What’s the Value of Your Facebook Fans?

From my recent social media projects in the restaurant industry, I have become fascinated with brand Fan Pages on Facebook.

In fact, the genesis of this blog came about when I read a blog post from Ignite Social Media where they summarized the top 50 brands on Facebook.  There are 8 pure restaurant brands in the top 50 and I have summarized them below.  To make the comparisons somewhat equal, I added a column for the number of locations and calculated the number of fans per location.

Top Restaurant Brands on Facebook (Per Ignited Social Media)

While 8.4 million fans for Starbucks seems like an impressive number, it is only 4th in terms of Fans Per Location among the top 50 brands.  Interestingly, Krispy Kreme is doing the best job with 1.6 million fans spread across 615 locations yielding more than 2,600 fans per location.  As a comparison to smaller brands I was following, The Cheesecake Factory chain based in Los Angeles has 150 locations and 370,000 fans which yields 2,500 fans per location.

Which got me to thinking about the value of a Facebook Fan.

From my experience in a 43-location restaurant chain based in Southern California, I know that our Facebook Fan Page was important and the Facbook pageviews on a weekly basis were about 1/3rd of the pageviews from the main website.  In my mind, the Fan pageviews on Facebook are even more important than the website because they are current and interactive, and all Comments or Likes are hitting the newsfeed for each fan with the potential of reaching many more people.  If I had to make a back of an envelope calculation, I would say that the value of a fan would be at least 1 to 2 times the average dinner check for a casual dining or typical restaurant as that is my estimate of incremental visits driven by Facebook activity.  From my experience in managing the Facebook fan page and reading fan comments, I know that we were getting people to think about and talk about our brand when they weren’t in the restaurant – and that we were reminding people to come back and visit us.

To be a little more scientific, I did a Google search of recent blog posts on the subject of “What is the value of a Facebook Fan?”

Augie Ray, a social media blogger from Forrester, made an argument last week that the value of a Facebook Fan was zero.  While he may have been overstating his case, his point was that a fan does not have any value until a company is engaging the fan and working to keep their interest.  In other words, just pumping up a fan base for the sake of sheer numbers is not a way to build value.

Research firm Syncapse released an interesting study last month that said that the value of a Facebook fan was approximately $71.  Their report was based on interviews with more than 4000 fans of 20 top brands and analyzed the spending patterns of fans vs. non-fans.  Gigaom has a blog post summarizing the Vitrue report and you can download the full Vitrue report here.

I also found an interesting tool from Vitrue called the Facebook Fan Page Evaluator.  This looks to be a nifty little tool and uses a concept called ‘”Earned Media Value” to calculate the current and potential value of a brand based on the number of fans, page posts and interaction.  The Earned Media Value is an assumption that the user can change and see the results on the fly.  There are also recommendations for best practices for post frequency, post type and the use of short URLs.  There is a further explanation of the Evaluator tool from the Vitrue blog and at this AdAge blog post by Judy Shapiro.

Krispy Kreme - Vitrue Social Page Evaluation

So, what do you think the value of a Facebook Fan is?  I have some additional ideas about Fan page engagement and measurement that I will share in a follow-on blog post later this week.

Insights from Forrester’s Interactive Marketing Forecast for 2009 to 2014

Excerpt from my Omniture Email

I received an email from Omniture today with a link to the 22-page July 2009 Forrester report by Shar VanBoskirk (et.al.) titled “US Interactive Marketing Forecast, 2009 to 2014″.  Since I am always intrigued by what the experts are forecasting (especially when it’s free), I clicked the link to get access to the report.   The basis for the report was a quantitative survey with 204 marketers and interviews with 16 vendor and user companies.

Since I couldn’t paraphrase the report’s summary any better than Forrester, here is their Executive Summary:

US Interactive Marketing Forecast, 2009 to 2014

Other highlights of the study include:

  • Social media – Social media spending will see a 34% CAGR growth from $700 millinoto over $3 billion – the highest of any channel over the next 5 years
  • Search marketing – Search marketing (58% of total interactive spend) and display advertising (31% of total) still represent the lion’s share of total spend of $55 billion in 2014
  • Display ads – Advertisers continue to favor per-per-click (PPC) over impression-based ads – and 58% of display budgets are going to performance-based media mostly because of the easy measurement and immediacy
  • Email - Email continues to grow at the expense of direct mail (the ‘green’ marketing alternative) and as it becomes more inexpensive and smarter
  • Strategy - More than 40% of respondents say that marketing is become a strategic leader in their organization

I included the following chart because it addressed how marketers view the effectiveness of interactive vs. traditional marketing.

  • 75% of respondents will increase budget for interactive by shifting money away from traditional marketing (60%) or by keeping traditional marketing budgets flat (15%)
  • The big decreases in traditional marketing budgets will come from direct mail (40%), newspapers (35%) and magazines (28%)

Effectiveness of Interactive Marketing Tactics vs. Traditional Marketing Tactics

What’s interesting to me is that around 90% of the marketers believe that the effectiveness of “created social media” will increase over the next 3 years, compared to about 80% for online video and 75% for search engine optimization (SEO).  On the other hand, each of the traditional marketing tactics were forecast t o decrease by more than 50% of the respondents over the next next 3 years.  There’s no surprise in either interactive or traditional tactics and the disparity is easy to see if you focus on the medium dark blue bars above.   Marketers say that traditional methods are ineffective, but it still seems that they are spending large amounts of their budgets on this channel.

The report closes with some ways interactive trends will redefine the business of marketing:

  • Advertising budgets will decline in the next 5 years, but marketing investments will not
  • Traditional agencies that cannot nuture customer relationships will not make it
  • As media becomes more syndicated, media will be digested across devices instead of just sites – which gives an advantage to Microsoft, Apple and Google

You can purchase the full report report from Forrester or get it from Omniture as I did, however I did not see a link on the Omniture website for the report yet.  It’s definitely a great read if you can get your hands on a copy.

Social Media Update from Forrester Groundswell

Forrester’s Groundswell Interactive Marketing team published their 3rd annual Social Technographics Profile in a report last week in a document called “The Broad Reach of Social Technologies” (costs $499 if you want to read the whole report).  The results show that more than 80% of online Americans are active in either creating, participating in, or reading some form of social content at least onece per month.

As a reminder, here is how Forrester categorizes the participation of various online users based on their behaviors of Creators, Critics, Collectors, Joiners, Spectators and Inactives.

Forrester - Social Technographic Profiles

Forrester - Social Technographic Profiles from Blogs.Forrester.com/Groundswell

The biggest growth in 2009 occurred in the Joiner category which grew from 35% to 51% of online Americans.  Much of this growth comes from the large numbers of people joining the top social media sites such as Facebook, Twitter and LinkedIn.  The other big finding is that social media Spectators now represent 73% of all online Americans which means that you cannot ignore social media as a phenomena.

As Josh Bernoff stated in his blog post announcing the study’s results:

Marketers, if you’re not doing social technology applications now, you’re officially behind. We expect a wave of Web site reorgs and redesigns to include social activity.

Forrester also created an interactive Consumer Profile tool that lets you analyze the results by Age, Country and Gender.  Below are the results for all online US Consumers.

2009 Forrester Consumer Profile Tool

2009 Forrester Groundswell Consumer Profile Tool

The profile tool is available at http://www.forrester.com/Groundswell/profile_tool.html

ROI of Social Media in Customer Service

Forrester’s Natalie Petouhoff spoke at the Social Media Club of Los Angeles on Wednesday night, and she discussed the importance of using social media in customer service communities.  Using social media is more than implementing the tools, it’s “building a community that  interacts with each other on an ongoing basis.”   Natalie noted that a ‘perfect storm’ exists today with the collision of increasing customer dissatisfaction with companies wanting to do more with customer service and the growing use and influence of social media tools.

Here are the 2 most important things you need to know about what she discussed:

  • Social media activities have a big impact on customer service
  • The conservative ROI on customer service communities  is 100% with a payback of less than 12 months

She also shared some of the revenue improvements and cost savings that are direct benefits of customer service communities:

Revenue Improvements Cost Savings
  • Increase lifetime customer value
  • Increase product ideation
  • Increase lead conversion rates
  • Reduce calls
  • Reduce emails
  • Increase agent productivity
  • Increase FCR (first call resolution)
  • Reduce SEO costs

Finally, she talked about how companies need to track a customer’s social value along with their lifetime value.  Customer advocates need to be recognized, acknowledged and thanked.  Even customers who are saying negative things about your brand or product can be turned by acknowledging their concerns and reaching out to them.

You can access Natalie’s complete presentation from this link (requires free registration) – www.forrester.com/socialmediaclubla.  Natalie is also available on Twitter at @drnatalie.

Jeremiah Owyang – Thumbs Up or Thumbs Down

Crowdsourcing Jeremiah Owyang’s Fate

Jeremiah Owyang - Yah or Nay

Jeremiah Owyang - Yah or Nay

Forrester analyst Jeremiah Owyang wrote a blog post yesterday about some rumors at Mzinga that ended with a strong recommendation for any prospects to stall any movement until he is briefed by Mzinga next Monday.

Here are a few excerpts from the original post:

I’ve been hearing from multiple sources in a variety of folks that Mzinga is undergoing some changes. With the recent layoffs a few months ago, to apparently voluntary leave of the CMO this week, there are a lot of questions I have to ask.

I strongly recommend that any Mzinga clients or prospects stall any additional movement till they brief me next Monday.

First, I believe that such statements in a blog are incredibly unprofessional and border on negligent corporate behavior – especially when the post was written based on unsubstantiated rumors.  Second, the call to “stall any movement” until Jeremiah gets briefed next week is pretentious in that only Jeremiah can get to the bottom of this issue’?

Jeremiah is a respected analyst working for a respected firm, and has worked hard at covering and growing the social media and community space.  Jeremiah did issue an apology on his blog today and I heard that Forrester also sent Mzinga an apology as well.  Plus, there have been more than 60 responses to his original blog post and nearly 30 to his apology post today.  I’m sure that Jeremiah feels contrite in the same way that Alex Rodriguez, Bernard Madoff and Bill Clinton have felt in the past when they issued their own public apologies.  But that doesn’t undo any damages that Mzinga has incurred from negative mentions in the posts and on Twitter.

Because Jeremiah is such a proponent of social media, I think we turn his predicament over to the general public and use crowdsourcing to determine his fate.

Take a moment to express your opinion below in this quick poll:

Several other bloggers have piled on to this issue including:

I’m sure there will be more.

My disclosure – I have worked with Mzinga since December 2006 on two different community efforts and I believe that Forrester should fire his a** for this flagrant offense in order to protect their own brand and image.

Walking the “Social Media Walk”

Forrester came out their latest research note on “Community Platforms” today.  Jeremiah Owyang, their lead analyst, wrote a very extensive summary of the report on his blog too.  At a minimum, you must check out the blog post and read all of the extensive comments that Jeremiah has received so far.

Jeremiah made some great points in his post and this quote sums it up best:

Used correctly, communities can impact the top and bottom line of company’s financials…and communities matter more now than ever – especially during a recession.

Based on their research, Forrester believes that most companies are looking for a solution partner or a vendor that can deliver on strategy, education, services, community management, analytics and support.  As such, 60% of their weighted criteria for the scoring was based on this feature.

The graphic below summarizes where Forrester places the leading vendors in the space.  Their top four vendors include Jive Software, Telligent, Mzinga and Pluck.  I am very familiar with Mzinga as I worked with them for nearly 2 years with the Catalyze community and am working with them again on a start-up professional community.

From Jeremiah Owyang's Blog

After reading Jeremiah’s post and thinking about other circumstances that occurred this week, it got me to thinking about community vendors and their own social media efforts.  In fact, I wrote a comment to Jeremiah’s post and here is an excerpt of my comments:

…I want my social media vendor to be active and visible in the social media space – which means that I want them to be blogging, twittering and participating in other social media activities.  I thought Mzinga used to do the best job of any of the leading vendors with their participation in social media. Their management profiles set the standard for how people need to be socially available in today’s Web 2.0 world and they proved it by including office and mobile phone numbers along with links to Twitter, Facebook, blogs and LinkedIn in their profiles.

Mzinga used to have some very active social media people listed as Thought Leaders on their website. However, people like Aaron Strout (@aaronstrout), Jim Storer (@jstorerj), Rachel Happe (@rhappe) and several others are no longer with Mzinga.  Mzinga now lists just 4 Thought Leaders on their website and other than CEO Barry Libert, I’ll let you draw your own conclusions as to their leadership and activity.

Looking at the other leading vendors, they do not appear to be very active either. Telligent’s CEO Rob Howard has a blog, but his Twitter traffic is pretty minor. The positive is that Telligent does have a number of blogs linked to their website, which I do view as a positive. Jive has a blog on their website and their CEO David Hersch has written some posts, but it hasn’t been updated since November.

So my question is, can a social media company really be a leader when they don’t have any social media leaders or when their social media efforts come across as fairly weak?

Don’t social media companies have to walk the ’social media walk’?

So, is your social media vendor ‘walking the walk’ or just talking the talk?

[1/10/09 update – the Forrester report is available from the Telligent website. The download requires registration.]

What’s Your Social Software Strategy?

An article by Tony Byrne of CMSWatch in Enterprise Social Software in KMWorld magazine last week got me thinking about the wide array of social software tools and how these tools can be used to create a social community offering.

Tony provided a very good overview of the social software landscape and identified the major categories in the social software marketplace.  Tony also identified 11 different implementation strategy scenarios for social software broken into Internal and External groupings, and he acknowledged in practice there will be variants or hybrids of these scenarios.

Here is a listing of his scenarios:

Internal communities:

  • Project collaboration
  • Enterprise collaboration
  • Enterprise discussion
  • Information organization and filtering
  • Knowledgebase management
  • Communities of practice
  • Enterprise networking

External scenarios:

  • Branded customer communities
  • Customer/reader interaction
  • Partner collaboration
  • Professional networking

Another way for looking at the social software landscape has been offered by the Forrester social media analysts in their Groundswell blog and book.  Their categories for communities are based on advancing organizational or corporate goals and include:

  • Listening (research)
  • Talking (marketing)
  • Energizing (sales)
  • Supporting (customer support)
  • Embracing (product development)
  • Managing (internal or employee applications)
  • Social impact (pro-social non-commercial activity)

I understand where Forrester is coming from, but Tony’s categorizations make a lot more sense to me.  The Forrester approach seems to force communities into neat little packages and ignores the reality of hybrid communities.

For example, the Catalyze community that I founded for business analysts and usability professionals was definitely a hybrid.  At the top level, it was a professional networking and knowledge sharing community with an embedded branded customer community that provided customer support, the latest product information via tips and tricks, and a ‘suggestion box’ for future product enhancements.  In this case, it is very difficult to fit this ‘square’ community into one of the Forrester ’round’ categories.

Or maybe, the best way to approach community strategy would be a combination of the two approaches – and hopefully, I’ve given you a place to start.

In any case, it is critical to identify and document your community strategy and goals upfront before selecting your social software tools.