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What’s A Facebook Fan Worth? Definitely Not $3.60!

Last week, Mashable published an article about the value of a Facebook fan.  This article has been shared thousands of times and reposted all over the marketingverse, and I’m terrified by the implications of how may people have read it (more on that later).

Using a CPM model, Vitrue calculated that a Facebook fan is worth $3.60.  Here’s the math:

facebook fan worth What’s A Facebook Fan Worth? Definitely Not $3.60!

from: Mashable

There’s one problem: This is NOT how Facebook works.

This statistic reinforces one of the most common misconceptions about social media.  A misconception near-and-dear to people who think in TRPs and GRPs that is so flawed that it threatens to destabilize your efforts on Facebook and potentially reward bad behavior by community managers.

This statistic puts a value on 1-way communication and totally overlooks the core of a good Facebook campaign.

Engagement

When working in social spaces, engagement is key.  Lets say you have a million fans and you post daily.  By some miracle you get a 100% impression rate, but only 5 likes and 5 comments.  The bulk of those million impressions came from people scrolling through their newsfeed where your post is likely sandwiched between posts by friends, other brands and in the worst case scenario a note that a friend has engaged with your competitor.  Few intelligent media buyers would pay $5 CPM for this kind of cluttered and shared text-only inventory.

In this case, you had 10 meaningful engagements and a boatload of mediocre impressions, especially since you probably got most of your fans through an engagement block that allowed people to become fans without ever visiting your page.  Your 1MM fans are hardly worth $3.60 a piece at a 0.001% engagement rate.  If you were buying banner inventory and had a 0.001% engagement or click-thru rate, you’d move your money elsewhere, but by Vitrue’s logic each of these fans is still worth $3.60

However, when someone comments on your wall or likes a post or uses an app, their activity is shared on their newsfeed.  All of their friends see someone they know, and hopefully trust, engaging with your brand, which is effectively an endorsement.  Most brand activity in social spaces is not instigated by brands.  It’s people asking their peers for advice, and a personal endorsement is the best you can hope for.

So how do you measure Facebook?

Interactions

An interaction is defined as a “like”, comment or post on a discussion thread.  An interaction is much more valuable than a simple impression because it means that not only have you enticed a user into taking action, but you’ve also been exposed to all their friends via their newsfeed.

  1. Interaction Rate (Gross) – The percentage of your total fans who interact with your page, post or app during a given period
  2. Interaction Rate (Net) – The percentage of users who viewed a post or app and interacted, rather than the total fan count
  3. Average Interactions – The average number of interactions per post
  4. Frequency – the number of times each fan interacted with your page during a given time

Conversion

These are the most meaningful metrics.  A conversion is deeper than a like or comment.  It represents a meaningful step taken by your fans and is also shared on their newsfeed.  These conversion metrics apply to apps, but you can apply however makes the most sense to you.

  1. App Conversions – How many people completed an experience
  2. Conversion Rate – The percentage of users who viewed an app and completed the experience
  3. Conversion Reach – The percentage of total fans who completed an experience

Impressions

These are definitely part of a comprehensive report, but are by far the least meaningful metrics.  However, they are a definite step ahead of fan numbers, which may be the most nefarious of all.

  1. Total Impressions – the raw number impressions during a given time for your Facebook page, Wall Posts and Apps
  2. Impressions Per Post – the number of impressions you get for each wall post
  3. Impression Rate – the percentage of users you reach during a given time
  4. Frequency – How often you reach your fans, ie 6 impressions per week
  5. Demographics – The who and where of your reach (age, gender and location)

Those are all relatable media metrics and tell a pretty compelling story about how well you utilizing your fan page.  You can pull actionable insights from them and optimize your efforts, which will over time help you create a more engaging space and develop positive experiences around your brand.  Ultimately, that’s all you can ask for.

However, the non-actionable metric that most people care about most is pure fan numbers and fan growth.  Fan growth has more to do with the quality of your space than anything else.  If your fan growth is slowing, first look at your unsubscribe rate, which will probably surprise you.  If you’re not creating engaging, compelling content, all those valuable impressions that netted you out at $3.60 per fan are probably resulting in fan attrition.

The best way to grow your fan base is provide compelling, engaging content and experiences.  Your fans will do the work for you by providing a personal recommendation for your page and brand to all of their friends every time they engage with you.

Why I’m Scared

Now that Vitrue shouted from the top of the social media mountain that a Facebook fan is worth $3.60, people all over the world are probably scratching their head thinking, “How can I get more Facebook fans so I can tell my boss/client/mom/dentist that my Facebook page is worth $3.6MM?”, instead of, “How can I better engage the fans I have and create meaningful experiences that genuinely make people’s lives more enjoyable and result in people sharing my content, which will in turn increase my fanbase, brand loyalty and sales?”

Next thing you know, your community managers are acting like Wall Street types making short-sighted decisions to blow out their numbers to meet campaign goals… and one day you realize you have a million fans that like you less than when they clicked the become a fan of button because all you do is clutter their newsfeed twice a day.

For all I know, your Facebook fans are worth $3.60 each, but probably it’s got little to do with impressions and much more to do with meaningful interactions with your brand.  My guess is you’ll never know how much they are worth, unless you are running some seriously kick-ass, water-tight eCommerce machine!  All you can really know is that people who regularly engage with your brand and find those engagements pleasant probably like you a whole lot more than the guy who’s sending them two messages a day because he read an article about how much money they are worth.

d51f7eaeef8972f163361c952d41831d 64 What’s A Facebook Fan Worth? Definitely Not $3.60!
Josh Millrod is a digital strategist at Wieden+Kennedy, a full-service, creatively driven advertising agency based in Portland, Oregon with offices in Amsterdam, London, New York, Tokyo, Shanghai and Delhi.  Josh’s work encompasses brand strategy, community management and SEO for a variety of clients.  In his ever dwindling free time, he plays trumpet in a noise band called Grasshopper and runs a small record label called Bloodfist Karate School. The views in this article belong solely to the author and do not represent those of Wieden+Kennedy in any way, shape or form.

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11 thoughts on “What’s A Facebook Fan Worth? Definitely Not $3.60!

  1. I remember reading this Mashable post. I thought to myself, and I can not honestly remember ever subscribing to any advertised services or products endorsed through Facebook or Twitter. That brings me to my next thought, people should be identifiable based on the type of account. Perhaps people there for networking, should be identified with green subtext. and people there for relationships blue etc., so to identify at first glance a type of user. Multifaceted individuals, multi-colored.

  2. I couldn't agree with you more. I was speaking at Sydney University over the weekend and someone brought up that number and the entire room nearly had a heart attack. The idea that the principles of old advertising metrics can be completely transferred into social media is preposterous.

  3. Completely agree Josh- the implications by the Vitrue analysis completely deflate the value of the social media. That said, I do think there is a benefit from valuing consumer 'fandom' but the algorithm Vitrue proposes is woefully incomplete. It certainly can be said that a measurement can be created to better understand (and curate) the emotional way that consumers interact with brands. I would imagine, that such a measurement tool is not intrinsically damning to interactivity…

  4. I also totally agree. I am in the process of setting up a new social media marketing agency, Centrality Media, and it is inaccurate ideas like Vitrue's which create difficulties when trying to get the true social messages across to clients. Statements coming from sites like Mashable are almost taken as gospel these days. Falsehoods like these are a dangerous thing, particularly as 2010 is supposed to be the year of ROI and accountability in the SMM industry.

  5. The Mashable article itself pointed out that engagement is key. Sure, some people are going to take that out of context, but there are always people who take marketing data out of context.