What Are Facebook Fans Worth to Retailers?

Discussion
May 10, 2013

How much is a Facebook fan worth? It’s pretty high if you’re Walmart with 28.6 million Facebook fans valued at $834.76 each. Not so much for Coca-Cola where each fan is worth $70.16.

That’s the analysis of a new study from social media marketing firm Syncapse Corp. and market research firm Hotspex Inc.

In January and February, the companies asked Facebook fans and non-fan panelists to explore their loyalty and word-of-mouth tendencies around 21 brands. Overall, the study found the average Facebook fan was worth $174.17, up 27.7 percent from $136.38 in 2010. The increase was attributed to a doubling or tripling of fan bases by most brands and significantly advanced "brand interaction" tools across social media.

But fan values varied widely. Besides Walmart, others valued highly include Target, with each fan worth $618.53; Zara, $405.54; Levi’s, $312.01; H&M, $309.57; and Victoria’s Secret, $289.88. The highest was BMW, $1,613.11. Joining Coca Cola on the low-end was Nike, $74.93; Oreo, $75.97; Subway, $127.61, and Disney, $132.88.

The findings were based on six factors:

  1. Product Spending: The difference in spending habits on each brand within the category
  2. Loyalty: The consumer intention to keep purchasing the brand in the future
  3. Page Recommendations: Probability and propensity for word-of-mouth recommendations to lead to future sales
  4. Media Value: Efficiencies of earned reach and frequency via the Facebook platform
  5. Acquisition Cost: Efficiency of fans in enticing others to participate and drive organic membership
  6. Brand Affinity: The perceived personality or emotional draw felt by fans toward their brands. Data for brand affinity was collected using Hotspex’s PersonaSphere, a proprietary tool to measure the emotional drivers of marketing stimuli.

In the report, researchers said brands with less-expensive retail prices or products that have a frequent purchase cycle have smaller fan values. Examples include soft drink brands such as Coca-Cola and Dr. Pepper ($73.58 fan value) as well as confectionaries such as Oreo and Skittles ($104). Categories with higher retail prices, such as BMW, and higher category purchases, such as Walmart and Target, showed higher fan values.

Also, brands with high equity, longevity, and those with "high-emotional connections" in the marketplace (Coca-Cola, Xbox and Nike) also tended to have lower fan values because non-fans also showed a high propensity to purchase and recommend the brands. Conversely, brands with polarized profiles between fans and non-fans (i.e., BlackBerry, Monster Energy Drink, Target) had higher fan values. Fans in these cases tend to be high frequency and loyalists whereas non-fans become "disenchanted consumers, sometimes brand detractors."

Which metrics (purchase intent, recommendation likelihood, acquisition cost, etc.) are most important in determining the value of a brand’s average Facebook fan? What challenges do you see in accurately gauging a brand’s Facebook fan valuation?

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14 Comments on "What Are Facebook Fans Worth to Retailers?"

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Nikki Baird
BrainTrust

Product spending and media value seem like the “hardest” values in that measurement—real, definable benefits. Maybe acquisition costs too. I think what’s most interesting about this analysis, though, is that it suggests other possibilities for how to value Facebook fans. Can they be used to gauge the success of new products? Then there is also a market research benefit. Can they be used to identify emerging trends faster and more reliably than other means? Then there’s that benefit as well.

I’m leery of some of the “softer” measures—brand affinity, for example, seems like a multiplier on value, rather than a direct driver of value. But they are all valuable things to know about customers.

Dan Raftery
BrainTrust

I’m not a fan of this type of rating scheme. Value should be linked to success in achieving strategic goals. Each of the six factors individually make sense as metrics, but aggregated? Not so much.

Ken Lonyai
BrainTrust

It seems really difficult and unlikely that a measurable dollar value can be put on “FB fans” for any brand or product. It’s possible that these measures are useful as a relative index, but that concept may be flawed too.

With so many potential purchase decision factors, many of which are non-quantifiable, how can Syncapse make a dollar determination? The only accurate way that I can envision would be to replicate the world without Facebook and then compare the two results. Short of that, it seems that this report benefits FB more than anyone else.

Cathy Hotka
BrainTrust

It’s a real stretch to imagine that anyone can put a dollar value on Facebook fans, much less down to the cent. A retail executive who brings a Facebook strategy project to the CEO, promising tangible dollar gains per person, is likely to get a quick dismissal from the corner office.

Max Goldberg
BrainTrust

The value of a Facebook fan is difficult to measure. This study is heavy on consumer opinions and light on consumer action. Use of Facebook is part of a coordinated brand marketing effort, not an end in itself. Brands should find ways to activate Facebook fans rather than waste time trying to decipher another study about how to quantify the value of a fan.

David Biernbaum
BrainTrust

This is a very well written report that makes more sense than most when it comes to social media. Brands with less-expensive retail prices with frequent purchase cycles have much smaller fan values and that’s why we advise smaller brands, niche brands, and premium brands, not to pay any attention to what Coke is, or isn’t doing online, because it doesn’t matter. Facebook and Twitter are very important to brands that rely so much on endorsement and word of mouth.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
4 years 6 months ago

I have to agree with Dan Raftery and Cathy Hotka. I am not a real fan of a study like this and not sure how the measurements aggregated can help calculate fan value. It’s a stretch at best.

If I had to answer the question above, I would say Purchase Intent was most important of the 6. At the end of the day, a “Like” is worth $0 if no one ends up purchasing anything.

Joel Rubinson
BrainTrust

I love Max at Syncapse, but this analysis is junk. From the work I did off of Compete data, I found that people who became fans of a brand were ALREADY EIGHT TIMES more likely to be visiting that brand’s website. In other words, consumers like brands they ALREADY, like in real life!

The key question is what is the LIFT in sales if someone becomes a Facebook fan? That is much smaller based on the analysis I did. If anyone wants to see the video of my presentation with Mike Perlman from Compete, given last year at the Wharton Future of ADvertising conference, I’d be happy to send you the link. Just contact me offline.

Warren Thayer
BrainTrust

Forgive me my nonsense, as I also forgive the nonsense of those that think they talk sense.

–Robert Frost

Mike B
Guest
Mike B
4 years 6 months ago

There is no value. People like chain retailers on Facebook to get a discount or post complaints. This reminds me of the study that said Safeway was one of the best at connecting to customers on Facebook. Go over there to http://www.Facebook.com/Safeway and look.at the bushels of customer complaints and how they are mostly unresolved according to many customers that actually follow up.

I think it can cause more harm than good when a retailer’s Facebook is nothing but a giant complaint board. As for Walmart, between this and the new soft PR campaign, if the Kool Aid gets much more high fructose corn syrup added, it’ll be total poison.

Jonathan Marek
Guest

This methodology makes good headlines, but is absolutely useless for business analysis. Think about it this way: how much were these same customers worth before Facebook existed? I’d venture to guess almost the same amount. Plus, would you rather have a higher or lower number? If a brand has 100 fans but has 100% market share with them, then this metric will be quite high—but there is nothing left to sell to these customers. So at least in that case, I’d rather have a low number, as that means I have some Facebook reach with customers I can actually influence to spend more.

Bottom line: marketers and retailers need to focus less on these bogus metrics and more on understanding the incremental ROI on online (and offline) investments.

Lee Kent
BrainTrust

I know the marketing folks need to assess ROI on any campaign but I’m hard pressed to put a dollar value on Facebook fans. Yes, they are plenty valuable for lot’s of other reasons. Maybe we can come up with some kind of ‘value quotient’ to assess them by. What d’ya think?

Craig Sundstrom
Guest

Having read through the comments offered, I would say the biggest challenge isn’t in measuring, but in getting people to believe your results—whatever they may be—since so many think the value of a Facebook fan is precisely zero. And I can’t say that I dispute that notion.

From a little more analytical perspective, these types of studies are always going to have trouble separating cause and effect: do strong brands cause Facebook fans, or do Facebook fans cause strong brands?

James Tenser
BrainTrust

Show me the BMW owner whose purchase decision was determined by something seen on the Facebook fan page and I’ll endorse this study.

For that matter, show me a Coke drinker who consults FB before guzzling.

The cited per-fan figures seem to align generally with average annual spending levels. So, in fact, they are a reflection of reality for big brands. Just don’t call it causality.

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