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Made to measure

Made to measure

PHD’s Mike Cooper tells Communicate why markets such as Saudi Arabia will only become more important, and how to benchmark social media by Austyn Allison

August 2, 2011 3:47 by

digital as a whole: “How much should we spend online?” and “How much should we spend on social?”

Twenty-three percent of people’s time in terms of media consumption is spent online. (That was in 2010; now I suspect that number is higher, more like 25 percent.) That was in major markets, but it included some emerging markets as well.

In theory, taking that as a benchmark, you should be spending 25 percent of your money on some form of digital advertising. People are spending 5 percent or 6 percent of their time on social. I don’t know of a global advertiser that spends that portion of money on digital.

The reason it is important to benchmark is that if you are one of the biggest advertisers in the world, spending multiple billions of dollars on advertising, and studies suggest you should be spending a quarter of your money on digital, then you are going to want to know where it is going; you are going to want to know you are getting value for money.

You talked at the Lynx about measuring the value of a Facebook fan. What are fans worth?
One of the things that is interesting about that question is the enormous variation in the value of a Facebook fan. It is not an easy thing to quantify. We looked at two studies at the Lynx. One was by a company called Virtue, which was looking at the value of Facebook fans compared to the price of normal media, and they equated it back to television. They have measured it on a cost-per-thousand basis and came up with this number, $3.60. If you were an advertiser trying to reach that number of people through traditional media this would be the cost.

A second company called Syncapse has done a study and they looked at in a lot more depth. They looked at it more in terms of influence. Influence is the key word to describe the benefit of social media. They have tried to measure Facebook fans based on their level of influence over other Facebook users; the cost of acquisition, which is a standard advertising model. You know, trying to get someone’s approval, to get somebody to become a customer or an advocate – however you choose to measure it.

If someone has actually signed up to be a fan of a certain product or service, they must feel pretty good about it. It’s highly likely that they are already using your products or have the propensity to use your products, so they aspire to use your products – like a brand we look after globally, for example, Porsche. It’s worth a lot of value to have people who are available to you, who are going to receive your messages over the Internet, and who are brand advocates. Syncapse looked over the whole range of data and came up with $136.38.

One of the reasons I wanted to use those two studies in the presentation was to say there is someone over here saying a Facebook fan is worth $3.60 and someone over here saying that it is worth $136.38. I think it’s kind of indicative both of the lack of real in-depth knowledge of what the power of a Facebook fan is and what the value of the Facebook fan is.

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