According to a recent study released by Vitrue last week, Facebook Fans are valued at $3.60 each in earned media for brands. Not everyone was happy with the study and a few even poked holes in the formula and assumptions made. I also wrote about it here if you’re interested. Despite the formula flaws, I do think it’s a good start to something many marketers are looking for – i.e. what’s the return on investing budget and human capital on a Facebook fan page? In fact, working on the brand side for many years, this question arises daily. And, the reality is that we may never know the true value of a fan because human behavior changes all the time and technology isn’t quite there yet; not to mention the possible privacy implications. I do feel that calculating fan value needs to involve more than just impressions. For now though, I am okay with that.
Here is a quick recap of the formula used to calculate the valuation:
1M impressions x 2 posts x 30 days = 60M impressions
60M impressions / 1000 x $5 CPM = $300,000
$300,000 x 12 months = $3.6M
$3.6M / 1M fans = $3.60
Using this same formula, I did some quick research and found 10 high profile brands and calculated their fan value. You will be surprised and some of the results:
- Coca Cola – $0.96 cents (5.3M fans and posted 16x in the last month)
- Youtube – $1.92 (4.8M fans and posted 32x last month)
- Pringles – $.030 (3.1M fans and posted 5x last month)
- Adidas – $2.40 (2.7M fans and posted 40x in the last month. Also sharing links to their e-commerce store so one would assume that their fan value is much higher)
- Red Bull – $1.14 (2.5M fans and posted 19x in the last month)
- Starbucks – $1.20 (6.8M fans and posted 20x in the last month)
- Pizza Hut – $0.30 (1.2M fans and posted 5x in the last month)
- McDonalds – $0.24 (2.1M fans and posted 4x in the last month
- NBA – $8.22 (2.1M fans and postes 137x in the last month; but this makes sense since it’s the Playoffs. I am sure the value of fans decreases in the off season)
- PUMA – $0.84 (1.5M fans and posted 14x in the last month
Now for those of you who are deficient in math like myself, you will notice that the value of each fan is solely based on the assumed $5 CPM and the frequency of monthly posts. The value doesn’t change if you have 50,000 fans or 6,000,000 fans.
Also, in analyzing each of each of these fan pages, I am most impressed with the NBA. They are doing polls, asking questions, posting videos; wallpaper downloads, linking to their e-commerce store, and their fans are extremely engaged.
If you work for a brand and have a stagnant fan page or if you are thinking about launching one; here are few pointers which might be useful.
Disclosure: Starbucks is an Edelman client.