Measuring the Value of Facebook Marketing To Your Business
Ever since Google announced earlier this year that social media posts (such as posts to Facebook Fan pages or tweets) would be searchable, many marketers have started Facebook pages for their companies for the added search value as well as to acknowledge and grow the community that exists around their product and service offerings.
Companies that employ Hubspot internet marketing software have an advantage in that Hubspot's closed-loop marketing analytics allow them to:
- monitor the social mediasphere for keyword relevant comments on many sites including Facebook
- automate posting of their blog to a Facebook business page
- measure incoming traffic from that Facebook business page
- calculate their total reach in terms of number of Facebook and other social media fans or followers whenever they publish new content
Tools such as these can clarify the contribution to traffic and lead generation that Facebook is playing for their business. But how can Facebook marketers take it one step further and actually measure the value of adding an incremental fan on Facebook? There is really no consensus on the answer to that question.
Now Syncapse, a social media measurement company, in a report released today, has developed a way to put a dollar value on a Facebook fan, and their calculations suggest that each fan is worth $136.38. That's an average value of course, and the report also suggests that each fan is worth far more to firms that perform extremely well, and worth hardly anything to the worst performers. So, how did they come up with their numbers?
Syncapse put together a group of over 4,000 fans culled from 20 of the leading brands who operate Facebook pages, such as McDonald's, BlackBerry, Adidas, Nokia, Victoria's Secret, Coca Cola, Nike and Starbucks, and asked them questions about their past purchases from the brands and why they had chosen to follow them on Facebook. The company then estimated the future value of purchases those customers would make from the brands and the value of having them as a fan over time.
Marketers who have been using Facebook business pages, and who have begun to promote those pages using Facebook ads, will surely find Syncapse's conclusions pleasing. According to this survey:
- Fans of a company's Facebook business or brand page are 28 percent more likely than those who are not fans to continue using that brand in the future.
- Facebook Fans are 41% more likely than others to recommend the company's product to their friends than people who are not fans
- Compared to non-fans, Facebook fans will spend $71.84 more than they otherwise would have on a product they describe themselves as fans of
There is little need to wonder whether or not this could have anything to do with why the number of advertisers using Facebook ads has more than doubled in the past year.
Another question remains: just exactly what is it that a Facebook fan does that creates this value to a company or brand, compared to a non-fan? This is where the difference in a company's performance can really vary, and where the marketer must focus in order to optimize fan contribution on their page. A fan with average levels of activity on the Facebook Business Page might participate on the page ten times a year, and make a single recommendation. In contrast, a truly active fan could participate three times as often but be ten times as likely to make a recommendation. Moving a fan along the continuum from inactive to highly active can have major value to company running the Facebook page.
For example, an active fan of Coca- Cola was valued at $316.78 versus $137.84 for an average fan, while an inactive fan was worth nothing.
The graphic above demonstrates that fans of a brand in every instance more on the company’s products. In the case of McDonald's & Starbucks, fans spent over twice as much per year as non-fans.
It may seem that these conclusions are rather obvious, at least directionally, since it seems reasonable that customers who care enough to take the time to "fan" a company's Facebook brand or business page might also be more regular customers and referrers. What is really interesting is that Syncapse has tried to put an actual dollar value on an individual fan for well known brands.
Who knows if these results can be extrapolated across the 500,000,000+ users of Facebook or not. But it they should at least give marketers pause to consider starting a Facebook business page for their company or brand if they have not, and cause for encouragement if they already have.
What do you think? How could you build a back of the envelope calculation to estimate the value of a Facebook fan to your company?