The Value of a Facebook Fan: Some Insightful Readings

February 21, 2012

In the course of doing research on Facebook’s valuation, I found some great articles and posts on the Value of a Facebook Like or Fan:

1. From the Brandbuilder blog, some of the best analysis I have seen on this subject.

Assigning an arbitrary (one might say “cookie-cutter”) value to Facebook fans in general, averaged out over the ENTIRE breadth of the business spectrum, is complete and utter bullshit.

2. Here is an argument (from Millward Brown) for how social media is not a means to building brands, but rather an end.

Social media can’t help build brands without the other ingredients that make brands strong: an effective business model, a great brand experience, clarity of positioning, and the ability to disrupt the status quo in a product category.

3. And this, a comparison between the value of Facebook and Twitter sharing from Eventbrite.

Sharing activity on Facebook equaled almost 4 times the amount of sharing on Twitter.  We attribute this to Facebook’s reach (right now there are simply more people that use Facebook than Twitter) and the fact that connections on Facebook more closely mirror real-world, personal relationships.

4. Finally, a video on calculating the ROI of a Facebook ‘Like’ by Adobe. Note that this is a promotion for Adobe’s offerings, but I found the methodology interesting.

 

Update: Here is an infographic from Minter Dial’s blog.

The short story is that there is no way to place a single value on a fan. The answer is that “it depends.” Not only are some fans worth more than others, but the way you build up engagement on your page makes the value of a fan more or less potent.

I plan to follow up with a post distilling my readings and my own ideas on assigning a value to social media ‘Fans’ or ‘Followers’.  Stay tuned!

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How Can Facebook Monetize Mobile?

February 8, 2012

Facebook’s S-1 states that users are increasingly accessing it through mobile devices but the company does not yet monetize mobile. “Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results;” There are 425 million monthly active users (MAUs) accessing Facebook through mobile devices. See link here. 

Even though the S-1 presents this as a risk factor, this is a huge opportunity that the company must certainly be planning to address.

One big challenge withMobileis that only one ad can be shown per page. On PC based interfaces, Facebook shows several ads per page (as many as 7 ads). So the monetization potential for that single mobile ad has to be equivalent to all the 7 web based ads combined.

This means that mobile ads have to be extremely targeted and relevant to induce users to take action. Regular display or banner ads or even generic sponsored stories will not cut it. Mobile ads should be sharply targeted, and the right ad delivered at the right time.

What monetization options does Facebook have?

(1) Location based offers and ads:

Facebook can let users check-in to receive coupons and offers based on their locations. Similarly users can also receive ads and offers as they drive by a particular area. For example, if a user is on a particular street inSunnyvale, she could receive offers or ads from Coldstone Creamery in the vicinity.

(2) App usage:

Mobile devices are used extensively to reduce boredom and to pass time. Facebook can encourage users to access apps and games via its mobile device. If a user is bored they may be more open to purchasing digital goods for entertainment, or purchasing movies for view, for example, via the Warner Brothers page on Facebook.

The challenge is that users could access games and apps directly via their mobile device’s app marketplace instead of via Facebook’s app marketplace. For example a user may prefer to access the Angry Birds mobile app directly rather than Farmville through Facebook. There has to be a compelling value proposition (for eg, interaction with one’s Facebook network or apps’ unique availability only on Facebook). The user interface for accessing Facebook apps via mobile also needs to be seamless.