Social media firms such as Syncapse, Vitru and now Fanscape have come up with formulas to capture the dollar value of a fan or follower's worth.
Syncapse, for example, has identified what it deems to be the value of a Facebook fan - $71.84. According to the study, that is the additional amount people who declare themselves to be a fan of a specific brand will spend compared to non-fans. Vitru came up with its own metrics using Starbucks' 6.5 million fans as a base: they are worth $23.4 million in media annually, or broken down to a per capita number, $3.60. Vitrue came to this conclusion by determining that the ratio of impressions to wall posts was approximately 1:1 (0.96:1 to be exact).
Fanscape, for its part, offers a step-by-step formula that can be tailored to any company's circumstances. It weighs takes such variables as a company's conversion costs, frequency increase, tenure into account when projecting future value. These are interesting studies - and far more highly-detailed than explained here. In truth, though, they are likely way beyond the capabilities of most firms that are just starting to get their arms around social media. Many of these companies have been proceeding on blind faith that a social media presence will pay off on the bottom line. While they are not inclined to want a specific number such as $3.60 - some sort of valuation path would be welcome. MarketingVox spoke with a few social media experts to find out what are the best ways to fill the gap between the complicated formulas of Syncapse et al and the fuzzy math used by the masses.
Referrals and Renewals
Eloqua's, director of Content, Joe Chernov, for one, takes a less formulaic approach to valuing fans. "I have seen that $3.60 figure presented, and I've seen it contradicted. While there might be some validity to it in the b-to-c market, the b-to-b world is very different. In the b-to-b market, fans tend to be existing customers bound by contract. So the goods themselves are much, much more "durable" than in the b-to-c environment."
Chernov sees the value of its fans as being twofold. First, they are essential as referrals for prospects. Buyers have grown increasingly distrustful of vendors over the past decade, and our "fans" provide an antidote to that skepticism by serving as a trustworthy complement to our sales team, he says. Second, in a subscription business such as with SaaS renewals are vital. "And our fans renew at a very high rate. We know the more fans we convert, the better our renewals will be, and therefore the more we are able to grow revenues year over year."
Retweets from High Quality Tweeters
Michael Volpatt with Larkin/Volpatt Communications takes an even broader view. The company has Twitter accounts for its clients, but in the past has struggled with determining which Twitter accounts it should follow and engage. The company jerryrigged a list of followers by using the social media list on We Follow, he explains. "We are now following all of the influential people that Tweet about games for our clients. We don’t put a number on them but we determine how influential they are by the number of followers, their retweets, and so on."
One time the company retweeted something Michael Arrington from TechCrunch wrote on behalf of a client Arkadium Games, he said. "He sent a direct email to the CEO. That one Tweet was a huge value to use because of the direct communication."
Stay tuned for part 2: More Metrics