How Much Is a Facebook Fan Really Worth?

48 Comments

Lots of companies — more every day, it seems — want to have Facebook “fan” pages, where customers or would-be customers can connect with them and become part of their online community. But what are those fans actually worth to a company? Everyone has their own views on that question, but now a social media measurement firm called Syncapse has come up with an actual dollar value in a report released today (PDF link). The answer? An average fan is apparently worth about $136.38, although for some very successful social marketers the value can be dramatically higher, while for some less successful companies it can be virtually zero.

Syncapse came up with the figure by asking 4,000 fans of 20 of the top brands on Facebook — including Nokia (s nok), BlackBerry (s rimm), Victoria’s Secret, Adidas, Nike (s nke), Coca-Cola (s ko), Starbucks (s sbux) and McDonald’s (s mcd) — why they were fans of those companies or brands, and about their past and future purchasing behavior. Syncapse then tried to estimate what the value of each fan’s spending would be to a company, as well as the value of continuing to have that fan as a customer over time.

The key findings of the report are likely to come as music to the ears of advertisers that have been pursuing a Facebook-based social media strategy. According to the survey:

  • On average, fans spend an extra $71.84 they would not otherwise spend on products they describe themselves as fans of, compared to those who are not fans.
  • Fans are 28 percent more likely than non-fans to continue using a specific brand.
  • Fans are 41 percent more likely than non-fans to recommend a product they are a fan of to their friends.

That probably helps to explain why, according to recent statement by the company, the number of advertisers working with Facebook has doubled in the past year. But Syncapse also said that its results showed how the value of a fan can vary widely:

An average fan may participate with a brand ten times a year and will make one recommendation. But an active fan may participate thirty times and make ten recommendations. The impact this has on fan value is quite dramatic. In the case of Coca- Cola, the best case for fan value reaches $316.78 but is $137.84 for an average fan. In the worse case scenario, a fan is worth $0.

As the chart below shows, fans of McDonald’s spent, on average, more than $300 on the company’s products, while non-fans spent just half that amount. Fans of Starbucks also spent more than twice as much as non-fans.

Some might argue that these conclusions aren’t exactly rocket science — after all, one would assume that if someone goes to the trouble of becoming a fan of a product on Facebook, that person would be enough of a supporter of the brand that they would buy it more often, recommend it to their friends and so on. And Syncapse’s results may also not be 100 percent reliable if extended to the entire universe of 500 million Facebook users, since a few thousand users is a relatively small sample. But it’s still interesting to see someone try to put an actual dollar figure on the value of a Facebook friend.

Related content from GigaOM Pro (sub req’d): Social Advertising Models Go Back to the Future

Post and thumbnail photos courtesy of Flickr user Ali Brohi

48 Comments

be

Dear readers: Please read the second page of the study in huge red 28-pt font “Value is reflected not simply by the action of being a ‘fan’, but rather the value of the audience.”

Perrin

I find the study’s methodology a bit confusing. The methodology says, “The questionnaire required panelists to self-identify those consumer companies with whom they could be identified as a fan.” Did they specifically ask, “Which brands are you a ‘fan’ of on Facebook?” or where they just asking “Which brands are you a fan of in general” – in other words, “Which brands do you like (online or off-line).” If respondents were asked that latter question, it doesn’t seem like Facebook has anything to do with this study.

Richard Meyer

The digitization of work (measurement) makes typical MBA’s very happy. It’s the sort of thing that look good in spreadsheets and let people say “see I told you so”. The challenge is while you’re doing this people are using social media to express emotions about brands which can’t be quantified. To suggest that a Facebook fan is worth a certain amount of dollars shows an ignorance of social media and new marketing that makes one wonder if “they get it”.

Michael

I think a better study would be to show how fans influence non-fans or how fan site updates affect future purchases or non-fans to become fans, etc.

Showing that fans tend to purchase more than non-fans is kind of ‘no duh’ kind of study if you ask me.

Ralph

I agree with some of these comments. Fanpages seem to be a better branding tool. I’m not yet convinced of how much income I’ve made from the fans but I am impressed with the speed by which my brand has been able to spread. If Facebook required us to pay for our pages I’m not sure that I would do it.

Rick Zwetsch

All these stats and numbers and $ signs are great. I would argue it will vary for every company, every product, every organization out there.

There are a trillion reasons why people become fans of FB sites. Until you ASK each and every one of them…until you ENGAGE each and every one of them…until they’re part of your TRIBE…until they’re TELLING everyone they know that’s just like them about your /company/organization…until you ask them how they FOUND you…until you ask them why they CARE about you…until you ask them HOW LONG they’ve been a fan…until you ask them how YOU CAN DO MORE FOR THEM…until you ask them what would it take to BUY MORE FROM YOU…until you track all this, replicate what WORKS and flush what doesn’t…I would argue you don’t know much and…you sure don’t know what a FB fan is worth.

That’s my $0.03. That’s also inflation, please spend it wisely! ;-)

Thanks for listening!

niket

Agree with Avery – definitely some issues regarding correlation here.

However, one could argue that the advertising potential for future products/marketing from a company has value for the customer life cycle. Not sure that I could come up with a number, but do think there is a strong value in fans. Especially in how fan information can be leverage to attract other fans (say their friends).

Mathew Ingram

I agree, Niket — it is the network effects that can make fan pages so powerful. Exactly how powerful is a difficult thing to measure, however.

henrylos8

I’d say they are worth a lot, and even more than the $136. I’m trying to build up my fan page currently and have about 32 fans. Quite poor.

Sébastien Simard

I reckon that the value of a customer is directly related to the strategy of the company. Plus, if you build a brand like Victoria’s Secret or Nike, which a lot of enthusiasts are always wanting for new nice products to come, and that the fans only worth between 200 and 230$ each for them, they probably have a value close to 0 for a company that have no strategy or any plus-value…

Social Medias sure suck for marketer who have nothing to offer… and are only spamming on them. The ability to make great products worth more than being good in social media, at least people care about that for real.

What is the adress of the Apple’s Fan Page or Twitter account?

Ron Vervoort

facebook fans have a personal reason why they became a fan in the first place. That could be anything. There could be a real value, once more information about the fan is available. That’s exactly where privacy becomes an issue.

Daniel Shlifer

My experience is similar to those who commented earlier. I am very involved with my site’s SEO, blog and social media development and although my social mead conversions are the highest, facebook is not a force within those numbers.

I get more productivity from Twitter and linkedin.

Griffin Boyce

I think this is flawed premise. If I fan Diet Coke, am I suddenly going to start using it? No, rather I used it before, liked it, and fanned it. If I fan a website, game, or service, is it because I’m considering using it, or because I am already using it. More likely that I am the latter, or that I simply like the concept.

Meanwhile, having 10’000 FB fans can increase your company/product’s perceived market penetration. Which definitely has value. I think if you are promoting how many FB fans you have on your sales site, it can work for or against you. But I would nowhere near put the value for each fan at $100.

For most websites, the value is less than a dollar. For huge, well-monetized sites the value is between $0.50 and $20 per fan. Most fans don’t turn into regular visitors and most regular visitors don’t turn into revenue.

Mathew Ingram

I think you and other commenters are right that there is a lot of overlap between fans who were already consumers of a product and new purchases related to that after they become a fan on Facebook. That is mentioned in the piece, and in the study. I don’t think Syncapse would argue that users go from not being fans to buying large quantities of a product simply by joining a Facebook page — obviously the two are related. Thanks for the comment.

jimmydog

So, we agree there’s a causation issue. Unfortunately this # will get some additional airplay, but the faulty premise won’t be examined.

What would have been nice is if the initial story/press release differentiated between ‘gross’ spend and ‘net’ additional spend that might be attributed to FB. Then listed what else might account for it. I, for one, put no credence in this whatsoever. I am an etailer, active on FB with over 1000 fans, and I am convinced that there’s some good that can come from this type of interaction, but there’s no easy money to be made, and LOTS of time and effort to be wasted looking for it.

SoHeresTheProblem

This study attributes 100% of the fan’s value to facebook. I GUARANTEE that facebook did not generate these customers. Additionally the facebook page for these brands probably has little to no impact on purchase behavior. So your simply surving a group of people WHO ALREADY BUY to find out that THEY WILL BUY MORE. Does anyone actually think about this?

Jeff Pester

I am HIGHLY suspicious of these findings/calculations, and I agree with the earlier comments that there are some significant correlation/causation logic problems in both the collection and interpretation of the survey results.

All due respect, let’s consider the source of this survey. The mission of the firm is “to help companies build, manage and measure customer relationships through the use of cutting-edge social media technology”.

I mean, what benefit could they possibly get from calculating inflated fan valuations and then having tech blogs rebroadcast the manufactured news across the internet? :)

Mathew Ingram

You are right that the study comes from a company that is interested in helping customers take advantage of social media, Jeff — but it is based on interviews with users. I did mention the correlation/causation issue as well. Thanks for the comment.

Siva

I try to add facebook fan bcoz most of visitor come to my blog. but gr8, many Big companies have realized people sparing time

Avery

Either this is the most effective form of advertising ever produced, or there’s a heavy correlation-causation problem (e.g. people only fan a product if they already spend huge amounts of money on it).

Rags Srinivasan

@Avery Very good point. I think it is more of the latter. unless they show a longitudinal study that shows spend goes up after they became fan (even then we need to be wary of lurking variables that drive both)
-rags

Jeff Molander

Even better, Avery… they just fan it for the hell of it. Why not. It’s just a click. Maybe they’ll get a coupon or somethin’.

eas

I don’t know what they are worth to big brands, but for my wife’s blog, they don’t seem to be worth much, at least not the ones obtained via targeted facebook advertising.

Increacing the number of fans 8x has, maybe, doubled the number of people who visit when she posts a link to a new blog post to facebook. I’d guess it is about 1/10th the rate of people responding to opt-in email updates. And honestly, the facebook updates are a lot more inviting than the plain text emails that get sent out.

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