Valuing Social Media
Valuing social media likes is an enormous challenge. We should be somewhat forgiving of problems in the methods. It is surely 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. This is a problem with Value of a Like measures.
Why Determine The Value Of A Like?
Few are clear on what the value of a like metric is for. 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.
To my mind some methodological issues with valuations of likes aren’t fatal. 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).
The Problem Of Causation And Value Of A Like
Here I concentrate on the problem of causation. People become Facebook fans because they like a brand. People do not usually like a brand because they are fans of its social media. 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: “Benchmarking 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. Yet, 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.
Fans And Non-Fans Differ
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