Value of a Facebook Fan Is Zero


The social media world is currently buzzing about the value of a Facebook fan. As businesses invest more into social media, the answer to this question is going to continue to grow in importance. Marketers want a quantifiable ROI for social media so they start to estimate the value of a fan.

There have been a couple of recent studies released that have attempted to determine the value of a fan. The first was by Syncapse Corp., which estimates the total average value of a Facebook fan to a company is $136.38. This takes into account how much, on average, each fan spends with the company over the course of a year, how many sales they encourage by word of mouth and the cost that goes into soliciting and maintaining the relationship.

For instance, the study suggests that that someone who has “liked” a brand may spend an average of $71.84 more each year on that brand’s products or services than will someone who has not “liked” it on Facebook. The upside to this theory is the vast amount of specific data it incorporates. However, the numbers are based on some of the best-known brands and don’t account for how consumable a product is or how the value translates for smaller brands. You can read the white paper here www.syncapse.com/media/syncapse-value-of-a-facebookfan.pdf.

Another company called Virtue takes a different approach. A social media software provider, Virtue assesses a Facebook page’s value based on the number of fans and asserts that a page with one million fans is worth $3.6 million, which equates to a worth of $3.60 dollars per fan.

This theory is much like the traditional advertising equivalency translated into social media, and could offer a safer bet for social media values, but it doesn’t account for the engagement aspect of a social space, or the fact that brand followers can block or sort out content, which would directly affect the ultimate value. You can take a deeper look at Virtue’s approach here: http://vitrue.com/blog/2010/04/14/360-facebook-fan-valuation-is-just-the-tip-of-the-iceberg.

I say both are wrong. Every time a client asks me the value of a fan, I give the same answer – “ZERO”

In my line of work, I see a lot of competitors that focus primarily on fan acquisition strategies. They claim to be able to add fans to a businesses page for $1 each. It sounds good and the price seems OK, but what is the purpose? Is quantity more important than quality? I would argue that there is more value in a small group of fully engaged, loyal fans than there is in a huge bucket of “purchased fans” that really have no interest in your brand.

The same argument can be made for the effectiveness of email marketing. Opt-in email addresses acquired through a client’s website or at the point-of-sale (POS) always outperform those that were generated through sweepstakes or using third-party lists. Clients and many social media-marketing firms have gotten too caught up in fan acquisition and have forgotten the key that makes social media so powerful.

It’s not advertising!

Advertising begins as an interruption. Social media begins with interest. Brands that put the interest of their core fans first are the ones having the most success and have the most valuable fans.

So again – what is a fan worth?

Nothing, until they are engaged. An engaged fan is worth infinitely more than one that is tuning you out. So, how should you measure your social media efforts?

Depending on the client and what they want to accomplish, we measure and track in the following way.

  • Website Referrals – What percentage of overall traffic is being driven from our social efforts to the client’s website?
  • Revenue – Using Omniture (or another sophisticated analytics tool), we can determine how much online revenue we are generating from our efforts.
  • Opt-In Email Acquisition – How effective are we in converting fans and followers to our opt-in database?
  • Engagements – How engaged is our audience overall, what posts generate the most engagements and what is the tenor of those engagements?
  • EdgeRank – We constantly monitor our client’s EdgeRank, daily, weekly and monthly to see how we are doing.

Of course there are many other intangibles that can be added to this list, but I believe there are simply too many variables that go into “value” to be able to come up with a reliable industry-wide number.