Why Brands Still Need Facebook 'Fans'
Social-media agency SocialCode is the latest firm to try to calculate the value of a Facebook fan as part of a new study. Their verdict: about $10 per "fan," assuming a constant cost-per-click of $1.
Looking at more than 5 million Facebook ads placed by over 50 clients (spanning verticals, but mostly in consumer packaged goods, auto and finance) from between May and September of this year, the study looked at the cost of acquiring new fans, and what it took to get them to perform a desired action.
Unsurprisingly, it found that fans perform desirable actions such as installing an app, voting in a contest and making a purchase at a much higher rate, and it's significantly cheaper to prompt them to do so through advertising than it is to prompt non-fans.
The study looked at seven actions a user might perform on a Facebook fan page: app install, contest submission, contest voting, fan acquisition (which encompasses "liking" a sub-brand for existing fans), program sign-up, purchase and sweepstakes. In the aggregated grand total, it found that the difference between the cost per acquisition -- calculated by dividing the total cost of clicks by the total number of actions -- for fans and non-fans is $9.56.
The total conversion rate for fans, obtained by dividing the total users who performed an action by the total who clicked on an ad, is 19%, compared to 7% for non-fans.
"This research makes the value of a fan obvious, with quality fans converting at more than 500% in some instances," said Laura O' Shaughnessy, CEO of SocialCode, which is owned by the Washington Post Company.
Previous attempts to quantify the value of a Facebook fan have been all over the map, a symptom of wildly divergent marketer goals and metrics for success.
It's significant to note that SocialCode's research doesn't take offline sales for CPG advertisers into account. According to the data, the cost-per-acquisition for a non-fan to purchase is $43.86, compared to $14.88. However, since the data doesn't take offline buying that could have been spurred by Facebook ads into account, those numbers could be too high.