(Speaker Notes are included on the slides, and available separately at http://www.slideshare.net/mediaczar/the-value-of-a-fan-webit-2011-script)

1. Mat Morrison
Starcom MediaVest Group
@mediaczar
THE VALUE OF A FAN

2. …so please bear with me
(Try telling that to your CFO)
1

3. WHAT IS A FAN?

4. Kevin Kelly, “1,000 True Fans”
A True Fan is defined as someone name.
who will purchase anything and They bookmark the eBay page
everything you produce. where your out-of-print editions
They will drive 200 miles to see show up. They come to your
you sing. They will buy the super openings.
deluxe re-issued hi-res box set They have you sign their copies.
of your stuff even though they They buy the t-shirt, and the
have the low-res version. They mug, and the hat. They can't wait
have a Google Alert set for your till you issue your next work. They
are true fans.
http://www.kk.org/thetechnium/archives/2008/03/1000_true_fans.php
3

5. We use brands to tell a story about ourselves.
MUFC Harley Davidson Legend of Zelda
Playboy Apple Nike
Some brands are easier to co-opt than others
4

6. The spectrum of fandom
Mad Love Really Like Fairly Oblivious Actively Dislike
5

7. Superfans: True Fans with body paint & tattoos…
This fan… …creates the space for
these fans to exist
6

8. But I’m only talking about Facebook Fans
Not “True Fans”
Not “Superfans”
But “Facebook Fans”
7

9. Why is Facebook so important?
1000 Facebook growth: users and 100
estimated market cap
800 80
600 60
Facebook users (millions)
400 40
Facebook valuation ($bn)
200 20
0 0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11
Data: Facebook, VentureBeat, SharesPost, SecondMarket
8

10. European Web Usage
85 billion
user
minutes/mo
nth
Data: comScore EMEA August 2011
9

11. European Web Usage
163 billion
page
views/mont
h
Data: comScore EMEA August 2011
10

12. The most-loved brands on Facebook last week
Brand Fans • November 2007;
Coca-Cola 35,017,182 Facebook introduces
Starbucks 25,747,572 Pages
Oreo 23,271,622
Red Bull 22,673,250 • “We’ve built a way for you
Converse All Star 20,883,240 to connect to things other
Converse 20,410,948 than people”
Skittles 19,460,585
Pringles 15,855,303 • Effectively sets strategy
Monster Energy 12,504,459 for Brand Advertisers for
adidas Originals 11,273,177
next 4 years.
11

13. WHAT’S THE VALUE OF A
FAN?

14. I won’t insult your intelligence…
(Of course it does. Now I can go home.)
13

15. The costs are fairly simple
Annual cost of
Annual cost Community
of Recruitment Management
Fans
14

16. Value is more complex
Valuation Method Publisher Date
$3.60 Media Vitrue Apr 2010
Value
$71.84 Incr. Spend Syncapse Jun 2010
$136.38 Agg. Value Syncapse Jun 2010
$2.53 Incr. Sales EventBrite Oct 2010
470% Incr. Spend WFA/Millward Brown/ Mar 2011
Dynamic Logic
$2.10 Incr. Sales Spinback May 2011
15

17. Why Brands like Fans
Sign of my brand’s popularity
Source of insight
Generate increased engagement with brand
Generate increased short-term spend
Generate increased long-term spend
Increased loyalty
Increased advocacy/recommendation
Source: SMG London Client Interviews
16

18. Why Brands like Fans
Earned Media Value
Direct Sales/Sales Promotion
Brand Preference Metrics
17

19. EARNED MEDIA VALUE

20. Vitrue’s Advertising Value Equivalent model
Fans Posts CPM
1,000
1m fans × 2 posts x 30 days = 60m impressions
60m impressions ÷ 1000 × $5 CPM = $300,000
$300,000 × 12 months = $3.6m
$3.6m ÷ 1m fans = $3.60
19

21. And where that model goes wrong:
Daily Active Users
Reach Pages reach between 5% and 20% of their fans
1m fans may mean 50K Daily Active Users
Frequency Smart advertisers cap frequency to avoid burnout
DAUs are exposed multiple times
Result? Hard to value this way – but let’s dig deeper
20

22. How people use a Facebook Page (real client data)
Audience Activity Day Part Week Day Competitor Activity
See Brand Ignore, Like See/Don’t
Like Page Post in or See Future
News Feed Comment Posts
Like source First exposure Responders Ongoing Exposure
0.6% 11%
36%
99%
0.6% attributed to Estimate Comments + Likes DAU
“on Page” Likes Total
DAU 21
Fans

23. Post engagement by hour and day
(most responsive days highlighted)
To May 2011 Since May 2011
60 40
30
Count of Posts by Hour
40
20
20 10
- -
0 6 12 18 0 6 12 18
80 40
60 30
Count of Posts by Day
40 20
20 10
0 0
Mon Thu Sun Mon Thu Sun
Single client data. Your mileage will vary

24. The effect of EdgeRank
åuwd e e e
edges e
EdgeRank
See Brand Ignore, Like See/Don’t
Like Page Post in or See Future
News Feed Comment Posts
Like source First exposure Responders Ongoing Exposure
0.6% 11%
36%
Key take-out: if you don’t use them, you lose them
99%
0.6% attributed to Estimate Comments + Likes DAU
“on Page” Likes Total
DAU 23
Fans

25. Could we earn more value by posting more often?
• 80% of responses within 3 50%
91.4%
hours. 40%
• 90% within 6 hours
30%
• (There’s a small blip after 24
hours: engaged/non-daily users) 20%
• What does this imply about 10%
how often the page could
0%
post?
0 6 12 18 24 30 36 42 48
• How does post frequency Elapsed Hours
impact other KPIs? %age responses cumulative
24

26. Impressions & Reach grow strongly inline
with post frequency
15.5 -1.4
y = 1.108x + 11.63
15
R² = 0.943 -1.6
14.5
y = 0.400x - 2.346
-1.8 R² = 0.530
14
ln(7-day rolling imps)
13.5 -2
ln(reach)
13 -2.2
12.5
-2.4
12
-2.6
11.5
11 -2.8
0 1 2 3 4 0 0.5 1 1.5
ln(7-day rolling posts) ln(posts)
25

27. ..but Unlikes increase, too
• Nearly all Unlikes are a response to 7.5
post activity*
y = 0.459x + 5.523
R² = 0.577
• Post frequency seems to lead to fan 7
attrition:
ln(7-day rolling unsubs)
Increase from 1 to 2 posts = 46% 6.5
increase in Unlikes.
• Recent f8 changes suggest that 6
users may increasingly hide posts
rather than Unlike the page:
5.5
This should have a long term impact
on DAU/Reach – but Post
engagement may increase and 5
Unlikes decrease. 0 1 2 3 4
ln(7-day rolling posts)
26

28. Why direct media value isn’t enough
Incremental media value, not cost
reduction
Fan audiences remain small vs. total
target audience
Impressions not a proxy for subsequent
user behaviour or revenue growth
27

29. INDIRECT MEDIA VALUE

30. Homophily
We like to hang around with people like ourselves…
29

31. Social Proof
…and we unconsciously copy what our friends do
30

32. Indirect Media Value: Homophily & Social Proof
Better targeting (& less wastage)
Paid
Greater impact
Implied/explicit endorsement
Higher response
Earned Spontaneous endorsement
Greater impact
Free marketing = reduced marketing spend
31

33. Indirect Media Value: Homophily & Social Proof
Nielsen BrandLift
Ad Exposure Social Ad Exposure Social Ad + Organic
+30%
+16%
+13%
+10%
+8% +8% +8%
+4%
+2%
Recall Awareness Purchase Intent
http://blog.nielsen.com/nielsenwire/online_mobile/nielsenfacebook-ad-report/
32

34. How to make Media Valuation work for you
Remove focus from Fan growth at any cost
Reach/Frequency
Focus on
Sharing
Engagement
Integration with campaigns
Audience quality
Efficiencies & cost reductions
33

35. DIRECT RESPONSE VALUE

36. Why people “Like” Brand Pages on Facebook
To receive discounts and promotions 40%
To show my support for the company… 37%
To get a "freebie" 36%
To stay informed about the activities… 34%
To get updates on future products 33%
To get updates on upcoming sales 30%
For fun and entertainment 27%
To get access to exclusive content 25%
Someone recommended it to me 22%
To learn more about the company 21%
For education about company topics 13%
To interact (e.g. share ideas, provide… 12%
Data: ExactTarget/CoTweet September 2010
35

37. Example from a major multiple
493 Clicks 3,008 Clicks
£5 Off Code Half Price Sale
Tesco Data is in public domain courtesy of Bit.ly
36

38. Online Retailer
130,000 Clicks
Live Sale
ASOS data is in public domain courtesy of Bit.ly
37

39. How to make DR Valuation work for you
Obsessive Tracking Use [[Google Analytics]] (insert own choice)
Combine with (branded) short links
Track individual channels and posts/tweets
Form & test hypotheses
Learn from other channels
Optimise Earned Media Reach
Metrics Frequency
Sharing
Engagement
Audience quality
Efficiencies & cost reductions
38

40. BRAND METRICS

41. Building loyalty. One fan at a time.
Customer Services does one-to-one
Marketing doesn’t 40

42. Social Interactions appear to impact brand metrics
SMBI: Impact on Brand Metrics
Visit Only Visit + Action
+78% +79% +79% +81% +82%
+74%
+41% +43%
+31% +34% +35%
+28%
SMBI is a Starcom MediaVest Product
41

43. What did we learn from the SMBI study?
Sharing/recommending is the key action we should
seek
Not simply because it reaches others…
..but because it’s a public commitment
…and has high impact on future
preference/behaviour
42

44. How to make Brand Metrics Valuation work for you
Invest in market research to justify activity
Compare across multiple channels
Optimise content and earned media metrics for
sharing
43

45. Don’t have to Like a Page to engage & share…
People want to
promote
themselves, and
they’re prepared
to let Brands
help.
Make the content
about them, and
they’ll share it.
44

46. WHERE DOES THIS LEAVE
US?

47. Why do people become Fans?
To receive discounts and promotions 40%
To show my support for the company to others 37%
To get a "freebie" 36%
To stay informed about the activities of a… 34%
Mostly, they’re “Subscribers”
To get updates on future products33%
or “Permissions”, and not 30%
Tp get updates on upcoming sales “Fans”
For fun and entertainment 27%
To get access to exclusive content 25%
Should this make us think?
Someone recommended it to me22%
To learn more about the company 21% “Truly social”
For education about company topics 13%
To interact (e.g. share ideas, provide…
Channel duplication
12%
Data: ExactTarget/CoTweet September 2010
46

48. What if we unbundled the user journey?
From a consecutive model …to parallel streams
Fan acquisition & MGM
MGM & Sharing
Fan acquisition
Engagement
DR
Engage
DR
Sequential Parallel
• Orthodox model insists • Allow users to interact
Question: Does every brand need to maintain
that users “join with brand on own terms
community” before • Increased
a day-to-day relationship? focus on
receiving benefits Performance Marketing
or Brand Metrics
47

49. Caveat
Facebook changes fast & often
Marketers must be prepared to change minds
and direction
Seemingly established models are only 12 or
24 months old
Smart marketers are asking questions about
value of their fans
48

50. How is it changing?
Owned Space
Your
Your Your Site
Apps Pages
CRM messages
Your
Places
Social Signals
Your
Apps
Targeting Data
Friends
Fans
of Fans
User Data
Targets Your
Traffic eCRM
49

51. It’s less about your brand on Facebook,
more about putting Facebook in your brand comms
• Used in varying ways by
publishers
(HuffPo, Independent, TechCru
nch, Travelocity), retailers
(Amazon, ASOS), and
advertisers
(Aviva, Intel, Heineken Group)
• Recent f8 announcements
make it even more important to
begin integrating Facebook
elements into your site.
50

52. Are we looking at this the right way?
Valuation Approach Publisher Date
$3.60 Media Vitrue Apr 2010
Value
$71.84 Incr. Spend Syncapse Jun 2010
$136.38 Agg. Value Syncapse Jun 2010
$2.53 Incr. Sales EventBrite Oct 2010
470% Incr. Spend WFA/Millward Brown/ Mar 2011
Dynamic Logic
$2.10 Incr. Sales Spinback May 2011
51

53. So for our purposes, is a fan…
Someone who engages with your content?
Someone who promotes your products?
Someone who promotes your content?
Someone who buys your product?
Someone who becomes content for campaign?
52