Valuing social media likes is an enormous challenge. We should be somewhat forgiving of problems in the methods — it is better to be addressing difficult challenges than ignoring them entirely. It is, however, also important to be explicit about we are claiming and not claiming.
Why value a like? Presumably to decide how much to spend on social media. Thus if a valuation methodology can’t inform such decisions it is best practice to make that clear. Syncapse produce a Facebook fan valuation that must be used with extreme caution when determining how much to spend on social media. Syncapse say the Average Fan Value is $174.17. This emphatically does not mean you should spend up to $174.17 on acquiring each Facebook fan.
Some methodological issues aren’t fatal to my mind. Syncapse values well known brands — if your business isn’t similar to those being valued obviously you shouldn’t assume the results will be similar. I do however have a major problem focusing on spending not profit for value. WalMart, unsurprisingly, has a huge value as businesses with lower margins have the value of their Facebook fans more systematically overstated (see Revenue and Valuing Likes for more).
Here I concentrate on the problem of causation. People become Facebook fans because they like a brand. They don’t usually like a brand because they are Facebook fans. Freebies and incentives won’t magically make non-fans act like fans simply by persuading them to click “like”.
To be fair Syncapse never say “spend $174.17 on fan acquisition”. Instead the advice is: “Bechmarking and tracking is critical for daily optimization as well as long-term understanding of cause-and-effect” (Syncapse 2013, page 6). I worry that this advice is unclear and so could encourage the belief that spending up to $174.17 on acquiring each Facebook fan is advisable. I’m sure it is too cynical to think this is deliberate but the Executive Summary does say: “The significant and increasing value of a Facebook brand Fan affirms past social marketing investment and mandates deeper commitment and accountability in the future.” (Syncapse 2103, page 2). Affirms seems like a causal claim which appears unsupported.
The difference in value between a fan and non-fan should never be attributed solely to any social media strategy. Always ask social media consultants to clarify what, if any, causal claim they are making.
Read: Syncapse (2013) The Value of a Facebook Fan 2103: Revisiting Consumer Brand Currency in Social Media, click here