PHD Perspectives: Want to Know the Value of a 'Fan?' Ask the Late 90s - Lance Neuhauser - MediaBizBloggers

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Facebook has more than 400 million active users.

Twitter has more than 75 million active users.

Both platforms have amassed these followings in record time.

Consumers have changed the way they communicate as a result of these platforms.

Marketers are saying, "We want in. We need to be in!"

CFO's are saying, "Tell me what we get in return."

Marketers are then saying, "Oh crap."

And therein lies the issue.

Ever since Digital media/marketing has burst onto the scene, folks have been trying to figure out how to justify expenditures within it.

We usually start by applying a model from another, more established method of investing. We then graduate into a modified version of an old method, but it is very rare that we ever create a new investment justification model from the ground up.

This repurposing is exactly why most new Digital platforms, at one point or another, make their way into the DR pigeonhole. It's easiest to understand.

Here are a couple examples…

A recent study by The Independentasked, "What's the value of a Twitter follower?"

They claimed that the results were still hard to quantify. However, one takeaway was that social media "fans" are two-thirds more likely to recommend a brand they've "friended" to a friend -- or buy the products themselves.

And another study released by Vitrue projected the value of a Facebook Fan as $3.60 (based on the value of newsfeed impressions only).

These types of studies make me fearful that every time something new in Digital is making an impact, marketers will regress to a late 90s mentality of pay-for-what-we-can-easily-track. Unfortunately, this keeps us behind the consumer usage curve and unable to capitalize on the promise that these revolutionary platforms can bring.

Imagine if new models of investment were created as quickly as consumer adoption was happening. The combination of money and usage would create an amplifying output effect; listen, test, innovate and implement, listen again. The advancement of the platform would be staggering.

However, have no fear folks, I am not here to just raise problems. I am here to offer solutions!

Let's think back on the first study from The Independent.

"A fan is 2/3 more likely to recommend a product or buy it than a non-fan."

To arrive at new solutions that allow for larger investment, but are grounded enough to appease the CFO, we must ask the challenging questions.

Let's start with…

•How are we measuring a non-Facebook 'fan'?

•How does the declared Facebook 'fan' compare to our 'non-Facebook fan'?

Where we net out from these first two questions is searching for another source of customer information, another source of 'opt-in' data.

(The light bulb sizzles.)

Have we compared our 'fan' data to our brand's e-mail database?

I'm assuming an answer of no. I have no choice but to ask whether or not we have realized yet that 'fanning' is just another way for us to engage in permission-based communication.

Here's the claim…

Feeds are the Modern Day Inbox

Think about it. It's quick communication from those we give our address to (connect or follow). We opt in for messages from brands we dig. We read. We respond. We glance. We disregard. We move on.

Therefore, as marketers we should not be asking the value of a fan, but rather how can we best deliver value to our consumers in order to warrant a response.

E-mail marketing has advanced well into the new millennium and its metrics far exceed open and click rates. We now evaluate product selection, forwards, feedback, lifetime shopping patterns, communication platform preferences, multi-channel experiences and more, all in the name of understanding what a consumer valued.

We can then jump even further ahead in the technology continuum by applying the advancement of e-mail value delivery to the space that Facebook provides for content, applications, social interactions and spontaneous influence.

This means our model should not be asking the ROI from a fan, but rather it should be asking what the value was that a consumer received from the interaction.

To calculate this we borrow a few lessons from economics 101. If someone made a purchase from an interaction, the value they received is the price they were willing to pay. We can also assess that if a consumer felt compelled to share the interaction, talk about the interaction, or build on top of the interaction, then they also received value. By following those interactions across the social map, and the ever-evolving communication/transactional methods available (mobile, web, etc.), we can determine what did and did not provide value to a consumer.

Therefore, we are not judging based on sales and engagement rates (albeit some of the same metrics are used). We are flipping the mentality.

We are judging based on a…

Consumer's Return on Interaction (CROI)

You may be asking, what's the difference?

Imagine you're a top beverage company with a large presence on Facebook.

Imagine you only measured your Facebook investment via clicks, event RSVP's and sales.

You would then look at major initiatives, like a face match or free giveaway, and inevitably back into a straight-line analysis that says…we lose money on this. You would say our media dollars, promotional costs, labor, etc. didn't profitably drive enough sales.

Luckily for you, you don't need to think that way.

You can have a consumer first mentality and work off a new primary metric…CROI.

Your CROI will let you know whether or not you've earned the right to continue talking to your consumers.

And at that point you would prioritize initiatives that delivered the most value.

Your ongoing investment will pave the way for more fans, larger future events, and due to the nature of the platform, the ability to listen and receive way more consumer insight about your product and services, which of course will lead to…more sales.

You can then justify to your CFO further investment by showing him/her the non-DR pathway to sales via the following value indicators:

Consumer sentiment/feedback/chatter

Fan recommendations/new fans

Application engagement

News feed replies, etc.

So let's do it marketers. We finally have the chance to think about consumers first. We have the opportunity to listen, talk and then listen again. It makes sense. After all, we were given two ears and one mouth for a reason.

Lance Neuhauser, EVP, U.S. Digital Director, PHD Media, an Omnicom Company. You can follow PHD's Twitter feed at http://twitter.com/PHDisSmartMedia

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