Facebook · Social Media

Pay Per Fan: What Big Brands Are Paying For Facebook Fans

Although it may sound weird or repulsive to some purists, brands have been buying fans on a cost per fan basis for months (some for many moons).

cpf money Pay Per Fan: What Big Brands Are Paying For Facebook Fans

Cost Per Fan Is No Big Surprise

When you step back, it makes sense:

  • Many companies operate on a cost per action basis to get emails… fan bases are the social media analogue of email lists.
  • Companies have been acquiring emails, downloads, real estate leads and more via pay per click and SEO for years. There’s always a cost per action target and value associated with these efforts.

Acquiring contacts is a business goal. The ultimate goal is ROI through some sort of sale, but the first milestone is building a distribution list or audience. As long as those fans are relevant, you can get ROI in the next step of the social marketing process.

What’s a Fan Worth?

The value of these fans depends on how much money you make from them down the road. On Facebook, if you don’t engage them, you’ll probably lose them. You have to court them – but that’s page management or community management, and beyond the focus of this article.

So one determinant of cost per fan price are questions like:

  • What’s your conversion rate from fan to customer?
  • What’s your average sale?
  • What’s the lifetime value of these customers?

You probably don’t know the answers to this before you get a fanbase. So you can’t really know the ultimate ROI. But that’s probably not your number one concern if you want to pay to acquire fans. And the reasons a company would do this are also beyond the scope of this article.

My number one focus here is: how much should you pay for a fan?

One internet marketer suggested this rule of thumb: double your email value, and that’s the value of a fan.

Why?

Viral potential.

cpf viruscops Pay Per Fan: What Big Brands Are Paying For Facebook Fans

It’s much easier to get a fan to bring you another fan (their friends), than to get someone on your email list to get you another email. Facebook fans multiply easier than email subscribers do.

How Much Are Companies Paying For Fans?

I and many of my peers are under NDA’s not to mention their clients, but I’ve seen or heard of deals like this in 2010:

  • 30,000 fans for $1.50 cost per fan
  • 60,000 fans for $1.25 cost per fan
  • $20,000 per month to acquire 10,000 fans per month ($2.00 CPF)
  • 4500 fans for $9,000 ($2.00 CPF)

The average price per fan we’re seeing in the industry is $1.50 – 2.00. But expect this to go up over time, because Facebook ads will become more expensive, just as AdWords costs have steadily increased. And Facebook users may become more fickle about what and how much they “like”.

There’s more that goes into it…

The Vagaries of Fan Acquisition and Cost Per Fan

The cost to acquire a fan depends a great deal on factors such as:

  • Can something with broad, no-brainer appeal can be linked to it: sex, celebrity, food, etc.
  • Can you get your ideas past the Facebook ad moderators?
  • Are you using best practices? Doing Facebook ads the wrong way can increase your cost per fan tenfold.
  • Is the brand a household name?
  • Do you have any incentives?

cpf fairuz Pay Per Fan: What Big Brands Are Paying For Facebook Fans

To be sure, many of the habits your typical AdWords optimizer has learned over the years come into play.

But it’s different from that, and different from display ads. Interest-targeting is a whole new world, as Aladdin would say.

Creative commons image attribution: Money image courtesy of David Beyer; Policia image courtesy of Sari Dennise; Fairuz image courtesy of Emelec.

 Pay Per Fan: What Big Brands Are Paying For Facebook Fans
Brian is author of The Like Economy: How Businesses Make Money With Facebook and Facebook Marketing: Leveraging Facebook's Features For Your Marketing Campaigns, How to Get More Fans on Facebook, and LinkedIn For Business: How Advertisers, Marketers and Salespeople get Leads, Sales and Profits from LinkedInBrian has 12 years experience as a freelance consultant and digital marketing agency director. His hands-on business experience, cutting edge insights, background in improv and stand up comedy culminate in a keynote speaker, and social media trainer who leaves every audience not only entertained, but armed with powerful strategies and tactics.
 Pay Per Fan: What Big Brands Are Paying For Facebook Fans

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22 thoughts on “Pay Per Fan: What Big Brands Are Paying For Facebook Fans

  1. Wait a minute. Presumably, the value of an email subscriber would be calculated by the number of rev generated divided by the total number of subscribers.

    While it's obviously hard to argue that it's easier to get an additional Facebook fan than it is an additional email subscriber, when you say that a Facebook fan is worth 2x an email subscriber because of that virality factor, you're making two gigantic assumptions:

    1) You're assuming that each fan is just as willing to make a purchase via Facebook as via email.

    2) You're assuming that each fan remains just as engaged over time on a Facebook Fan Page as on an email list.

    Regardless of what you think about them, these assumptions must be tested. To be honest, it's pretty ridiculous that you left two key assumptions for marketers to think about out of this article in favor of boiling the decision down to simple dollar values.

  2. Companies should be looking to increase value per fan, not the value of a prospective fan. Customers come in different values, and successful companies must leverage their most valuable customers above anything else.

    Buying fans is like buying paid links in search. The practice is ineffective and will eventually become extinct.

    1. Ya, the art is using FB ads or email to get those people to fan your FB page, and then motivating them to spread the word. All of it has time or ad spend cost. Buying fans is not ineffective, and that's a bad analogy- paid links are bad because Google may penalize you for it (unless you're a huge brand, as some cases have shown)- Facebook has actually set up their system to cost you less if you are trying to buy fans.

  3. the tactics and practices used to get to the cost per fan are valid.. but “cost per fan” is just a step in a sales process. “value per fan” would seem to be a more worthy pursuit

  4. LOL you guys. Like I said, we can't know what the value is yet. This is like the early days of email, when no one knew what if anything you could sell via email. Baby steps.

  5. I guess it all depends on the industry. Some industries facebook ins't really a good venue for bring business (i.e. payday loans, title loans, etc) but some is.

    1. Ya, you can't sell it that way. You have to have a client that's committed to being competitive in every marketing channel, or especially in new ones. Sometimes it's only because the competition is doing it. But if you're an SMB purely focused on ROI with a very tight marketing budget, I'd be cashing in on low hanging search marketing fruit and emailing to a house list composed of previous buyers before going to Facebook marketing.

  6. That is awfully expensive for a Facebook fan. How can they be sure that the fan is an actual person? I mean, somebody can create a thousand FB accounts in a week. And if you happen to hire these companies offering FB fans, look again, you may be looking at a thousand fans from a single person. Stop the crap please. LOL

    1. I think that would actually be more difficult and more expensive than what we're doing right now. And all I can say is, if you think big brands wouldn't catch that, or that anyone could get work with a big brand if that's what they do… then you haven't worked in that part of the advertising world :-)

  7. How would you price it, then? And based on what? On the second point, you are right, but it's the same with TV and radio- you target intelligently to the type of people that do buy your products.

  8. Brian, I too am surprised at the cost. We've done some work with no-profit and affinity groups — where it's easier to target interest — and gotten CPF in the $0.03 range over 10,000 fans.

    I would think by targeting slightly tangential interests you could get a lot more “like”s.

    In our recent case, 10K for less than $300.00 in ad spend yielded several hundred fan interactions per week.

    Oh, yeah, and some sales too ;-)

    1. There are certainly outliers like that, but that's not the average. Lateral interests are the way to go, but they have to be relevant enough to the page and landing tab or you risk FB disapproval. Their approval policies became stricter mid August- was your case study before that, or in the last couple weeks? But ya, mapping interest targets is the most challenging and rewarding area here, with few available tools- it's a strange way of thinking. Psychographics.

  9. Pay per Fan is new to my ears, but I think that it would be also a good marketing strategy for website owners especially now that were in the height of social network media.

  10. Brian great post it all comes down to quality. Consumers that have reach, active and willing to make comments share with friends are clearly more valuable if they are producing sales. There is also an element of I have more fans than you so I must be better. Were working on Social Intelligence here @infinigraph and are finding that having the right fans will increase the Content Consumption Graph around a brand and drive real meaningful traffic. Converting the traffic will always be a hurdle and if they pay 2 bucks and the lifetime value of that person is several 1000’s then that’s a good buy. @chasemcmichael Were addressing this topic at http://bit.ly/cRajeH+ this event head on so should be good .