Social media ROI: Value of a fan

Some time ago, the social media agency Vitrue; an American agency that develops social media applications for brands, till then quite unknown to me; came up with a shocking statement and a formula that calculates the value of a fan. We had some great theories that Social Media has a positive ROI and blablabla like in the Socialnomics video, but nobody ever stick a genuine mathematical formula on it that can compete with traditional media agencies’ GRP calculations, … and that is still more understandable to the common human being. This value calculation kept the blogosphere and twittersphere busy for quite some time and even if there are people that think the whole thing is rubbish, everyone has to admit that the approach is quite groundbreaking. Here is the formula:

1M impressions x 2 posts x 30 days = 60M impressions
60M impressions / 1000 x $5 CPM = $300,000
$300,000 x 12 months = $3.6M
$3.6M / 1M fans = $3.60

This formula doesn’t take into account the fact that Facebook allows you to hide profile updates from a person or a brand. Something that is really interesting to block the hideous Farmville updates from all your friends that don’t have anything else to do than feed the cows and to irrigate their fields. But it also allows you to stop brands from spamming you. I don’t think Facebook gives you the opportunity to identify how many people have blocked you this way.

But still, what interesting for me are not the figures, because those can be false or true, but don’t really matter to me at this stage. What’s interesting is the fact that you need to take into consideration that this fan base (or should we say “likers” now) every advertiser is so keen on, has a real media value, they are “activatable”, they have accepted that you Mr. or Ms. Brand send them some relevant information about your brand, products, … those messages can be either commercial or rather informational or entertaining, depending on what you sold to them in the first place, which is quite an important factor to keep the fans. You can now freely engage with them knowing that they are already in a place you own and you shouldn’t spend another XX$ to go and find them. Isn’t this the best opt-in you can have?

If we speak in terms of social media KPIs, the number of fans all of a sudden gains in importance rather than to take into account the engagement KPIs, where we would state that only engaged fans have any value …

I’m quite interested in your opinion on the subject … So feel free!

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2 thoughts on “Social media ROI: Value of a fan

  1. Tweets that mention Social media ROI: Value of a fan « Talk Digital -- Topsy.com on said:

    […] This post was mentioned on Twitter by Ludovic Freitas, stijnjacobs and Talk Digital, Talk Digital. Talk Digital said: Social media ROI: Value of a fan : http://wp.me/pwR74-eo […]

  2. Facebook microsite disease: back to the future in digital marketing « Talk Digital on said:

    […] About Social media ROI: Value of a fan […]

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