What's the value of a Facebook fan?

In his blog posting titled "Why Each Facebook Fan Is Worth $2,000 to J. Crew," Joe Skorupa lays out a simplistic calculation for assigning a value to social media efforts within Facebook. While I don't believe the metric, at least its a metric that can be applied consistently. Trying to explain the ROI to management to start a program, then benchmarking to show progress isn't straightforward at all. Social media isn't really mature enough to have hard-and-fast rules around valuation (yet).

When I'm asked by retailers how to measure social media efforts, I usually fess-up and say I can't show an ROI but the investment is so low you might was well take a risk. Intuitively, it just seems like a good way to interact with consumers, and since your competition is doing it, you better do it as well.

Vitrue, a social media management company, has calculated a fan as being worth $3.60 per year based on impressions generated in Facebook's news feed. That means a fan base of 1 million translates into at least $3.6 million in equivalent media over a year. Don't believe that number either? Fine, Vitrue now has a tool that let's you adjust the earned media value of a fan.

Jump over to http://evaluator.vitrue.com/ and enter your brand's Facebook URL to get an assessment of the current value and potential value. For fun, I compared Abercrombie & Fitch (1,077,480 fans), Gap (567,772 fans), and Wet Seal (294,479 fans). The image below shows the results assuming the default $5 earned media value for a fan.

Facebook Page Value.JPG

The calculation is more complicated than just counting fans. It also accounts for postings and comments. Its possible for a brand with fewer fans to have a higher value based on frequency and relevancy of posts. The tool gathers data via the Social Graph API for the past 30 days of activity.

I'm not sure this tool assigns the correct value either, but hey, its a great start.

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David Dorf, Sr Director Technology Strategy for Oracle Retail, shares news and ideas about the retail industry with a focus on innovation and emerging technologies.


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