How much is that Facebook Fan worth anyway?

Vitrue a social media marketing platform determined that the average value of a Facebook ‘fan’ is about $3.60 when it comes to a Media Equivalent Value (MEV) per year. This calculation is based on the brand posting to their Facebook Fan Page twice a day and that they have a million fans which equates to 60 million impressions per month at a $5 CPM (cost per thousand impressions), so 60 million impressions. This would result in $300,000 a month in Media Equivalent Value or what the brand might have to spend elsewhere to get the same eyeballs. So then the math goes $300,000 month, which is $3.6M a year, meaning with 1M fans, the average value is $3.60 per fan.

While I can understand the approach to equating it to media dollars that you would have to spend to get that same reach only .2% of Fans ever return to a Fan page and in some cases it’s more like .02% (hat tip to BrandGlue) So people on Facebook who “like” your Fan page basically never go back to it.

The true value of a Facebook fan is Zero until you can monetize them. And that’s the era I think we have all just entered. For the last 2 years we have been building our network of people that “like” the brand by creating content and engaging with them. I certainly hope you have been doing this – and its not an insignificant feat to create all this content. This is the #1 stumbling block I hear from marketers over and over again.

So the question I hear from many marketers now is “ok I have done that – now how do I monetize them?”

In reality there are only 2 ways to do this and I invite your comments on this approach – you either sell them something (hello f-commerce which is coming to a Facebook fan page near you soon) or you activate them in some other way like an “advocate” network meaning if they cant buy from you directly perhaps they could refer you a new customer which might even be better than buying something from you if you think of the Lifetime Value of a Customer (LTV).

Bottom line is I think we are exiting a phase of experimentation (what I like to call Social Science Experiments) and moving into a phase of monetization. How are you monetizing your fans?

13 comments to How much is that Facebook Fan worth anyway?

  • Paul – While I agree that the actual value of a Facebook fan is virtually zero, I’m going to push back on your premise that those one-million fans are worthless, unless they’re monetized.

    Those fans – at least those who return – are brand advocates. They add value to your Facebook presence by attracting friends who may not have paid attention to you without their connection.

    Unless your product is completely worthless, some of those people are going to buy it because of the franchise you’ve created in their minds through your Facebook content.

    I see Social Network marketing as similar to the legendary Coca-Cola executive who reportedly wanted the brand’s trademark red color everywhere, saying – “If it moves, sponsor it. If it doesn’t move, paint it red.”

  • @Jim – ok fair point – even at .02% of fans returning to your page is still something when you have a million fans (or more like coke) but on smaller sites that have 1000 or 10000 fans that number gets pretty small

    But if we apply your legendary coke exec’s saying then there must be some value there – thanks for commenting Jim!

  • I’m with you on this one Paul. As I note in my own post on this: Like is a button. Commitment is a purchase. And brands the world over should be seeking to be intensely bought rather than just freely shared. http://markdisomma.wordpress.com/2011/07/25/volume-is-nothing-like-intensity/

  • I like that Mark – Like is a button / Commitment is a purchase! thanks for commenting!

  • Sanjeev

    Hi Paul, great article and I tend to agree with everything that you have to say here. Especially the f-commerce bit which like you rightly said is around the corner.
    My hypothesis is that small marketeers are soon going to build their websites on Facebook itself and will not need to have a separate website of their own. And with f-commerce becoming a reality this will happen sooner than we can blink. So commerce, engagement, info sharing all can happen on the same platform and the targeting will only help them optimize their budgets.

  • I don’t know why brands focus so much energy on Facebook. FB is a tool that should be used to funnel traffic back to your website where you can monetize that traffic in someway (doesn’t need to be a sale).

    I would argue that it’s nearly impossible to monetize a “fan” on Facebook. If you can get them to your website where you can grab their email in exchange for a free something, you know have something to work with, and something you own.

    I see so many brands doing it backwards – “come see us on Facebook” in commercials and ads instead of putting their “dotcom” there. Why send traffic to a website you don’t own or control?

    My opinion is Facebook Fans/Likes are worthless until you get them to your website/store.

  • @Sanjeev – I said the same thing on my blog a few years back (march 2009) and I got some very interesting comments

    check it out here — http://pauldunay.com/with-facebook-pages-who-needs-website/

  • Phil – like I said – “The true value of a Facebook fan is Zero until you can monetize them”

  • An interesting take on Facebook fans… will Twitter followers be next, a cent per day per follower for example their only real value regardless of conversations they start, ideas they inspire or business they bring to your physical doorstep?

  • @Josh

    I sense there will be more ways to “activate” a twitter fan in the future – just not sure we are there yet

    thanks for commenting

  • […] How much is that Facebook Fan worth anyway? BUZZ MARKETING FOR TECHNOLOGY | WEDNESDAY, JULY 20, 2011 […]

  • This post hits close to home as the preliminary results of my Facebook marketing are coming back at about $3 to acquire a new fan, but to calculate what that fan is worth is obviously quite difficult. My friends organic herb business is averaging about 25 cents per new fan by comparison. I was shocked by how low the return rate of new fans was in your numbers. Makes me wonder if Facebook marketing will fall on its face once businesses figure out the ROI is very low….

  • @J – good questions J – with all the big brands piling into FB right now to do advertising – I dont think it will fail – they are very interested in getting a return so once that happens I am sure it will trickle down

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