Facebook fans are valuable to brands

15 April 2010

PALO ALTO: Every fan that signs up to follow a brand on Facebook generates word-of-mouth equivalent to a media spend of $3.60 (€2.65; £3.17) a year, according to a new study.

Vitrue, the consultancy, analysed the behaviour of the 41 million netizens that had registered as fans of its clients on the social network.

More specifically, its calculations aimed to establish the number of extra impressions that were delivered on behalf of these companies by valuing the relevant feedback posted by this audience.

Overall, it found that a brand with 1 million fans would have to spend $3.6m via other forms of media a year to achieve the same number of commercial impacts as delivered by its Facebook fan base.

This estimate was based on a CPM (cost per thousand impressions) of $5, and assessed the comments made on the news feeds of individual users of the site.

On these terms, Starbucks, the coffee house chain, would enjoy free coverage to a value of $23.4m from its 6.5 million devotees on Facebook over the course of a year.

Coca-Cola, the soft drinks giant, would similarly benefit from exposure that would be worth $19.4m in more traditional channels.

As these brands have more supporters on Facebook, they are more likely to feature in discussions, and thus could gain even higher returns than was assumed in Vitrue's study.

"It's important to understand that once you build that [Facebook] fan base, you want to make sure you're leveraging it," Michael Strutton, chief product officer at Vitrue, said.

"It helps [marketers] justify the spend they're making, especially in acquiring a fan base and engaging that fan base."

Advertisers' attempts to use Facebook to maintain and strengthen relationships with their existing customers were not considered, but could offer similarly impressive returns, he added.

"When you start to [add] engagement value, it goes higher. We were trying to get an easy-to-understand valuation terminology," said Strutton.

Data sourced from AdWeek; additional content by Warc staff