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

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