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Your Brand Has Thousands of Facebook Fans–How Much Is That Worth?

The viral video of a cat on a trampoline often seeks nothing more than the bragging rights of the number of views that it generates. In contrast, well executed brand-based social media campaigns strive to raise consumers’ awareness and improve brand opinion–while driving trial and conversion.

Brand based social media is intrinsically different from the vast majority of consumer generated social media. The viral video of a cat on a trampoline often seeks nothing more than the bragging rights of the number of views that it generates. In contrast, well executed brand-based social media campaigns strive to raise consumers’ awareness and improve brand opinion–while driving trial and conversion.

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That difference demands more than simply reporting the reach of the campaign. To truly know the value of your forty thousand Facebook fans, you must start with two questions:

  1. Where did they come from
  2. How do they behave

Where Did They Come From?

Not all fans are created equal. In order to understand the value of your fans, you need to understand why they came to you. Facebook is a conduit for conversation unlike any other–it has instant credibility. And it can be consumed at warp speed–at one’s home, place of work, or in the palm of a hand. But the most important question for brands on Facebook is this: why are these consumers taking the time out to engage with your brand? You need to know where they came from–and how to group them accordingly based on that knowledge. In my experience, Facebook fans can be grouped into five key categories:

The first group is the brand enthusiasts. They absolutely love your brand. Whenever your category comes up in conversation, they never fail to mention you. They are constantly on the lookout for new ways to engage with your brand and utilize your product. These fans can become product evangelists–primed to expand their depth of purchasing with your company.

The second group loves everyone. Sure they “like” your brand but they “like” everything from their toothpaste manufacturer to their windshield washer fluid. You have an inroad with them and have the opportunity to differentiate yourself from all of their other “favorites.”

The third group is the average user. You are the brand they tend to go with but they don’t give you much thought and they could be swayed by a persuasive argument. These consumers make up a majority of your sales and figuring out a way to engage them is key.

The fourth group is the sweepstakes fan. If you offer coupons or giveaways to consumers who sign up as fans, you tend to get a large group of consumers that were looking for something free and don’t really care about your brand.

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The final group is the issue fan. Your company did something they like – perhaps you gave to a cause, went green, and they want to reward you with their fandom. You have made some significant inroads with their sensibilities and now is the time to translate that to a purchasing shift.

In order to accurately assess the value of your overall fan club, you will need to segment your fans into some type of schema akin to what we just reviewed. Part Two of this post will provide instructions on how to do this. While it isn’t easy, it is possible. It is important to do because different fans have different values.

How Do They Behave (aka Quantifying Value)

Ultimately, all consumer touch points are about one thing– driving sales. Whether it is a near term or long term strategy, marketing is designed to influence consumers to convert. The early history of measuring the social space has shown the following:

  • Social media impacts sales both through ongoing “earned” media as well as specific events/tactics
  • In addition to a direct effect through earned media and specific tactics on sales, an indirect effect exists through social activity that drives consumers to websites and thereby drives sales
  • Social media is measurable and often has a positive ROI comparable to other forms of communication that drive awareness, such as TV advertising

Social media impacts consumers’ awareness, brand opinion, trial and sales. In order to truly quantify the value of your fan base, you need to understand how your fans relate to each of these success areas.

The most direct way of valuing your fan base is to match them against a consumer panel. Once the match is completed, you can evaluate how much a fan spends relative to your ‘average’ consumer, how many different types of products they purchase and how often they substitute other brands. This type of approach, common in the CRM world, is very straightforward but requires access to either a survey or scanning panel.

At an aggregate level, the immediate volumetric impact of your fan base can be directly measured through marketing mix modeling. By understanding the value of key interactive and social media activities –as well as the rate at which your fan base engages in these activities– the ongoing volumetric value of your fan base becomes a rather straightforward measure. I previously outlined how modeling allows you to quantify the impact of interactive touch points on offline customer conversion.

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By creating a second stage model–which links your fan activity to other previously quantified activity–you can determine the ongoing value of your fans.

In addition to measuring direct sales impact from fans, consideration must be a cornerstone of social media reporting. Whether survey based or model based, shifts in consideration have a long term impact on sales. By understanding how the size of your fan base changes your brand consideration, you gain the first insight into the financial value of your fans.

Using the aforementioned approaches, we have seen the value of a typical Facebook fan club range anywhere from significantly less than a dollar to more than $5. And we have seen a significantly larger range in the value of different fan groups, as reviewed above–with some “evangelist” brand groups being worth more than $50 a fan. A few corollaries we have learned from this analysis include:

  • Brands which are dominant in their category tend to have fans that are worth more than the fans of challenger brands
  • Products that are more highly considered (durable goods versus consumer package goods) tend to have fans that are worth more
  • Sentiment has a big impact on fan value–and this can cause an overall fan base to have a negative dollar value–and hence should be listed as a liability, an interesting challenge for accountants
  • Brands that employ active community managers have fans that are worth more
  • The value of a fan is not static–it changes based on the experiences and content within the social network and is also greatly impacted by the brands overall marketing ecosystem

If 2010 was the year that social media became an accepted part of the marketing mix then 2011 should be the year that social media becomes accountable and measurable. If we learned anything last year, it is that good social media programs aren’t free–they cost money to create, curate and stay relevant. In order to justify the resources to maintain good social media programs, we must understand what our “fan club” is worth. If your analytics groups can’t provide answers, or at least a roadmap to get to these answers, then perhaps it is time to reconsider how much you invest in them.

In part two of this post, we will show you how to calculate ROI on your Facebook activities and segment your Facebook fans as well as find successful ways to commercialize your fan base.

Steve Kerho is the Senior Vice President of Strategy, Analytics, Media and Marketing Optimization at Organic, Inc.

About the author

Steve has over 24 years of agency and client side experience leading CRM, interactive marketing, sales and media practices for brands including Nissan, Bank of America, Visa and Procter & Gamble, to name a few. In 2011, he was named an Adweek Media-All Star for his innovative work measuring earned and owned media content and developing predictive analytics models to optimize digital ecosystems.

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