A Facebook Fan is Worth $3.60. Really?

by Scott Bishop on April 13, 2010

How Much Are Facebook Fans Worth?

A Facebook Fan is worth $3.60. Really?

Adweek reported today that a Facebook Fan is worth $3.60 of media value. This formula was conceived by Vitrue, a social media management company.

The dollar amount was concluded by determining that on average, a fan base of 1 million translates into at least $3.6 million in equivalent media over a year. The $3.6 million figure came by working off a $5 CPM (meaning, that a brand’s 1 million fans generate about $300,000 in media value each month).

Because ROI is so important for being able to justify a company diving into social media, too many organizations and studies are trying to quantify how much money an individual “Fan” or “Follower” is.

My math skills may see how the study got us here, but my deductive reasoning skills lead me to different conclusions.

I understand the need to create a monetary value for Fans. If your business is to work with large companies with social media you’ll need to show them that the money is justified. A finite dollar value makes for a much easier sales pitch for allocating marketing dollars from Television and traditional media platforms into the social media bucket.

I get Vitrue’s study and reason to put it out there. It’s easier to sell to more folks in PR, Marketing, and Advertising that are still speaking the language of “impressions”. But what I don’t get is everyone else who buys it. Come on, really? You think that every fan is really worth $3.60 in media value?

I am hoping the day comes soon that we can move the discussion involving social media away from impressions.

Am I just off on a rant today or do you agree? Is this a fair assessment for value of Facebook Fans?

What are your thoughts and if I’m wrong…where?

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Scott S. Bishop is editor for Real Time Marketer and a marketing strategist with a specialty in social media. He is an avid blogger and active across the net. He is @thescottbishop on Twitter

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Tagged as: facebook fans, facebook page, fan base, marketing strategist, media management, media platforms, media statistics, pr marketing, sales pitch

Article by Scott Bishop

Scott Bishop is editor for Real Time Marketer and is the Director of Social for an integrated marketing firm. He is an avid blogger and active across the net. He is @thescottbishop on Twitter

Scott has written 127 awesome articles for Us.

http://www.theoceanagency.com Danny Prager

This was a ridiculous way to calculate the value of each Facebook Fan. Assuming that each fan is worth an equal amount is ridiculous.

People have different motivations for joining FB fan pages. If I'm trying to sell something, the fans that are ready to buy are a lot more valuable than friends who join the page just to support me.

I'm all for PR companies/agencies calculating, even to the individual level, the cost it takes to build up a community of fans. However, attempting to assign an equal dollar amount to every Facebook fan is pretty absurd.

The way we move out of the world of impressions? We do a better job of selling the value of targeting and engagement. Who cares if you have 50,000 Facebook fans, if only 5 buy your product. I'd rather have 50 fans with 40 extremely engaged users who increase my bottom line.

For now, marketers have to be able to generate both impressions and engagement, which is a challenge to say the least. Reports like this really do not help the industry evolve.
sbishop

Couldn't agree more. I think my next post is about getting away from “impressions”. They just don't work in the social space. If you're agreeing that Facebook Fans have a media value of $3.60 each…you're then saying that the girl who runs “Can this pickle get more fans than Nickleback?” is sitting on 5.7 million dollars in media value? I really don't like when studies like this come out and muddy the water. They take away from much more meaningful conversations. Thanks for the comment!
http://twitter.com/elginista Crysta Anderson

Completely agree with you impressions. We don't bother looking at them for the social side. Plus, for social – especially Facebook – there's a very delicate line between drawing attention and annoying people to the point that they unfan or hide your updates. We'd rather have fewer impressions but more true interactions, as Danny says above.
http://twitter.com/maggielmcg maggielmcg

I guess in a world where social media consultants charge tens of thousands of dollars a month, Facebook fans are worth $3.60 each. Hm, wonder if the two have anything to do with each other?
sbishop

They certainly might Maggie. I think it's more of a statement about how folks stuck in older mediums are trying to use the same metrics. Unfortunately, they just don't apply. The honest truth in the debate is that nobody has a sense of universal ROI so the waters are muddy. That allows room for stats like this to actually gain credibility. Thanks for the comment!
sbishop

Great points Crysta. The Facebook feed algorithm has also been completely changed. It's now based on engagement and not post updates. So most fans aren't even seeing updates when they're posted anyway. If Vitrue used impressions as 1 per fan then the numbers are already grossly overstated. Thanks for the comment. Stats like this just muddy the ROI waters which were already a mess.
http://www.BeyondThePedway.com Tim Jahn

Agreed that impressions don't work in the social space much. I'm very intrigued by the new “resonance” idea Twitter will be implementing for it's new ad system. How cool would it be to buy/sell ads based on “resonance” rather than traditional CPM?

That's the first shift I've seen in this space toward a new way of measuring that seems to make more sense for the space.
http://www.BeyondThePedway.com Tim Jahn

Tens of thousands of dollars a month? Chris Brogan makes $22,000 a day. Tens of thousands is beer money for the “professionals”.
sbishop

You speak the truth Tim. To most social media ninja-guru-rock stars that's chump change. Perhaps someday I'll reach the ninja status and maybe even set up my own reality TV on YouTube and UStream where tens of tens of people will watch and hold onto my every last word or worthless advice. Did I mention I'm selling an ebook?
sbishop

I'm very interested in the new Twitter model. It will be refreshing to see a new way to sell ad space without PPC and CPM. I've been waiting for this day and hope that new business models will become the norm rather than the old metrics trying to fit into new mediums. Thanks for the comments.
HelloPresto

Silly, silly, silly.

What about small businesses (for example, a restaurant) that has 400 followers that are local and 100 that are too far away to come for dinner on any given night. You can't put them at the same value. I understand maybe $3.60 being an average, taking into account fans that will spend more making up for fans that spend nothing. But then again, that depends on what the business is.

Say our restaurant with 500 fans, with a value of $3.60 a fan. $1800 a year right? But a fan coming into this hypothetical restaurant will have a meal that costs, on average, $36. To make the fan value, only 50 people have to come in for dinner. That 1 out of 10. This presents a whole new mathematical scenario of RIO and how effective your social media marketing is at getting people to spend, but at any rate, dismisses this $3.60 nonsense.
http://lamiki.com/ Laura Kimball

Going further with Danny's statement that people have different motivations for joining FB fan pages, business and organizations have different motivations for creating, maintaining, and engaging (or lack of) fans via FB fan pages.

I'm an admin for a nonprofit's FB fan page (http://www.facebook.com/jolkona). We're still planning the strategy and figuring out how we want to leverage our fans and the page. Ultimately we want to use it as a portal to keep “fans” and supporters interested in our work and push them back to our website and make a donation (action). Are they worth $3.60 each? Too soon to tell.

Personally, I'm a fan of 78 pages on Facebook. And I'd say 80-90% of them are inactive. How does this study account for fans and pages that don't have any activity? Loss of income, opportunity, and community engagement? — yep!
sbishop

Great scenario with the restaurant, dead on. Like most things regarding social media…the answer is usually “it depends”. Because the experience is so unique, it's almost impossible to qualify every situation as one big piece. Each Page interacts differently and each page has a different agenda and goal.

To try and lump a $$ amount and equation for everyone is silly. I'm glad this has sparked such a conversation because I think we need to look for new metrics and have more people understand the strategies behind them. The world from old media has changed…the metrics need to adapt. Thanks for the comment!
Chris Carpenter

I think there is absolutely validity in trying to understand the value of an impression in social media. These “free” brand impressions are meaningful to the brands that earn them through heir interactioons with fans. That being said, I think the published ROI of a fan is grossly overstated leveraging the methodology Vitrue used to calculate it. There need to be layers of social media measurement that include engagement and impressions, and I, as a brand marketer, think impressions is fine as a KPI in that dashboard.

Obviously, not all fans are created equally. A brand needs a formula that helps them identify the top 10% that shoudl be leveraged as ambassadors, as well as the bottom 10% that somehow need to be convinced to buy more. That measure comes from engagement and individual social graphs. I don't think anyone has cracked that nut yet, but I don't think Vitrue should be faulted for trying to put little context to this space.
sbishop

I agree with the statement that there is validity in understanding impression value. But I keep coming back to engagement. In a social setting, you must have engagement, or at least a call to action. Twitter and Facebook impressions don't mean much without engagement so we are in total agreement there. Trying to crack this code is clearly a difficult task seeing that there isn't anyone who has it completely correct, including myself.

I def like your thinking of identifying the top 10% of folks who are the cheerleaders and can help drive eyeballs. I don't blame Vitrue at all…I should have been more clear about that. They are selling a service and that paper will help them sell more to big brands. I just hope behind closed doors they're having a discussion like the comments here. Thanks for stopping by Chris.
http://angelobeltran.com/blog Angelo Beltran

Are you kidding me!? $3.60!? I'd like to see which KPI-nerd monkey came up with this? But for those who's got buzzing on the OG Protocol with Facebook's Like button then check this post http://angelobeltran.com/blog/tutorials/add-fac…
http://angelobeltran.com/blog Angelo Beltran

Are you kidding me!? $3.60!? I'd like to see which KPI-nerd monkey came up with this? But for those who's got buzzing on the OG Protocol with Facebook's Like button then check this post http://angelobeltran.com/blog/tutorials/add-fac…
sbishop

Haha, yes I'm not really sure how this survey was delivered with a straight face. While a Facebook impression may be somehow equal in a bizzarro-land scenario to traditional media impressions…it's still irrelevant because comparing all Facebook Pages as equal is ludicrous. Thanks for stopping by and for the article.
http://icreatech.com/2010/05/facebook-fans-valued-at-3-60-each-try-90/ TJ

Scott,

Interesting post on the $3.60 value. You are right, there can be SO much more to a social media relationship than just impressions. At it's most basic, Vitrue is setting the value at the cost it would take to buy those same number of impressions. And for all the relationship and opt in reasons of Facebook the 'real' value will vary, and likely be more.

The other math Vitrue completely missed was if you can save $3.60 per year, that has a much higher 'real value'. You would have to invest between $36 and $90 to generate earnings of $3.60 each year. So, the value is much higher. For more on this, we also posted the math and other factors impacting the value here: http://icreatech.com/2010/05/facebook-fans-valu…

Looking forward to more!
http://www.searchengineoptimisation.com Phil

Both of ur calculations are correct, i have read somewhere that GB fans can be boought from 1usd to 1.5usd, is that true and if so, its not good for business