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THE VALUE OF A FACEBOOK FAN:
       AN EMPIRICAL REVIEW
       JUNE 2010



       Presented by Syncapse in association with hotspex




SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com
THE VALUE OF A FACEBOOK FAN:
AN EMPIRICAL REVIEW
Executive Summary
As Facebook matures as a viable marketing and customer service channel, many
organizations are looking to quantify and understand the impact of their overall marketing
investment on their business. Quantifying the Return on investment (ROI) of Facebook
marketing efforts includes multiple variables and companies often fail to understand and
to properly value their efforts in terms of the potential long-term business benefits of the
Facebook channel.


Many brands overcomplicate their measurement requirements by tracking dozens of
independent variables. Many oversimplify by trying to apply a single number concept of
value, and far too many fail to quantify ROI in such a way as to convince a CFO of the merit
of increasing or shifting investment towards Facebook marketing.


Syncapse has adopted a unique approach to
understanding the financial returns that social members on
Facebook provide to a business. Facebook fan ROI can
                                                                              Value is reflected
be understood though a knowledge of key performance
indicators that have traditionally led to increased sales                     not simply by the
and profit in business and the key differences between
Facebook users who have opted to “fan” a brand and
those who have not.
                                                                              action of being
This study will examine the five leading contributors to
                                                                              a “fan” but rather
Facebook fan value. (1) Product Spending (2) Brand
Loyalty, (3) Propensity to Recommend, (4) Brand Affinity
                                                                              the value of the
and (5) Earned Media Value.
                                                                              audience.
Introduction: Understanding The Value Of A Fan
Brand marketers have been struggling to understand the impact of their Facebook marketing efforts
contribution to their overall marketing success. Many are attempting to establish the return through
a campaign-based analysis rather than by a consideration of long-term business value. Confusion in
the industry is widespread and clear principles for Facebook measurement have not been commonly
adopted. This has resulted in missed advantage across agencies, brand teams, and executives in fully
realizing the potential benefits of Facebook marketing.

Understanding long-term Facebook fan value is a complex undertaking with advanced calculations
required across multiple variables. This understanding is rooted in the measureable differences
between users who have “fanned” a brand and those who have not. The value is reflected not simply
by the action of being a “fan” but rather by the value of the audience and the benefits “fanning” offers
the brand.




                       SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   02
Deriving Fan Value
Identifying differences in behavior and motivation between fans and non-fans is significant in
understanding the true value offered to an organization. Syncapse has identified and isolated
these factors and associated them with key factors recognized across the industry as drivers
of shareholder value. The factors studied are widely identified as fundamental to both
short-term and long-term sales performance and have been tested across multiple
organizations to confirm their importance.


The variables studied in this paper for the purpose of understanding
Facebook fan value Include:


                1. Product Spending:
                The ability to understand the methodology of
                increasing product spending.




                2. Loyalty:
                The ability to understand the available means
                to influence and promote brand loyalty within a
                target audience.



                3. Propensity to Recommend:
                Probability and propensity for word-of-mouth
                recommendations leading to sales.




                4. Brand Affinity:
                The impact on brand perception and recall.




                5. Media Value:
                Efficiencies of earned reach and frequency via
                the Facebook platform.




                6. Acquisition Cost:
                Efficiency of Fans in enticing others to participate
                and drive organic membership.




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   03
Methodology
The quantitative research for this Syncapse undertaking was conducted in conjunction with
Hotspex Market Research and consisted of a 25-minute survey using their online panel. Data
was collected from over 4,000 panelists across North America in June 2010.


The questionnaire required panelists to self-identify those consumer companies with whom they
could be identified as a fan. Then, information on past or projected future consumer behaviors
of respondents was collected, together with the feelings of respondents towards the past or
projected actions or feelings of others (family, friends, etc.) with respect to their consumer
behaviors. Standard Lichert Scale methods were used to profile questionnaire responses.


Brands used in this study were twenty of the top brands on Facebook at the time of conducting
this research. In order to ensure that the survey questions were applicable to each product
type, research was focused only on consumer brands. Celebrity and un-official pages where
not analyzed.


Syncapse analyzed the data utilizing SocialTRAC™, a propriety global platform for
understanding social media value and business drivers. Assumptions are supported through
in-depth proprietary research and data analyses of two-years available data across millions of
interactions.


Findings were then analyzed contrasting fans and non-fans for these top brands: Nokia,
BlackBerry, Motorola, Secret, Gillette, Axe, Dove, Victoria’s Secret, Adidas, Nike, Coca-Cola,
Oreo, Skittles, Nutella, Red Bull, Pringles, Playstation, Xbox, Starbucks, and McDonald’s.




A fan base is a self-segmented group
of highly valuable customers.

Summary Of Key Findings
Consumers who are fans are more valuable to organizations across all variables studied than
are consumers who are not fans. Key value points include:


   • On average, fans spend an additional $71.84 on products for which they are fans
     compared to those who are not fans.
   • Fans are 28% more likely than non-fans to continue using the brand.
   • Fans are 41% more likely than non-fans to recommend a fanned product to their friends.




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   04
No Two Brand’s Fan Values Are The Same
With all variables analyzed across all 20 studied brands, Syncapse’s research indicates the
average annualized value of an individual fan is $136.38. Fan value can vary widely by
company and product. Factors influencing this variability include product purchase price,
purchase frequency, product purchase cycle, product category and brand equity. It should be
noted that underlying brand strength is the cause for some of these differences.


For example, the baseline brand equity has a very strong influence on the relative value
of a fan. A case in point is the fan value of BlackBerry ($83.98) versus Nokia ($180.87).
BlackBerry manifests a lower loyalty premium for Facebook fans because the strength of their
product among non-fans is much higher compared to Nokia. For Nokia, fans are intense
stalwarts but less enthusiasm is evident with non-fans. In that light, fan value is not simply a
question of ‘good’ or ‘bad’, but rather must be understood in terms of the overall profile of a
brand’s loyalty inside and outside of the social channel.


Equally important is the impact of external forces upon value. In the above case the pricing
impact of channel partners may artificially distort the overall fan value of premium brands
such as BlackBerry or other Smartphone providers due to their inherent need to price discount
in order to gain market penetration.


No Two Fans Are Created Equal
The fan base of a brand is unique and comprised of different levels of influencers and
customers. The average fan value is $136.38, but it can swing to $270.77 in the best case
or go down to $0 in the worst. This is due to the fact that no two fans are alike.


Syncapse has observed that an average fan may participate with a brand ten times a year
and will make one recommendation. But, an active fan may participate thirty times and make
ten recommendations. The impact this has on fan value is quite dramatic. In the case of Coca-
Cola, the best case for fan value reaches $316.78 but is $137.84 for an average fan. In the
worse case scenario, a fan is worth $0. This degree of variability in the value of a fan must
be a major consideration in determining how brands address different types of fans in efforts
to move them up the value ladder. In short, the goal must be to reduce fan variability while
moving the average fan value to the active end of the range.




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   05
Product Spending (Annual)
Driving new and increased spending per customer is a key focus for most marketers.
Understanding the difference in consumer spending patterns between users who have fanned
a brand and those who have not provides insight into the importance of the audience to the
financial success of an organization.


Syncapse’s research indicates strong findings that Facebook fans are more valuable
customers and spend more on average than do non-fans. Across the twenty brands
examined, fans reported spending, on average, $71.84 per year more than respondents
who were not fans.




    Facebook fans reported spending
    $71.84 more per year than non fans.

McDonald’s saw the largest variability, with Fans reporting spending $159.79 more
per year than non-fans. Oreo saw the lowest value with a difference of $28.52. Factors
influencing these differences may include both product price and purchase lifecycle. Thus,
these differences are less an indicator of marketing performance, and more a confirmation
that Facebook fans are more valuable customers than those who are not. It is probable that
these numbers can be influenced by a number of factors, including sales penetration, brand
health, product health, as well as Facebook marketing success. This study did not investigate
these mitigating factors as they could vary greatly depending on region, brand, and product
category.


The chart on the next page outlines the total annualized spending and contrasting results
between fans and non-fans. Differences are not proposed to be representative of overall
marketing effort success, but rather represent a snapshot of reported spending differences
between the two audiences.




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   06
Product Spending: Facebook Fans vs. Non Fans                                                 Fans            Non-Fans           Difference



                        Average $157.18                 Average $85.34                                  Average $71.84



                         $171.22
                                                                              Nokia                                 $107.37
                                                      $63.86

                                   $132.31
                                                                           BlackBerry          $34.62
                                          $97.68

                            $160.01
                                                                            Motorola                             $90.92
                                                     $69.09

                                               $89.11
                                                                              Secret           $34.91
                                                        $54.20

                                   $128.60
                                                                             Gillette               $52.07
                                                    $76.53

                                           $101.48
                                                                               Axe              $39.61
                                                      $61.87

                                 $141.76
                                                                              Dove                           $84.74
                                                       $57.02

             $229.04
                                                                         Victoria’s Secret                 $76.08
                             $152.97

                                    $125.59
                                                                             Adidas                $51.75
                                                    $73.83

                 $205.02
                                                                               Nike                                       $121.32
                                               $83.69

                      $190.48
                                                                           Coca-Cola                     $69.50
                                     $120.98

                                               $84.27
                                                                              Oreo            $28.52
                                                    $55.75

                                   $128.62
                                                                             Skittles                      $75.81
                                                         52.82

                                           $101.93
                                                                             Nutella              $48.84
                                                        $53.10

                                       $113.95
                                                                             Red bull                   $63.81
                                                        $50.14

                                   $133.38
                                                                             Pringles                     $72.55
                                                      $60.83

                       $188.02
                                                                           Playstation                  $66.42
                                     $121.61

                         $173.34
                                                                              Xbox             $33.88
                               $139.46

            $235.22
                                                                            Starbucks                                     $124.27
                                          $110.95

  $310.18
                                                                           McDonald’s                                               $159.79
                                $150.39



                                                                                                                      Source: Syncapse Corp




                       SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                       07
Brand Loyalty
As more organizations look to platforms like Facebook to foster and grow relationships with
their customers, loyalty values become key indicators of marketing and product performance.

Research across all 20-brands studied indicated that Facebook fans were more loyal to the fanned
brand than consumers who were not fans. On average, Facebook fans are 28% more likely to
continue using a brand than are non-fan consumers. This data illustrates the importance of the
audience on short-term and long-term marketing efforts of an organization.

Adidas had the highest variance of loyalty between fans and non-fans with 42.5% of fans
indicating a heightened likelihood of continued product usage. Secret saw the lowest difference in
loyalty, only 15.83% between the two groups. Loyalty is often viewed as a key indicator of brand
and product health. The data further suggests the heightened value of the Facebook fan Page audi-
ence and the difference between the potential of the general mass market versus that of fans.




Facebook fans are more loyal to
the fanned brand than non-fans.

The chart on the next page outlines the percentage of fans compared to non-fans who have
indicated they are “very likely” to continue using each brand. Again in this case, the data is not
suggesting success of specific Facebook marketing efforts, but rather profiles the overall value of
the audience to the organization.




                       SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   08
Brand Loyalty: Continued Product Usage                       Fans       Non-Fans             Difference



                     Average 75.3%           Average 47.5%                                                         Average 27.7%



                         60.0%
                                                                              Nokia                                     31.78%
                                                     28.2%

                     65.9%
                                                                           BlackBerry                           23.97%
                                        41.9%

                     65.0%
                                                                            Motorola                                        33.63%
                                                  31.4%

                   67.6%
                                                                              Secret                      15.83%
                                51.8%

     83.3%
                                                                             Gillette                              24.57%
                           58.8%

               71.4%
                                                                               Axe                             22.58%
                                   48.9%

       80.0%
                                                                              Dove                              24.23%
                             55.8%

       79.2%
                                                                         Victoria’s Secret                      23.90%
                             55.3%

       80.0%
                                                                             Adidas                                                  42.55%
                                             37.5%

           76.6%
                                                                               Nike                                     30.90%
                                      45.7%

    85.0%
                                                                           Coca-Cola                           22.35%
                       62.7%

           77.1%
                                                                              Oreo                           20.39%
                             56.8%

             75.0%
                                                                             Skittles                              25.87%
                                   49.1%

     83.9%
                                                                             Nutella                                             39.82%
                                       44.1%

                        62.1%
                                                                             Red bull                                 29.42%
                                                 32.7%

                69.2%
                                                                             Pringles                        20.25%
                                   49.0%

   87.5%
                                                                           Playstation                                           40.02%
                                     47.5%

       79.1%
                                                                              Xbox                                       32.66%
                                     46.4%

            76.0%
                                                                            Starbucks                                28.62%
                                     47.4%

      81.3%
                                                                           McDonald’s                         21.45%
                         59.8%



                                                                                                                            Source: Syncapse Corp




                             SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                   09
Propensity To Recommend
Word-of-mouth is extremely credible as a sales driver and plays a direct role in driving an
organization’s revenue. Word-of-mouth is often hard to measure as it takes place in both the digital
and physical worlds. This makes dashboards or other trending indicators nearly impossible to
construct. Business ranging from SMB’s through the world’s largest companies all experience sales
lift or decline as a result of positive or negative word-of-mouth. Understanding Facebook’s ability,
through continued engagement, to influence and impact a customer’s Likelihood to Recommend,
becomes a critical part of the methodology of assessing effectiveness of social media marketing.

Overall, 68% (on average) of Facebook fans indicated that they are very likely to recommend a
product across the 20-top leading brands. This is contrasted by 28% for non-fans. Gaming brand
Playstation led overall Likelihood To Recommend with 81.4% followed by Victoria’s Secret with
79.4%. Notably, the lowest Likelihood To Recommend by fans was still quite favorable at 59.5%
for Secret. On average, Facebook fans were 41% more likely to recommend a product then their
non-fan counterparts.

This research suggests that a large of base of fans would
result in an increase in consumers willing to participate
in brand-based recommendations and discussions.
These findings, at a brand level, become a key driver
                                                                      68% of Facebook
in reporting fan value throughout the marketing and
executive portions of the organization. This data,                    Fans indicate they
                                                                      are very likely
supported by averaged conversation rates and margins,
demonstrates long-term financial advantage to the
organization that far surpasses simplistic campaign-
based calculations.                                                   to recommend a
The chart on the next page outlines the percentage
of fans who responded that they are “very likely” to                  product.
recommend a product or brand as compared to non-
fans. The data is designed to highlight the importance
of Facebook fans and their propensity to recommend a
brand in comparison to the population as a whole.

Impact Of Recommendations
As noted previously, recommendations are important as they help drive product sales.
Understanding if there is a difference between recommendations coming from a best friend or a
casual acquaintance is important as it illustrates the impact of word-of-mouth based on its source.

Fanning has a demonstrable impact on others. Thirty-eight percent of respondents reported that
they would likely become a fan of a brand if they saw a family member or close friend do so. This
influence surprisingly is only reduced to 34% if it is a person known through Facebook rather than
a family member. Likelihood to try a product if somebody else became a fan is 44% if it was a
close family member or friend, moderating to 36% for a Facebook friend.




                       SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   10
Propensity to Recommend                           Fans             Non-Fans                       Difference



      Average 68.38%                                    Average 27.61%                                     Average 40.77%



                       55.3%
                                                                                   Nokia                                          42.70%
                                                            12.6%

                  62.7%
                                                                                BlackBerry                                   47.54%
                                                          15.2%

                  63.0%
                                                                                 Motorola                                44.67%
                                                        18.4%

                    59.5%
                                                                                   Secret                  33.72%
                                                 25.7%

            68.5%
                                                                                  Gillette              32.31%
                                        36.2%

              64.7%
                                                                                    Axe                                 45.68%
                                                        19.0%

     76.0%
                                                                                   Dove                32.46%
                                 43.6%

   79.4%
                                                                              Victoria’s Secret                 49.03%
                                           30.3%

      73.2%
                                                                                  Adidas                            50.49%
                                                   22.7%

            68.7%
                                                                                    Nike                       40.69%
                                                28.0%

    77.8%
                                                                                Coca-Cola             28.82%
                              49.0%

          72.6%
                                                                                   Oreo               27.42%
                                45.1%

              66.0%
                                                                                  Skittles                35.88%
                                           30.1%

          72.7%
                                                                                  Nutella                                51.66%
                                                    21.1%

                      57.6%
                                                                                  Red bull                                                 46.92%
                                                                10.7%

                   60.7%
                                                                                  Pringles            22.92%
                                      37.8%

  81.4%
                                                                                Playstation                        55.22%
                                                 26.1%

          71.7%
                                                                                   Xbox                                   52.19%
                                                        19.5%

            68.6%
                                                                                 Starbucks                       43.44%
                                                 25.2%

             67.6%
                                                                                McDonald’s              31.68%
                                        36.0%



                                                                                                                              Source: Syncapse Corp




                            SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                        11
Affinity with the Brand
Brand affinity is important to understand as it demonstrates the ability of a brand to drive repeat
purchases and long-term success.

Research indicates that 81% of fans said they feel connection/empathy with the brand, compared
to 39% of non-fans. 87% said they felt warmth, gratitude, happy or satisfied, compared to 49%
of non-fans. Most brands show a significant gap in results between those who are fans and those
who are non-fans. This provides further evidence of the value of an audience to an organization
and the necessity of factoring in fans as a key aspect of long-term marketing value.


  Brand Affinity: Connection / empathy toward brand                                                                Fans            Non-Fans



                                                            Average 38.6%                                         Average 81.3%



                                                                                                          73.7%
                   Nokia
                                                       22.7%

                                                                                                                           86.3%
                BlackBerry
                                                                30.8%

                                                                                                               76.1%
                 Motorola
                                                                 31.4%

                                                                                                       70.3%
                   Secret
                                                                            37.7%

                                                                                                          74.0%
                  Gillette
                                                                                    43.6%

                                                                                                                  79.4%
                    Axe
                                                             27.4%

                                                                                                                          85.4%
                   Dove
                                                                                               57.0%

                                                                                                                  79.4%
              Victoria’s Secret
                                                                              40.6%

                                                                                                                            87.8%
                  Adidas
                                                                      35.4%

                                                                                                                               89.6%
                    Nike
                                                                                43.7%

                                                                                                                       82.4%
                Coca-Cola
                                                                                              55.4%

                                                                                                                  79.6%
                   Oreo
                                                                                               57.6%

                                                                                                                          85.1%
                  Skittles
                                                                               42.1%

                                                                                                               75.8%
                  Nutella
                                                                30.4%

                                                                                                       69.7%
                  Red bull
                                                    19.5%

                                                                                                                        83.9%
                  Pringles
                                                                                      47.0%

                                                                                                                                89.8%
                Playstation
                                                                     34.2%

                                                                                                                           87.0%
                   Xbox
                                                                      35.3%

                                                                                                                        84.3%
                 Starbucks
                                                                     34.0%

                                                                                                                           86.8%
                McDonald’s
                                                                                      46.8%



                                                                                                                       Source: Syncapse Corp




                             SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                  12
Brand Affinity: Feel warmth, gratitude, happy or satisfied                                                                  Fans             Non-Fans



                                                         Average 49.0%                                              Average 87.0%



                                                                                                           71.1%
                  Nokia
                                                           27.4%

                                                                                                                             88.2%
               BlackBerry
                                                                   35.2%

                                                                                                           71.7%
                Motorola
                                                                   34.8%

                                                                                                                   78.4%
                  Secret
                                                                                 46.9%

                                                                                                                           84.9%
                 Gillette
                                                                                         54.9%

                                                                                                                      82.4%
                   Axe
                                                                    36.1%

                                                                                                                           85.4%
                  Dove
                                                                                                          70.2%

                                                                                                                               90.5%
             Victoria’s Secret
                                                                                         55.4%

                                                                                                                             87.8%
                 Adidas
                                                                                 46.8%

                                                                                                                                    92.5%
                   Nike
                                                                                      52.7%

                                                                                                                            87.0%
               Coca-Cola
                                                                                                         68.6%

                                                                                                                                   92.0%
                  Oreo
                                                                                                                  77.1%

                                                                                                                                   91.5%
                 Skittles
                                                                                          57.2%

                                                                                                                           84.8%
                 Nutella
                                                                            42.5%

                                                                                                                   78.8%
                 Red bull
                                                      22.0%

                                                                                                                                    92.9%
                 Pringles
                                                                                                 61.1%

                                                                                                                                       96.6%
               Playstation
                                                                            43.3%

                                                                                                                                      95.7%
                  Xbox
                                                                         40.6%

                                                                                                                                    93.1%
                Starbucks
                                                                              46.0%

                                                                                                                                     94.1%
               McDonald’s
                                                                                                 61.3%



                                                                                                                               Source: Syncapse Corp




                          SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                              13
Understanding “Value of a Fan” Calculations
Across the twenty brands that were evaluated in this study, the average value of a Facebook
fan was $136.38 factoring in all areas measured within the Syncapse model. In calculating
the average, there were many factors beyond the simple media value that they hold. In
understanding the value of a fan, what we are really seeking to understand is the monetary
value provided by the audience to the organization. For the purpose of this study we are
proposing the value offered to the organization by Facebook fans in comparison to the
Internet audience as a whole. In other words, what additional dollars can be expected to be
attributed to a Facebook fan in comparison to a Facebook user who is not a fan.


The Syncapse model utilizes key research findings                    Average Value of a Fan

across all five measured variables, specifically
(1) Product Spending, (2) Brand Loyalty,
                                                                                                Spend                             $   71.84
(3) Propensity to Recommend, (4) Brand Affinity and
                                                                                                Loyalty                           $   43.71
(5) Earned Media Value. Averages and participation
                                                                                                Recommendations                   $   13.57
rates across multiple Facebook programs were
                                                                                                Earned Media Value                $    6.79
then assigned based on Syncapse SocialTRAC™
                                                                                                Cost Offset for Fan Acquisition   $    0.47
databases. It is important to note these values are not
                                                                                                Sum                               $ 136.38
a simple reflection of Facebook marketing efforts and
engagements. They are complex calculations that
look to understand differences in audience values
and declared spend levels.


Additional internal client data, including specific
engagement levels within Facebook, product margins
and product lifecycle, along with other factors, would                                                                                        Source: Syncapse Corp



be required for a specific non-average based model.
This data was not available for all brands at the
time of this study. This study was based on customer reported data versus internally provided
data which is consistent in terms of consumer perception, but which can differ on client value
based on the product category.




The Average Value
of a Fan is $136.38.

For example, in the case of mobile handsets, consumers reported spending $155 per year.
However, without the subsidies provided by carriers, the actual amount would be higher.
When this model is applied in a client funded versus a generic model real data along with
balances and controls are utilized to minimize the risks of uncontrolled variables. Thus, in the
case of smartphone providers, the value of their fan can be understated due in part to the
larger subsidy applied by the carrier to actively promote increased smartphone penetration,
which drives higher carrier fan value through increased mobile data usage.




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                             14
Value Per Fan
Not all fans are created equal. Some are extremely active with a brand while others sign up
and never participate again. This results in the monetary value of fans varying dramatically.
Best case scenarios take into account intensely socially active fans while the worst-case
presumes totally inactive users. The most valuable fan in the survey was that of McDonald’s
who presented an annual value to the organization of $508.16. This would be a frequent
visitor to their establishments, highly loyal, frequently referring, and participating actively in
their Facebook community. An average McDonald’s fan netted the organization a value of
$259.82.


The lowest Best Case Fan was reported by Oreo. This would be a highly loyal, frequently
referring, and participating customer. However, the product price is lower and the frequency
of purchase is much lower thus impacting the total value to the organization.


If one were to multiply the average value of the audience across the entire fan base, a
marketer can begin to understand the value an audience offers the organization. In the case
of McDonald’s, that value would equate to $580,003,461 worth of annualized value based
on a fan base of 2,232,328 at the time of study. It is important to note that this audience
would still have value without Facebook, although arguably much less discernable value.




Monetary value of fans varies
dramatically. Some are intensely
active while others are totally inactive.

The chart on the next page outlines the high, average and low values that EACH Facebook
fan offers the organization as an influencer.




                      SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   15
Fan Value: By Brand                                                                                                   Best         Average         Worst



                               Average $0                   Average $136.38                   Average $270.77



                                                                                                       $299.60
                Nokia                                                    $180.87
                                $0
                                                                           $189.65
             BlackBerry                          $83.98
                                $0
                                                                                                     $290.37
              Motorola                                                $164.60
                                $0
                                                               $134.78
                Secret                      $62.90
                                $0
                                                                                   $213.29
               Gillette                              $101.92
                                $0
                                                                      $164.14
                 Axe                           $77.98
                                $0
                                                                                                $237.36
                Dove                                           $139.81
                                $0
                                                                                                                     $377.57
           Victoria’s Secret                                         $160.79
                                $0
                                                                                           $239.59
               Adidas                                      $123.93
                                $0
                                                                                                                     $380.16
                 Nike                                                            $209.53
                                $0
                                                                                                          $316.78
             Coca-Cola                                         $137.84
                                $0
                                                                $141.68
                Oreo                        $60.60
                                $0
                                                                                      $234.94
               Skittles                                     $126.94
                                $0
                                                                                $201.63
               Nutella                               $105.95
                                $0
                                                                                $198.87
               Red bull                                 $112.78
                                $0
                                                                                    $220.31
               Pringles                                   $116.93
                                $0
                                                                                                                 $352.41
             Playstation                                              $168.04
                                $0
                                                                                               $265.46
                Xbox                                    $113.29
                                $0
                                                                                                                             $412.91
              Starbucks                                                            $219.03
                                $0
                                                                                                                                             $508.16
             McDonald’s                                                                      $259.82
                                $0



                                                                                                                                       Source: Syncapse Corp




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com                                      16
IMPLICATIONS FOR
THE ORGANIZATION

Score The Fan Base
Understanding current value and the factors that influence the value of a Facebook membership
base is important. Multiple factors that happen both on and off Facebook influence the value of
the audience. A clear understanding of these variables is key to aligning stakeholders and driving
marketing performance. Defining the variables that matter to an organization’s bottom line,
deployment of a measurement platform that allows stakeholders to track their performance over
time and adherence to a protocol that supports executives in discerning value within the business
are vital.


Understand Performance Of Social Channels
Brands need to understand the causal relationship between their social programs and its effect
on key performance indicators. Understanding Earned Media Value generated by a social base
is a direct indicator of the amount of word-of-mouth conversation about a brand. Understanding
Community Health is a leading indicator of the future sustainability of a community and the ability
to nurture high value customers. Mining the conversation and understanding the tone and focus
provide insights into the association fans have with a brand and how marketers can use such
allegiance to their advantage.


Execute Strategies Against Key Factors
Loyalty, Spend, Recommendation, Fan Acquisition Cost, Affinity, and Media Value are the key
factors that impact fan value. Brands need to develop strategies that address these areas. In
Syncapse’s experience, we have observed that focused strategies will yield more positive fan
engagement and overall community health than will an ad hoc approach. Focusing efforts on these
factors will help increase fan value over the long term. Campaign-based practices typically do not
produce sustained positive results.


Manage And Build Off The Trends
Fan value is cyclical and ever changing based on the ongoing marketing performance of the
activities described within this paper. It becomes incumbent upon Brands to institute a long term
view if they are to successfully learn and evolve from independent campaign orientations to an
approach of defining, measuring and increasing the value of their fans over an extended period
of time. The key performance indicators identify the levers marketers must pull to improve their ROI
performance and fan value.


Conclusion
As growing audiences migrate to social networks like Facebook, a brand’s ability to connect and
influence these customers must shift from traditional marketing strategies. Facebook fans represent
a significant opportunity to drive revenue enhancement, brand, and loyalty without incurring
the considerable cost-per-person of conventional marketing. More importantly, such Facebook
strategies allow for a discernable ROI that is not allowed by most other approaches.


Fans are an extremely valuable segment of the Internet audience and should be addressed with
specific strategies to nurture their ongoing participation and influence. Unlike traditional campaign-
based marketing, Facebook-based marketing through well crafted fan utilization has no defined
shelf life and can be more readily integrated into the day-to-day operation of the enterprise.




                     SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   17
ABOUT
SYNCAPSE
Syncapse Corp. is a global leader in the areas of community building, technology
solutions, and digital measurement. Founded in 2007, Syncapse Corp. has offices in Toronto,
New York, London and Portland. Syncapse works with Fortune 500 companies and global
media agencies to reinvent how organizations use social media to their competitive advantage.


To learn more visit http://www.syncapse.com


Contact Us

facebook.com/Syncapse
@syncapse
416.593.3773
info@syncapse.com
syncapse.com




                    SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com   18

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Syncapse value-of-a-facebook-fan

  • 1. THE VALUE OF A FACEBOOK FAN: AN EMPIRICAL REVIEW JUNE 2010 Presented by Syncapse in association with hotspex SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com
  • 2. THE VALUE OF A FACEBOOK FAN: AN EMPIRICAL REVIEW Executive Summary As Facebook matures as a viable marketing and customer service channel, many organizations are looking to quantify and understand the impact of their overall marketing investment on their business. Quantifying the Return on investment (ROI) of Facebook marketing efforts includes multiple variables and companies often fail to understand and to properly value their efforts in terms of the potential long-term business benefits of the Facebook channel. Many brands overcomplicate their measurement requirements by tracking dozens of independent variables. Many oversimplify by trying to apply a single number concept of value, and far too many fail to quantify ROI in such a way as to convince a CFO of the merit of increasing or shifting investment towards Facebook marketing. Syncapse has adopted a unique approach to understanding the financial returns that social members on Facebook provide to a business. Facebook fan ROI can Value is reflected be understood though a knowledge of key performance indicators that have traditionally led to increased sales not simply by the and profit in business and the key differences between Facebook users who have opted to “fan” a brand and those who have not. action of being This study will examine the five leading contributors to a “fan” but rather Facebook fan value. (1) Product Spending (2) Brand Loyalty, (3) Propensity to Recommend, (4) Brand Affinity the value of the and (5) Earned Media Value. audience. Introduction: Understanding The Value Of A Fan Brand marketers have been struggling to understand the impact of their Facebook marketing efforts contribution to their overall marketing success. Many are attempting to establish the return through a campaign-based analysis rather than by a consideration of long-term business value. Confusion in the industry is widespread and clear principles for Facebook measurement have not been commonly adopted. This has resulted in missed advantage across agencies, brand teams, and executives in fully realizing the potential benefits of Facebook marketing. Understanding long-term Facebook fan value is a complex undertaking with advanced calculations required across multiple variables. This understanding is rooted in the measureable differences between users who have “fanned” a brand and those who have not. The value is reflected not simply by the action of being a “fan” but rather by the value of the audience and the benefits “fanning” offers the brand. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 02
  • 3. Deriving Fan Value Identifying differences in behavior and motivation between fans and non-fans is significant in understanding the true value offered to an organization. Syncapse has identified and isolated these factors and associated them with key factors recognized across the industry as drivers of shareholder value. The factors studied are widely identified as fundamental to both short-term and long-term sales performance and have been tested across multiple organizations to confirm their importance. The variables studied in this paper for the purpose of understanding Facebook fan value Include: 1. Product Spending: The ability to understand the methodology of increasing product spending. 2. Loyalty: The ability to understand the available means to influence and promote brand loyalty within a target audience. 3. Propensity to Recommend: Probability and propensity for word-of-mouth recommendations leading to sales. 4. Brand Affinity: The impact on brand perception and recall. 5. Media Value: Efficiencies of earned reach and frequency via the Facebook platform. 6. Acquisition Cost: Efficiency of Fans in enticing others to participate and drive organic membership. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 03
  • 4. Methodology The quantitative research for this Syncapse undertaking was conducted in conjunction with Hotspex Market Research and consisted of a 25-minute survey using their online panel. Data was collected from over 4,000 panelists across North America in June 2010. The questionnaire required panelists to self-identify those consumer companies with whom they could be identified as a fan. Then, information on past or projected future consumer behaviors of respondents was collected, together with the feelings of respondents towards the past or projected actions or feelings of others (family, friends, etc.) with respect to their consumer behaviors. Standard Lichert Scale methods were used to profile questionnaire responses. Brands used in this study were twenty of the top brands on Facebook at the time of conducting this research. In order to ensure that the survey questions were applicable to each product type, research was focused only on consumer brands. Celebrity and un-official pages where not analyzed. Syncapse analyzed the data utilizing SocialTRAC™, a propriety global platform for understanding social media value and business drivers. Assumptions are supported through in-depth proprietary research and data analyses of two-years available data across millions of interactions. Findings were then analyzed contrasting fans and non-fans for these top brands: Nokia, BlackBerry, Motorola, Secret, Gillette, Axe, Dove, Victoria’s Secret, Adidas, Nike, Coca-Cola, Oreo, Skittles, Nutella, Red Bull, Pringles, Playstation, Xbox, Starbucks, and McDonald’s. A fan base is a self-segmented group of highly valuable customers. Summary Of Key Findings Consumers who are fans are more valuable to organizations across all variables studied than are consumers who are not fans. Key value points include: • On average, fans spend an additional $71.84 on products for which they are fans compared to those who are not fans. • Fans are 28% more likely than non-fans to continue using the brand. • Fans are 41% more likely than non-fans to recommend a fanned product to their friends. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 04
  • 5. No Two Brand’s Fan Values Are The Same With all variables analyzed across all 20 studied brands, Syncapse’s research indicates the average annualized value of an individual fan is $136.38. Fan value can vary widely by company and product. Factors influencing this variability include product purchase price, purchase frequency, product purchase cycle, product category and brand equity. It should be noted that underlying brand strength is the cause for some of these differences. For example, the baseline brand equity has a very strong influence on the relative value of a fan. A case in point is the fan value of BlackBerry ($83.98) versus Nokia ($180.87). BlackBerry manifests a lower loyalty premium for Facebook fans because the strength of their product among non-fans is much higher compared to Nokia. For Nokia, fans are intense stalwarts but less enthusiasm is evident with non-fans. In that light, fan value is not simply a question of ‘good’ or ‘bad’, but rather must be understood in terms of the overall profile of a brand’s loyalty inside and outside of the social channel. Equally important is the impact of external forces upon value. In the above case the pricing impact of channel partners may artificially distort the overall fan value of premium brands such as BlackBerry or other Smartphone providers due to their inherent need to price discount in order to gain market penetration. No Two Fans Are Created Equal The fan base of a brand is unique and comprised of different levels of influencers and customers. The average fan value is $136.38, but it can swing to $270.77 in the best case or go down to $0 in the worst. This is due to the fact that no two fans are alike. Syncapse has observed that an average fan may participate with a brand ten times a year and will make one recommendation. But, an active fan may participate thirty times and make ten recommendations. The impact this has on fan value is quite dramatic. In the case of Coca- Cola, the best case for fan value reaches $316.78 but is $137.84 for an average fan. In the worse case scenario, a fan is worth $0. This degree of variability in the value of a fan must be a major consideration in determining how brands address different types of fans in efforts to move them up the value ladder. In short, the goal must be to reduce fan variability while moving the average fan value to the active end of the range. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 05
  • 6. Product Spending (Annual) Driving new and increased spending per customer is a key focus for most marketers. Understanding the difference in consumer spending patterns between users who have fanned a brand and those who have not provides insight into the importance of the audience to the financial success of an organization. Syncapse’s research indicates strong findings that Facebook fans are more valuable customers and spend more on average than do non-fans. Across the twenty brands examined, fans reported spending, on average, $71.84 per year more than respondents who were not fans. Facebook fans reported spending $71.84 more per year than non fans. McDonald’s saw the largest variability, with Fans reporting spending $159.79 more per year than non-fans. Oreo saw the lowest value with a difference of $28.52. Factors influencing these differences may include both product price and purchase lifecycle. Thus, these differences are less an indicator of marketing performance, and more a confirmation that Facebook fans are more valuable customers than those who are not. It is probable that these numbers can be influenced by a number of factors, including sales penetration, brand health, product health, as well as Facebook marketing success. This study did not investigate these mitigating factors as they could vary greatly depending on region, brand, and product category. The chart on the next page outlines the total annualized spending and contrasting results between fans and non-fans. Differences are not proposed to be representative of overall marketing effort success, but rather represent a snapshot of reported spending differences between the two audiences. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 06
  • 7. Product Spending: Facebook Fans vs. Non Fans Fans Non-Fans Difference Average $157.18 Average $85.34 Average $71.84 $171.22 Nokia $107.37 $63.86 $132.31 BlackBerry $34.62 $97.68 $160.01 Motorola $90.92 $69.09 $89.11 Secret $34.91 $54.20 $128.60 Gillette $52.07 $76.53 $101.48 Axe $39.61 $61.87 $141.76 Dove $84.74 $57.02 $229.04 Victoria’s Secret $76.08 $152.97 $125.59 Adidas $51.75 $73.83 $205.02 Nike $121.32 $83.69 $190.48 Coca-Cola $69.50 $120.98 $84.27 Oreo $28.52 $55.75 $128.62 Skittles $75.81 52.82 $101.93 Nutella $48.84 $53.10 $113.95 Red bull $63.81 $50.14 $133.38 Pringles $72.55 $60.83 $188.02 Playstation $66.42 $121.61 $173.34 Xbox $33.88 $139.46 $235.22 Starbucks $124.27 $110.95 $310.18 McDonald’s $159.79 $150.39 Source: Syncapse Corp SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 07
  • 8. Brand Loyalty As more organizations look to platforms like Facebook to foster and grow relationships with their customers, loyalty values become key indicators of marketing and product performance. Research across all 20-brands studied indicated that Facebook fans were more loyal to the fanned brand than consumers who were not fans. On average, Facebook fans are 28% more likely to continue using a brand than are non-fan consumers. This data illustrates the importance of the audience on short-term and long-term marketing efforts of an organization. Adidas had the highest variance of loyalty between fans and non-fans with 42.5% of fans indicating a heightened likelihood of continued product usage. Secret saw the lowest difference in loyalty, only 15.83% between the two groups. Loyalty is often viewed as a key indicator of brand and product health. The data further suggests the heightened value of the Facebook fan Page audi- ence and the difference between the potential of the general mass market versus that of fans. Facebook fans are more loyal to the fanned brand than non-fans. The chart on the next page outlines the percentage of fans compared to non-fans who have indicated they are “very likely” to continue using each brand. Again in this case, the data is not suggesting success of specific Facebook marketing efforts, but rather profiles the overall value of the audience to the organization. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 08
  • 9. Brand Loyalty: Continued Product Usage Fans Non-Fans Difference Average 75.3% Average 47.5% Average 27.7% 60.0% Nokia 31.78% 28.2% 65.9% BlackBerry 23.97% 41.9% 65.0% Motorola 33.63% 31.4% 67.6% Secret 15.83% 51.8% 83.3% Gillette 24.57% 58.8% 71.4% Axe 22.58% 48.9% 80.0% Dove 24.23% 55.8% 79.2% Victoria’s Secret 23.90% 55.3% 80.0% Adidas 42.55% 37.5% 76.6% Nike 30.90% 45.7% 85.0% Coca-Cola 22.35% 62.7% 77.1% Oreo 20.39% 56.8% 75.0% Skittles 25.87% 49.1% 83.9% Nutella 39.82% 44.1% 62.1% Red bull 29.42% 32.7% 69.2% Pringles 20.25% 49.0% 87.5% Playstation 40.02% 47.5% 79.1% Xbox 32.66% 46.4% 76.0% Starbucks 28.62% 47.4% 81.3% McDonald’s 21.45% 59.8% Source: Syncapse Corp SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 09
  • 10. Propensity To Recommend Word-of-mouth is extremely credible as a sales driver and plays a direct role in driving an organization’s revenue. Word-of-mouth is often hard to measure as it takes place in both the digital and physical worlds. This makes dashboards or other trending indicators nearly impossible to construct. Business ranging from SMB’s through the world’s largest companies all experience sales lift or decline as a result of positive or negative word-of-mouth. Understanding Facebook’s ability, through continued engagement, to influence and impact a customer’s Likelihood to Recommend, becomes a critical part of the methodology of assessing effectiveness of social media marketing. Overall, 68% (on average) of Facebook fans indicated that they are very likely to recommend a product across the 20-top leading brands. This is contrasted by 28% for non-fans. Gaming brand Playstation led overall Likelihood To Recommend with 81.4% followed by Victoria’s Secret with 79.4%. Notably, the lowest Likelihood To Recommend by fans was still quite favorable at 59.5% for Secret. On average, Facebook fans were 41% more likely to recommend a product then their non-fan counterparts. This research suggests that a large of base of fans would result in an increase in consumers willing to participate in brand-based recommendations and discussions. These findings, at a brand level, become a key driver 68% of Facebook in reporting fan value throughout the marketing and executive portions of the organization. This data, Fans indicate they are very likely supported by averaged conversation rates and margins, demonstrates long-term financial advantage to the organization that far surpasses simplistic campaign- based calculations. to recommend a The chart on the next page outlines the percentage of fans who responded that they are “very likely” to product. recommend a product or brand as compared to non- fans. The data is designed to highlight the importance of Facebook fans and their propensity to recommend a brand in comparison to the population as a whole. Impact Of Recommendations As noted previously, recommendations are important as they help drive product sales. Understanding if there is a difference between recommendations coming from a best friend or a casual acquaintance is important as it illustrates the impact of word-of-mouth based on its source. Fanning has a demonstrable impact on others. Thirty-eight percent of respondents reported that they would likely become a fan of a brand if they saw a family member or close friend do so. This influence surprisingly is only reduced to 34% if it is a person known through Facebook rather than a family member. Likelihood to try a product if somebody else became a fan is 44% if it was a close family member or friend, moderating to 36% for a Facebook friend. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 10
  • 11. Propensity to Recommend Fans Non-Fans Difference Average 68.38% Average 27.61% Average 40.77% 55.3% Nokia 42.70% 12.6% 62.7% BlackBerry 47.54% 15.2% 63.0% Motorola 44.67% 18.4% 59.5% Secret 33.72% 25.7% 68.5% Gillette 32.31% 36.2% 64.7% Axe 45.68% 19.0% 76.0% Dove 32.46% 43.6% 79.4% Victoria’s Secret 49.03% 30.3% 73.2% Adidas 50.49% 22.7% 68.7% Nike 40.69% 28.0% 77.8% Coca-Cola 28.82% 49.0% 72.6% Oreo 27.42% 45.1% 66.0% Skittles 35.88% 30.1% 72.7% Nutella 51.66% 21.1% 57.6% Red bull 46.92% 10.7% 60.7% Pringles 22.92% 37.8% 81.4% Playstation 55.22% 26.1% 71.7% Xbox 52.19% 19.5% 68.6% Starbucks 43.44% 25.2% 67.6% McDonald’s 31.68% 36.0% Source: Syncapse Corp SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 11
  • 12. Affinity with the Brand Brand affinity is important to understand as it demonstrates the ability of a brand to drive repeat purchases and long-term success. Research indicates that 81% of fans said they feel connection/empathy with the brand, compared to 39% of non-fans. 87% said they felt warmth, gratitude, happy or satisfied, compared to 49% of non-fans. Most brands show a significant gap in results between those who are fans and those who are non-fans. This provides further evidence of the value of an audience to an organization and the necessity of factoring in fans as a key aspect of long-term marketing value. Brand Affinity: Connection / empathy toward brand Fans Non-Fans Average 38.6% Average 81.3% 73.7% Nokia 22.7% 86.3% BlackBerry 30.8% 76.1% Motorola 31.4% 70.3% Secret 37.7% 74.0% Gillette 43.6% 79.4% Axe 27.4% 85.4% Dove 57.0% 79.4% Victoria’s Secret 40.6% 87.8% Adidas 35.4% 89.6% Nike 43.7% 82.4% Coca-Cola 55.4% 79.6% Oreo 57.6% 85.1% Skittles 42.1% 75.8% Nutella 30.4% 69.7% Red bull 19.5% 83.9% Pringles 47.0% 89.8% Playstation 34.2% 87.0% Xbox 35.3% 84.3% Starbucks 34.0% 86.8% McDonald’s 46.8% Source: Syncapse Corp SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 12
  • 13. Brand Affinity: Feel warmth, gratitude, happy or satisfied Fans Non-Fans Average 49.0% Average 87.0% 71.1% Nokia 27.4% 88.2% BlackBerry 35.2% 71.7% Motorola 34.8% 78.4% Secret 46.9% 84.9% Gillette 54.9% 82.4% Axe 36.1% 85.4% Dove 70.2% 90.5% Victoria’s Secret 55.4% 87.8% Adidas 46.8% 92.5% Nike 52.7% 87.0% Coca-Cola 68.6% 92.0% Oreo 77.1% 91.5% Skittles 57.2% 84.8% Nutella 42.5% 78.8% Red bull 22.0% 92.9% Pringles 61.1% 96.6% Playstation 43.3% 95.7% Xbox 40.6% 93.1% Starbucks 46.0% 94.1% McDonald’s 61.3% Source: Syncapse Corp SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 13
  • 14. Understanding “Value of a Fan” Calculations Across the twenty brands that were evaluated in this study, the average value of a Facebook fan was $136.38 factoring in all areas measured within the Syncapse model. In calculating the average, there were many factors beyond the simple media value that they hold. In understanding the value of a fan, what we are really seeking to understand is the monetary value provided by the audience to the organization. For the purpose of this study we are proposing the value offered to the organization by Facebook fans in comparison to the Internet audience as a whole. In other words, what additional dollars can be expected to be attributed to a Facebook fan in comparison to a Facebook user who is not a fan. The Syncapse model utilizes key research findings Average Value of a Fan across all five measured variables, specifically (1) Product Spending, (2) Brand Loyalty, Spend $ 71.84 (3) Propensity to Recommend, (4) Brand Affinity and Loyalty $ 43.71 (5) Earned Media Value. Averages and participation Recommendations $ 13.57 rates across multiple Facebook programs were Earned Media Value $ 6.79 then assigned based on Syncapse SocialTRAC™ Cost Offset for Fan Acquisition $ 0.47 databases. It is important to note these values are not Sum $ 136.38 a simple reflection of Facebook marketing efforts and engagements. They are complex calculations that look to understand differences in audience values and declared spend levels. Additional internal client data, including specific engagement levels within Facebook, product margins and product lifecycle, along with other factors, would Source: Syncapse Corp be required for a specific non-average based model. This data was not available for all brands at the time of this study. This study was based on customer reported data versus internally provided data which is consistent in terms of consumer perception, but which can differ on client value based on the product category. The Average Value of a Fan is $136.38. For example, in the case of mobile handsets, consumers reported spending $155 per year. However, without the subsidies provided by carriers, the actual amount would be higher. When this model is applied in a client funded versus a generic model real data along with balances and controls are utilized to minimize the risks of uncontrolled variables. Thus, in the case of smartphone providers, the value of their fan can be understated due in part to the larger subsidy applied by the carrier to actively promote increased smartphone penetration, which drives higher carrier fan value through increased mobile data usage. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 14
  • 15. Value Per Fan Not all fans are created equal. Some are extremely active with a brand while others sign up and never participate again. This results in the monetary value of fans varying dramatically. Best case scenarios take into account intensely socially active fans while the worst-case presumes totally inactive users. The most valuable fan in the survey was that of McDonald’s who presented an annual value to the organization of $508.16. This would be a frequent visitor to their establishments, highly loyal, frequently referring, and participating actively in their Facebook community. An average McDonald’s fan netted the organization a value of $259.82. The lowest Best Case Fan was reported by Oreo. This would be a highly loyal, frequently referring, and participating customer. However, the product price is lower and the frequency of purchase is much lower thus impacting the total value to the organization. If one were to multiply the average value of the audience across the entire fan base, a marketer can begin to understand the value an audience offers the organization. In the case of McDonald’s, that value would equate to $580,003,461 worth of annualized value based on a fan base of 2,232,328 at the time of study. It is important to note that this audience would still have value without Facebook, although arguably much less discernable value. Monetary value of fans varies dramatically. Some are intensely active while others are totally inactive. The chart on the next page outlines the high, average and low values that EACH Facebook fan offers the organization as an influencer. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 15
  • 16. Fan Value: By Brand Best Average Worst Average $0 Average $136.38 Average $270.77 $299.60 Nokia $180.87 $0 $189.65 BlackBerry $83.98 $0 $290.37 Motorola $164.60 $0 $134.78 Secret $62.90 $0 $213.29 Gillette $101.92 $0 $164.14 Axe $77.98 $0 $237.36 Dove $139.81 $0 $377.57 Victoria’s Secret $160.79 $0 $239.59 Adidas $123.93 $0 $380.16 Nike $209.53 $0 $316.78 Coca-Cola $137.84 $0 $141.68 Oreo $60.60 $0 $234.94 Skittles $126.94 $0 $201.63 Nutella $105.95 $0 $198.87 Red bull $112.78 $0 $220.31 Pringles $116.93 $0 $352.41 Playstation $168.04 $0 $265.46 Xbox $113.29 $0 $412.91 Starbucks $219.03 $0 $508.16 McDonald’s $259.82 $0 Source: Syncapse Corp SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 16
  • 17. IMPLICATIONS FOR THE ORGANIZATION Score The Fan Base Understanding current value and the factors that influence the value of a Facebook membership base is important. Multiple factors that happen both on and off Facebook influence the value of the audience. A clear understanding of these variables is key to aligning stakeholders and driving marketing performance. Defining the variables that matter to an organization’s bottom line, deployment of a measurement platform that allows stakeholders to track their performance over time and adherence to a protocol that supports executives in discerning value within the business are vital. Understand Performance Of Social Channels Brands need to understand the causal relationship between their social programs and its effect on key performance indicators. Understanding Earned Media Value generated by a social base is a direct indicator of the amount of word-of-mouth conversation about a brand. Understanding Community Health is a leading indicator of the future sustainability of a community and the ability to nurture high value customers. Mining the conversation and understanding the tone and focus provide insights into the association fans have with a brand and how marketers can use such allegiance to their advantage. Execute Strategies Against Key Factors Loyalty, Spend, Recommendation, Fan Acquisition Cost, Affinity, and Media Value are the key factors that impact fan value. Brands need to develop strategies that address these areas. In Syncapse’s experience, we have observed that focused strategies will yield more positive fan engagement and overall community health than will an ad hoc approach. Focusing efforts on these factors will help increase fan value over the long term. Campaign-based practices typically do not produce sustained positive results. Manage And Build Off The Trends Fan value is cyclical and ever changing based on the ongoing marketing performance of the activities described within this paper. It becomes incumbent upon Brands to institute a long term view if they are to successfully learn and evolve from independent campaign orientations to an approach of defining, measuring and increasing the value of their fans over an extended period of time. The key performance indicators identify the levers marketers must pull to improve their ROI performance and fan value. Conclusion As growing audiences migrate to social networks like Facebook, a brand’s ability to connect and influence these customers must shift from traditional marketing strategies. Facebook fans represent a significant opportunity to drive revenue enhancement, brand, and loyalty without incurring the considerable cost-per-person of conventional marketing. More importantly, such Facebook strategies allow for a discernable ROI that is not allowed by most other approaches. Fans are an extremely valuable segment of the Internet audience and should be addressed with specific strategies to nurture their ongoing participation and influence. Unlike traditional campaign- based marketing, Facebook-based marketing through well crafted fan utilization has no defined shelf life and can be more readily integrated into the day-to-day operation of the enterprise. SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 17
  • 18. ABOUT SYNCAPSE Syncapse Corp. is a global leader in the areas of community building, technology solutions, and digital measurement. Founded in 2007, Syncapse Corp. has offices in Toronto, New York, London and Portland. Syncapse works with Fortune 500 companies and global media agencies to reinvent how organizations use social media to their competitive advantage. To learn more visit http://www.syncapse.com Contact Us facebook.com/Syncapse @syncapse 416.593.3773 info@syncapse.com syncapse.com SocialTRAC™, Value of a Facebook Fan. ©2010 Syncapse Corp. All rights reserved. www.syncapse.com 18