Saturday, July 24

# How much is your fan worth?

Mashable recently published an article highlighting research done by a social media management firm called Virtue, which looked at the value of a Facebook fan. According to its research, a fan was worth US\$3.60 per year. Bear with me as I get mathematical.

This figure was based the following formula: wall posts x impressions x \$5 CPM. And plugging in the average numbers from the 45 million fans they manage for their clients gave the following figure: 1 million impressions x two wall posts x 30 days = 60 million impressions a month. 60 million impressions / 1000 x \$5 CPM = \$300,000 per month. \$300,000 p/m x 12 = US\$3.6 million per year per million fans.

Great! How tidy. And how easy that has made it to now explain the value of your Facebook fan page to the chief executive. “We have 1500 fans, which is worth US\$5400 in advertising per year. Not bad huh boss.” Unfortunately, I don’t know if it is that simple. Surely some fans are worth more than others? For example, I would rather have Bill Murray as a fan of my Facebook page than Pauline Hanson. And even the kids at South Park know that a “chick friend is worth almost three times as much as a dude friend.”
There has been debate in New Zealand lately about whether or not PR should still be measured with Advertising Equivalent Value (AVE), a measurement tool that has been heavily criticised overseas. The measurement of social media and its value as an advertising channel is something that also needs debate.
Is CPM relevant when you are talking about word of mouth endorsement from peers? And how do things change if celebrities get involved, or even just the cool kid?
Perhaps an AVE kind of measurement involving a multiplier is required. It is opinion-based advertising after all, closer to an editorial than it is to anything else.
Maybe Facebook itself will provide the answer as they improve on their insights page? Maybe they will end up dictating to us how much our fans are worth? Nothing would surprise me from the people who control the world’s 3rd largest population these days. Oh, and when you have 20 spare minutes, watch this fantastic South Park episode. The guys have once again hit the nail on the head with their summation of Facebook.