A consumer who became a fan on a brand's Facebook page via an ad is worth about $1.07. At least that is what the cost of advertising is to the brand to attract said fan, according to an analysis by the Wall Street Journal of new data from Webtrends.
The report has generated much digital ink as it also showed that the rates at which users clicking on Facebook ads designed to generate fans are starting to decline even as they become more expensive.
The number is a let down from earlier studies that have placed a higher value on Facebook fans. Syncapse, for example, last year identified the value of a Facebook fan at $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, developed a step-by-step formula that could 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.
There are several reasons why Facebook advertisers are no longer getting the same bang for their advertising dollars, Justin Kistner, Webtrends’ senior manager of product marketing for social told the Journal: the ads are no longer as effective at attracting users, Facebook users have learned banner blindness or the ads might be too expensive as many are now sold through an auction system that’s getting increasing competition.
Interpreting the Data
Another element to the study, however, gives hope to brands that have already invested significantly in this platform. Namely, social media ads can double or triple their lifespans by incorporating messages about the viewer’s friend(s) engaging with the brands, All Facebook says.