According to studies from diverse research and analysis firms around the globe, a Facebook Fan is worth $136.38, a Twitter follower is worth $2.00, and a would-be friend on Pinterest is worth, perhaps, $5.00.
Unfortunately, as concise and direct as these figures might seem when used as PowerPoint fodder — supporting details on a small business loan application or as justification in an annual marketing plan — they don't really provide marketers or managers with the information required to make good decisions about investing in social media.
It turns out that no two Fans are really the same. Followers cannot necessarily be expected to comment on, repost, or share a business' content according to some predictable schedule, and not every customer who clicks “Like,” “Recommend,” “Pin,” or “+1” is really engaged — let alone married — to the brand associated with that click.
“Fan value can vary widely by company and product. Factors influencing this variability include product purchase price, purchase frequency, product purchase cycle, product category and brand equity,” wrote the authors of the June 2010 Syncapse study, “The Value of a Facebook Fan: An Empirical Review.”
“The fan base of a brand is unique and comprised of different levels of influencers and customers,” the Syncapse study said. “The average fan value is $136.38, but it can swing to $270.77 in the best case or go down to $0 in the worst.”
Social Media Effectiveness Can Be Measured
Nonetheless, if a business is willing to put some effort into establishing thoughtful goals and collecting and analyzing social media and site metrics, it is possible to discover what individual social media relationships are worth in actual dollars and cents. It is also possible to create a scale of social media contact values ranging from highly valued fans, followers, and friends to mire social media acquaintances.
The Importance of Setting Good Goals
The measurement process necessarily begins with knowing what is to be measured. Often in the case of online retail stores, the goal is to make a sale. So that some ecommerce marketers might be tempted to focus social media measurement and the question of how much a Fan is worth on either immediate sales generated with a single click or in comparison to a purchase from similar non-Fans.
Neither of these approaches, however, really provides the best information possible about a Fan's, a follower's, or a friend's monetary value.
Consider as an example, a study from Internet trend tracking firm comScore and Facebook, the largest social media site, titled, “The Power of Like 2: How Social Marketing Works,” which was released June 12, 2012.
According to the study's authors, “the 2011 holiday season presented an opportunity to further evaluate how social marketing works to drive quantifiable sales results for retailers. The analysis examined the social media presence of four leading retailers — Amazon, Best Buy, Target and Walmart — to determine how their social assets were leveraged to engage, and hopefully influence, customers during the all-important holiday season.”
The research found that Amazon's Facebook Fans, as an example, spent more than twice what the typical non-Fan spent. Best Buy's Facebook Fans were even more valuable relative to non-Fans, spending significantly more during the holiday season. In fact, even friends of fans were likely to spend more than shoppers not engaged on Facebook.
Unfortunately, these findings may not actually say anything about the value of a Facebook Fan.
“This empirical evidence that exposed Fans and Friends of Fans have higher spending behavior — across both online and in-store channels — strongly supports the importance of reaching these buyer segments. They are substantially more valuable consumers in terms of actual purchase behavior whether or not earned media exposure actually influenced their purchase decisions,” the comScore study said, adding that “while this research adds weight to the importance of social media, it also brings an important questions to the forefront — are the elevated spend levels among Fans and Friends of Fans the result of the messaging or a pre-disposition among these segments?”
Put simply, did these customers buy more than other customers because they were Facebook Fans or are they Facebook Fans because they frequently shop with a given retailer.
Changing the goal just slightly from making a sale to making a lifetime of sales, however, leads to what might be a better goal for the business' overall health and better metrics for really determining what a Fan, follower, or friend is worth.