Tuesday, August 3, 2010

The Value of a Facebook Fan

From Media Post Publications by Stephen DiMarco , Tuesday, August 3, 2010

The key paragraph is this one:
But while all of the elements of a great story are there for the shaping, advertisers and their agencies are still unsure how to capitalize on the Facebook opportunity. Add to this some negative associations with the Facebook brand from last week's ASCI E-Business Report, and it's no wonder that marketers are filling the void with a simple, yet frustratingly narrow question for Facebook:  "What is the value of a Facebook Fan?"  Taken to its illogical extreme, Facebook will be reduced to explaining why the Starbucks fan page has achieved a value of $1.01 per fan, while the Starbucks Frappuccino fans are worth $2.65 (to make this more confusing, the fan pages have 8.4 and 2.1 million fans respectively).
This is too bad for Facebook, because it now faces a storytelling and a measurement problem. Is this an immediate issue for Facebook? Perhaps not. But left unchecked, smart CMOs are going to begin saying (as one of our clients recently did), "Great, we have 500,000 Facebook fans.  So what?  Now what?"
And who can blame them?

And this is the answer:

By reshaping strategies for integrating with Facebook, both brands and Facebook can frame the big question differently.  Rather than quantifying the value of a fan page, we can ask a new and more appropriate question, "How can marketers harness Facebook to create new user experiences that increase the value of their brand?" 
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A few weeks back, fellow Metrics Insider Josh Chasin delivered a well-considered treatise  about the importance of effective storytelling for propelling online media to new heights. I read his post with great interest since I had just submitted my own piece which called for new measurement techniques, metrics and insights as the missing link to achieve that very same objective.

At first, these two views might be seen as opposite ends of the spectrum. You can picture the two camps debating which is the right path forward:  Great Stories, unencumbered by the baggage that data brings, versus Fact-based Analyses, containing all of the excitement of a balance sheet (apologies, CFOs and accountants). But the simple truth is that we need both, combining great data and compelling narratives that better connect online media to marketers' branding and sales goals. Selling media without data is like telling a joke without a punch line, and we can't afford to leave our audiences hanging.

And after spending a few days judging submissions for the IAB MIXX awards last week, it struck me that no other publisher faces this challenge more right now than Facebook. It's not surprising that nearly every campaign I evaluated had some level of integration with Facebook. Facebook presents marketers with a rare ability to seed and/or extend their campaigns, wrapping precise targeting, community engagement and massive reach all up in one truly unique platform.  To put it another way, Facebook is so top of mind among marketers right now that planners who don't integrate Facebook into their campaign strategies are taking professional risks.

But while all of the elements of a great story are there for the shaping, advertisers and their agencies are still unsure how to capitalize on the Facebook opportunity. Add to this some negative associations with the Facebook brand from last week's ASCI E-Business Report, and it's no wonder that marketers are filling the void with a simple, yet frustratingly narrow question for Facebook:  "What is the value of a Facebook Fan?"  Taken to its illogical extreme, Facebook will be reduced to explaining why the Starbucks fan page has achieved a value of $1.01 per fan, while the Starbucks Frappuccino fans are worth $2.65 (to make this more confusing, the fan pages have 8.4 and 2.1 million fans respectively).
This is too bad for Facebook, because it now faces a storytelling and a measurement problem. Is this an immediate issue for Facebook? Perhaps not. But left unchecked, smart CMOs are going to begin saying (as one of our clients recently did), "Great, we have 500,000 Facebook fans.  So what?  Now what?"
And who can blame them?

The good news is that there are compelling metrics that Facebook can share with the brands looking to leverage its platform. Based on analysis Compete completed across a wide range of marketers and their Facebook fan pages, there are standard ways for integrating brands and campaigns with Facebook, and there are standard measures to evaluate their success.

One finding from our study highlights that the sheer number of fans is not a primary measure of success (obvious to some perhaps, but based on the MIXX awards submissions I think a few boats will be rocked).  The more relevant metrics focus on the broader fan experience, namely peoples' impetus to become fans, and what they do/think/feel as a result.  This larger list of metrics includes: visitors per month to the fan page; penetration of fans to visitors; time spent within the fan page; fan return rate; navigation within Facebook and the fan page; overlap with off-site brand/product content; impact on purchase intent; and impact on brand metrics. Marketers can track these metrics over time and benchmark them across rivals and categories.

These metrics are important because they reshape the way marketers think about how to integrate with Facebook. Based on the fan pages we studied, we saw widely varying strategies for landing page content, the volume/frequency of posts from brands, connections/interactions with content and commerce on the brands "owned" site, use of promotions, degree of community/sharing and advertising/marketing tactics to build visitors and fan bases. As you can imagine, each approach netted different results and ultimately "value" for the brand.

By reshaping strategies for integrating with Facebook, both brands and Facebook can frame the big question differently.  Rather than quantifying the value of a fan page, we can ask a new and more appropriate question, "How can marketers harness Facebook to create new user experiences that increase the value of their brand?" 

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