Note: This is an excerpt from our 2013 Social Loyalty Report. You can download the full report here.
Since the introduction of Facebook Pages in 2007, marketers have bent over backwards trying to estimate the value of getting users to interact with a brand on social network platforms – not just Facebook, but Twitter, LinkedIn and more recent start-ups like Instagram and Pinterest.
Fig.1: The Estimated Value of a Facebook Like ($)
The traditional focus of these research attempts has been to estimate the monetary equivalent of a Facebook like. The methodology is spurious at best: Marketers tend to measure the impact of a like by surveying the average amount spent by someone who “likes” a brand on Facebook versus “non-liker”.
Fig.1 shows the difference in estimated like values by six research firms. Not only is the variance in estimates immediately obvious, we can find that as of November 2012, up to 9 out of 10 blog posts and news articles refer to these same six studies when discussing the topic of the monetary value of social media, with the Vitrue and Syncapse studies alone accounting for 6 out of 10.
Clearly, the money value of a like is more difficult to estimate than extrapolating numbers from a survey. The reasons why users initially like brands may give some more insight into their subsequent interaction on social platforms. A recent study showed that for 55% of users who like a brand the biggest motivator is receiving promotional discounts or giveaways, while for another 25% the biggest motivator is showing brand loyalty and trust. Motivations such as liking a brand because a friend recommended it, or liking an unknown brand to acquire more information about it trail far behind.
Why users like brands
Fig.2: Why users like a brand
If they like a brand, they are very likely to be familiar with the product and have mostly decided on how much money they are willing to spend on it.This reveals a clear misunderstanding of causation and correlation in the abovementioned methodology: Consumers don’t first like an unknown brand on Facebook or follow it on Twitter, and are then persuaded to start purchasing their products because of effective advertising. Rather, satisfied consumers will like the brand to receive offers, leave comments and feedback and learn about new products. We can deduce three crucial rules about social media users from these facts:
They decide to interact with a brand mostly to receive some form of discount on a future purchase.
Liking a brand does not convert a consumer from casual to loyal – rather it is the transition from a casual to a loyal consumer that induces the liking of the brand.
This seemingly throws a wrench into our intentions to monetize the social interaction: If the like has no significant impact on the user’s decision to purchase the product, what can the value of getting a customer to like the brand possibly be? It’s the ability to identify not how many loyal consumers you have (via the number of your likes), but rather who those consumers are. Facebook has only recently started to provide firms with the ability to engage in a certain degree of data mining in order to create targeted advertising campaigns.
In the second part of our report we analyse how the information gathered from a pool of users who like a brand can be translated into targeted marketing.
 Penn, C. (2011, December 29). What’s the value of a Facebook Fan? Retrieved November 4, 2012, from WhatCounts.com: http://www.whatcounts.com/2011/12/whats-the-value-of-a-facebook-fan/
 Strutton, M. (2010, April 14). $3.60 Facebook Fan Valuation Is Just the Tip of the Iceberg. Retrieved November 4, 2012, from Vitrue.com: http://www.vitrue.com/360-facebook-fan-valuation-is-just-the-tip-of-the-iceberg/
 Syncapse. (2010). The Value of a Facebook Fan: An Empirical Review. Syncapse.
 ChompOn. (2011). What is the Value of a Social Action in Online Commerce? ChompOn.
 TNS Digital Life. (2012). Putting a value on a Facebook fan. TNS Digital Life.
 Delo, C. (2011, November 22). Why Brands Still Need Facebook ‘Fans’. Retrieved November 4, 2012, from AdAge.com: http://adage.com/article/digital/study-facebook-fan-worth-10-average-brands/231128/
 Lab42. (2012). Like Us! Lab42.com, Retrieved November 4, 2012, from Mashable.com: http://mashable.com/2012/09/24/facebook-brand-page-value/