The Value of a Facebook Fan: An Empirical Review

THE VALUE OF A FACEBOOK FAN:
AN EMPIRICAL REVIEW
JUNE 2010
Presented by Syncapse in association with hotspex
SocialTRACT, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.comTHE VALUE OF A FACEBOOK FAN:
AN EMPIRICAL REVIEW
Exectutive SummaryAs Facebook matures as a viable marketing and customer service channel, many organizations are looking to quantify and understand the impact of their overall marketing investment on their business. Quantifying the Return on investment (ROI) of Facebook marketing efforts includes multiple variables and companies often fail to understand and to properly value their efforts in terms of the potential long-term business benefits of the Facebook channel.
Many brands overcomplicate their measurement requirements by tracking dozens of independent variables. Many oversimplify by trying to apply a single number concept of value, and far too many fail to quantify ROI in such a way as to convince a CFO of the merit of increasing or shifting investment towards Facebook marketing.
Syncapse has adopted a unique approach to understanding the financial returns that social members on Facebook provide to a business. Facebook fan ROI can Value is reflected be understood though a knowledge of key performance indicators that have traditionally led to increased sales not simply by the and profit in business and the key differences between Facebook users who have opted to "fan" a brand and those who have not. action of being
a "fan" but rather This study will examine the five leading contributors to Facebook fan value. (1) Product Spending (2) Brand Loyalty, (3) Propensity to Recommend, (4) Brand Affinity the value of the and (5) Earned Media Value. audience.
Introduction: Understanding The Value Of A FanBrand marketers have been struggling to understand the impact of their Facebook marketing efforts contribution to their overall marketing success. Many are attempting to establish the return through a campaign-based analysis rather than by a consideration of long-term business value. Confusion in the industry is widespread and clear principles for Facebook measurement have not been commonly adopted. This has resulted in missed advantage across agencies, brand teams, and executives in fully realizing the potential benefits of Facebook marketing.
Understanding long-term Facebook fan value is a complex undertaking with advanced calculations required across multiple variables. This understanding is rooted in the measureable differences between users who have "fanned" a brand and those who have not. The value is reflected not simply by the action of being a "fan" but rather by the value of the audience and the benefits "fanning" offers the brand.
SocialTRACT, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 02Deriving Fan ValueIdentifying differences in behavior and motivation between fans and non-fans is significant in understanding the true value offered to an organization. Syncapse has identified and isolated these factors and associated them with key factors recognized across the industry as drivers of shareholder value. The factors studied are widely identified as fundamental to both short-term and long-term sales performance and have been tested across multiple organizations to confirm their importance.
The variables studied in this paper for the purpose of understanding Facebook fan value Include:
1. Product Spending:The ability to understand the methodology of increasing product spending.
2. Loyalty:The ability to understand the available means to influence and promote brand loyalty within a target audience.
3. Propensity to Recommend:Probability and propensity for word-of-mouth recommendations leading to sales.
4. Brand Affinity:The impact on brand perception and recall.
5. Media Value:Efficiencies of earned reach and frequency via the Facebook platform.
6. Acquisition Cost:Efficiency of Fans in enticing others to participate and drive organic membership.
SocialTRACT, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 03MethodologyThe quantitative research for this Syncapse undertaking was conducted in conjunction with Hotspex Market Research and consisted of a 25-minute survey using their online panel. Data was collected from over 4,000 panelists acro... [download for more]