It is a question I hear several times a week: What is the value of a Facebook Fan? I’ve seen answers ranging from $136.38 to $3.60. I can’t blame vendors, agencies and consultants for trying to answer the question — the hunger from clients is so great that anyone promising a simple answer is likely to get attention. The problem is that there is no simple answer to such a complex question. In fact, it may be best if marketers approached this question as if the answer is zero — unless and until the brand does something to create value with Facebook Fans.
There are numerous reasons the question of Facebook fan valuation is problematic:
Assumptions: The methodologies for estimating the value of a Facebook fan rely on a host of assumptions, but every audience, brand and program is unique. For example, the value of a fan for big-ticket items cannot be the same as a fan for lower-consideration items.
All fans are not equal: Every individual has a unique social graph and a unique voice. I might be considered influential on topics of social media and marketing, but my opinion on floor mops might hold little influence within my set of friends and followers. One’s value as an influencer varies from category to category.
Acquisition matters: How a fan is acquired makes a difference. A fan that organically “likes” a brand has more potential value than one that is encouraged to click the “like” button in exchange for a coupon or some Farmville bucks.
Cause and effect: Which came first, the chicken or the egg? Do Facebook fans spend more, or do people who spend more become fans? If the former, then Facebook fans are generating new value, but if the latter is true then Facebook fandom merely reflects existing value rather than creating new value for brands.
The smart marketer will approach the question of value as if the answer is zero — there is no intrinsic value to a Facebook fan. This might sound sacrilegious to social media marketers, but think of it this way: What’s the value of an email subscriber if the company never uses the database for anything? And what’s the value of the same email subscriber if the company has a smart, user-focused strategy for email? It is what companies do with fans that creates value, not merely that a brand has fans.
If you find it concerning to think of Facebook fans as valueless, perhaps you might consider the difference between potential value and realized value. There is an appropriate and interesting corollary in the world of high school physics: If you lift a ball off the ground and hold it stationary, it has no kinetic energy but it does have potential energy; drop the ball, and the potential energy becomes kinetic energy. Facebook fans are like that — all potential energy until you introduce something that creates kinetic energy. As such, the operative question isn’t, “What is the value of a Facebook Fan?” but “How do I make my Facebook fans valuable?”
A Facebook fan has one primary value in the absence of activation by brands, and that is for risk mitigation, but even that value is made greater when brands foster stronger relationships with engaged fans. (Self-promotion alert: Watch for my new Forrester report on the ROI of social media marketing, due out within weeks. Risk mitigation is one perspective discussed and, when combined with other measurement approaches conveyed in the report, should assist marketers to assess the value they create with their social media efforts on Facebook and in other social venues.)
What do you think? Have you found easy ways to value your fans on Facebook? Or is real value only created when you unleash the potential value of fans via programs, interaction, information and other sorts of engagement?