Facebook Fans are worth $136.38 per year

A new study was just released by Syncapse, a Canadian social media agency, that tries to calculate an annualized dollar value for a Facebook Fan,  and has landed on $136.38 per year.  Gigaom posted a great, quick writeup summarizing how this value was derived, and the folks at Syncapse have posted an easy to download PDF,  so I’m not going to regurgitate on this post what you can read elsewhere.  I think that the agency did a wonderful job performing their research and making their arguments, and because I think that the number number is a bit silly, especially as an annualized value.

There’s No Causality

The report hits the nail on the head by identifying that a Fan base is a self-segmented group of highly valuable customers.  That is absolutely true.  What is also true is that the majority of value accredited to these fans is based on the fact that Facebook Fans surveyed spend over $71/year more than their non-fan counterparts.  Well,  that’s great–  but it doesn’t imply causality. These consumers aren’t necessarily spending more because they are fans.  From a behavioral standpoint, I believe brand evangelists will tend to flock to communities where they can wear the badge of being part of the brand.  I’m a little less sure of the causality going the other direction.

Earned Media Is Still the Best Metric

Assuming this is true (the core fans flock to pages),  it presents a fantastic opportunity for brands to engage a core group of their ambassadors and get brand messaging distributed organically.  A more meaningful metric that Syncapse discusses in their report is the earned media value measurement.  The idea that Facebook Fan (being a brand evangelist) is likely to share content and spread brand messaging seems more valuable to me than stating that a fan spends more than a non-fan.  This word-of-mouth recommendation system is still the number one reason for any brand to exist in social media.  Organic fan and customer growth cannot be accomplished with media placements and Facebook Pages are a proof of concept that supports this idea.

According to Syncapse,  68% of Facebook Fans indicate they are very likely to recommend a product.  This is incredible news for brands that want to spread value through connections with their customer base.  The issue that most brands (and agencies) are suffering under with this new medium is that it does not scale to the levels of purchased media (Chris Brogan has good things to say about this).  My personal take is that,  often in traditional media you can reach scale of impressions while generating very few connections.  Social media (ideally) starts with connections and grows from there.  It’s a different approach, but highly valuable if leveraged efectively.

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37 thoughts on “Facebook Fans are worth $136.38 per year

  1. So, if I’m reading you right, Facebook fan-dom is an indication of one’s status as a brand advocate, and may or may not be an indication of purchase intent. Makes sense to me.

    GDGT takes this non-causation idea one step further: users “like” gadgets even if they have no intention of ever purchasing them. There’s still value in that for everyone. How many Ferarri “advocates” wear the T-shirt, have the poster, use a Ferrari-branded laptop, but will never actually own the car?

    • Great point on “gadget” liking. We experience the same effect with our luxury goods brands (shoes are not gadgets, but play essentially the same role with disposable income). There’s always value to creating an aspirational community, but it becomes extremely difficult to identify purchase intent from activity in social media platforms. I think that’s why trying to crate an average value of a Facebook fan is not a great way of looking at the medium.

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