THE VALUE OF A FAN

Mat Morrison

Starcom MediaVest Group

@mediaczar

1

…so please bear with me

(Try telling that to your CFO)

WHAT IS A FAN?

3

Kevin Kelly, “1,000 True Fans”

A True Fan is defined as someone

who will purchase anything and

everything you produce.

They will drive 200 miles to see

you sing. They will buy the super

deluxe re-issued hi-res box set

of your stuff even though they

have the low-res version. They

have a Google Alert set for your

name.

They bookmark the eBay page

where your out-of-print editions

show up. They come to your

openings.

They have you sign their copies.

They buy the t-shirt, and the

mug, and the hat. They can't wait

till you issue your next work. They

are true fans.http://www.kk.org/thetechnium/archives/2008/03/1000_true_fans.php

4

We use brands to tell a story about ourselves.

MUFC Harley Davidson Legend of Zelda

Playboy Apple Nike

Some brands are easier to co-opt than others

5

The spectrum of fandom

Fairly Oblivious Actively DislikeReally LikeMad Love

6

Superfans: True Fans with body paint & tattoos…

This fan… …creates the space for

these fans to exist

7

But I’m only talking about Facebook Fans

Not “True Fans”

Not “Superfans”

But “Facebook Fans”

8

Why is Facebook so important?

Data: Facebook, VentureBeat, SharesPost, SecondMarket

0

20

40

60

80

100

0

200

400

600

800

1000

Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11

Facebook valuation ($bn)

Facebook users (millions)

Facebook growth: users and

estimated market cap

9

European Web Usage

Data: comScore EMEA August 2011

85 billion

user

minutes/mo

nth

10

European Web Usage

Data: comScore EMEA August 2011

163 billion

page

views/mont

h

11

The most-loved brands on Facebook last week

Brand Fans

Coca-Cola 35,017,182

Starbucks 25,747,572

Oreo 23,271,622

Red Bull 22,673,250

Converse All Star 20,883,240

Converse 20,410,948

Skittles 19,460,585

Pringles 15,855,303

Monster Energy 12,504,459

adidas Originals 11,273,177

• November 2007; Facebook introduces Pages

• “We’ve built a way for you to connect to things other than people”

• Effectively sets strategy for Brand Advertisers for next 4 years.

WHAT’S THE VALUE OF A

FAN?

13

I won’t insult your intelligence…

(Of course it does. Now I can go home.)

14

The costs are fairly simple

Annual cost

of Recruitment

Annual cost of

Community

Management

Fans

15

Value is more complex

Valuation Method Publisher Date

$3.60 Media

Value

Vitrue Apr 2010

$71.84 Incr. Spend Syncapse Jun 2010

$136.38 Agg. Value Syncapse Jun 2010

$2.53 Incr. Sales EventBrite Oct 2010

470% Incr. Spend WFA/Millward Brown/

Dynamic Logic

Mar 2011

$2.10 Incr. Sales Spinback May 2011

16

Why Brands like Fans

Sign of my brand’s popularity

Source of insight

Generate increased engagement with brand

Generate increased short-term spend

Generate increased long-term spend

Increased loyalty

Increased advocacy/recommendation

Source: SMG London Client Interviews

17

Why Brands like Fans

Earned Media Value

Direct Sales/Sales Promotion

Brand Preference Metrics

EARNED MEDIA VALUE

19

Vitrue’s Advertising Value Equivalent model

Fans Posts

1,000

CPM

1m fans × 2 posts x 30 days = 60m impressions

60m impressions ÷ 1000 × $5 CPM = $300,000

$300,000 × 12 months = $3.6m

$3.6m ÷ 1m fans = $3.60

20

And where that model goes wrong:

Daily Active Users

Reach Pages reach between 5% and 20% of their fans

1m fans may mean 50K Daily Active Users

Frequency Smart advertisers cap frequency to avoid burnout

DAUs are exposed multiple times

Result? Hard to value this way – but let’s dig deeper

21

Like Page

See Brand Post in News Feed

Ignore, Like or

Comment

See/Don’t See

Future Posts

How people use a Facebook Page (real client data)

11%

Ongoing Exposure

36%

Like source

99%

First exposure

0.6%

Responders

0.6% attributed to

“on Page” Likes

Estimate Comments + Likes

DAU

DAU

Total

Fans

Week DayDay PartAudience Activity Competitor Activity

Post engagement by hour and day

(most responsive days highlighted)

-

20

40

60

0 6 12 18

-

10

20

30

40

0 6 12 18

0

10

20

30

40

Mon Thu Sun

0

20

40

60

80

Mon Thu Sun

To May 2011 Since May 2011

Co

un

t o

f P

os

ts b

y H

ou

rC

ou

nt

of

Po

sts

by D

ay

Single client data. Your mileage will vary

23

The effect of EdgeRank

Like Page

See Brand Post in News Feed

Ignore, Like or

Comment

See/Don’t See

Future Posts

11%

Ongoing Exposure

36%

Like source

99%

First exposure

0.6%

Responders

0.6% attributed to

“on Page” Likes

Estimate Comments + Likes

DAU

DAU

Total

Fans

euedges e

å ew edEdgeRank

Key take-out: if you don’t use them, you lose them

24

Could we earn more value by posting more often?

• 80% of responses within 3

hours.

• 90% within 6 hours

• (There’s a small blip after 24

hours: engaged/non-daily users)

• What does this imply about

how often the page could

post?

• How does post frequency

impact other KPIs?

91.4%

0%

10%

20%

30%

40%

50%

0 6 12 18 24 30 36 42 48

Elapsed Hours

%age responses cumulative

25

Impressions & Reach grow strongly inline

with post frequency

y = 1.108x + 11.63R² = 0.9438

11

11.5

12

12.5

13

13.5

14

14.5

15

15.5

0 1 2 3 4

ln(7

-day r

olli

ng

imps)

ln(7-day rolling posts)

y = 0.4005x - 2.3461R² = 0.5301

-2.8

-2.6

-2.4

-2.2

-2

-1.8

-1.6

-1.4

0 0.5 1 1.5

ln(r

each)

ln(posts)

26

..but Unlikes increase, too

• Nearly all Unlikes are a response to post activity*

• Post frequency seems to lead to fan attrition:

Increase from 1 to 2 posts = 46% increase in Unlikes.

• Recent f8 changes suggest that users may increasingly hide posts rather than Unlike the page:

This should have a long term impact on DAU/Reach – but Post engagement may increase and Unlikes decrease.

y = 0.4594x + 5.5239R² = 0.5779

5

5.5

6

6.5

7

7.5

0 1 2 3 4

ln(7

-day r

olli

ng u

nsubs)

ln(7-day rolling posts)

27

Why direct media value isn’t enough

Incremental media value, not cost reduction

Fan audiences remain small vs. total target audience

Impressions not a proxy for subsequent user behaviour or revenue growth

INDIRECT MEDIA VALUE

29

Homophily

We like to hang around with people like ourselves…

30

Social Proof

…and we unconsciously copy what our friends do

31

Indirect Media Value: Homophily & Social Proof

Paid Better targeting (& less wastage)

Greater impact

Implied/explicit endorsement

Higher response

Earned Spontaneous endorsement

Greater impact

Free marketing = reduced marketing spend

32

Indirect Media Value: Homophily & Social Proof

+10%

+4%+2%

+16%

+8% +8%

+30%

+13%

+8%

Recall Awareness Purchase Intent

Nielsen BrandLift

Ad Exposure Social Ad Exposure Social Ad + Organic

http://blog.nielsen.com/nielsenwire/online_mobile/nielsenfacebook-ad-report/

33

How to make Media Valuation work for you

Remove focus from Fan growth at any cost

Focus on Reach/Frequency

Sharing

Engagement

Integration with campaigns

Audience quality

Efficiencies & cost reductions

DIRECT RESPONSE VALUE

35

40%

37%

36%

34%

33%

30%

27%

25%

22%

21%

13%

12%

To receive discounts and promotions

To show my support for the company …

To get a "freebie"

To stay informed about the activities …

To get updates on future products

To get updates on upcoming sales

For fun and entertainment

To get access to exclusive content

Someone recommended it to me

To learn more about the company

For education about company topics

To interact (e.g. share ideas, provide …

Why people “Like” Brand Pages on Facebook

Data: ExactTarget/CoTweet September 2010

36

Example from a major multiple

3,008 Clicks

Half Price Sale

493 Clicks

£5 Off Code

Tesco Data is in public domain courtesy of Bit.ly

37

Online Retailer

ASOS data is in public domain courtesy of Bit.ly

130,000 Clicks

Live Sale

38

How to make DR Valuation work for you

Obsessive Tracking Use [[Google Analytics]] (insert own choice)

Combine with (branded) short links

Track individual channels and posts/tweets

Form & test hypotheses

Learn from other channels

Optimise Earned Media Metrics

Reach

Frequency

Sharing

Engagement

Audience quality

Efficiencies & cost reductions

BRAND METRICS

40

Building loyalty. One fan at a time.

Customer Services does one-to-one

Marketing doesn’t

41

Social Interactions appear to impact brand metrics

+28% +31% +34% +35%+41% +43%

+78% +74% +79% +79% +81% +82%

SMBI: Impact on Brand Metrics

Visit Only Visit + Action

SMBI is a Starcom MediaVest Product

42

What did we learn from the SMBI study?

Sharing/recommending is the key action we should seek

Not simply because it reaches others…

..but because it’s a public commitment

…and has high impact on future preference/behaviour

43

How to make Brand Metrics Valuation work for you

Invest in market research to justify activity

Compare across multiple channels

Optimise content and earned media metrics for sharing

44

Don’t have to Like a Page to engage & share…

People want to

promote

themselves, and

they’re prepared

to let Brands

help.

Make the content

about them, and

they’ll share it.

WHERE DOES THIS LEAVE

US?

46

40%

37%

36%

34%

33%

30%

27%

25%

22%

21%

13%

12%

To receive discounts and promotions

To show my support for the company to others

To get a "freebie"

To stay informed about the activities of a …

To get updates on future products

Tp get updates on upcoming sales

For fun and entertainment

To get access to exclusive content

Someone recommended it to me

To learn more about the company

For education about company topics

To interact (e.g. share ideas, provide …

Why do people become Fans?

Data: ExactTarget/CoTweet September 2010

Mostly, they’re “Subscribers”

or “Permissions”, and not “Fans”

Should this make us think?

“Truly social”

Channel duplication

47

What if we unbundled the user journey?

Fan acquisition & MGM

Engage

DR

Sequential

• Orthodox model insists

that users “join

community” before

receiving benefits

Fan a

cquis

itio

n

Parallel

• Allow users to interact

with brand on own terms

• Increased focus on

Performance Marketing

or Brand Metrics

From a consecutive model …to parallel streams

MG

M &

Sharing

Enga

gem

en

t

DR

Question: Does every brand need to maintain

a day-to-day relationship?

48

Caveat

Facebook changes fast & often

Marketers must be prepared to change minds and direction

Seemingly established models are only 12 or 24 months old

Smart marketers are asking questions about value of their fans

49

How is it changing?

Your

Apps

Your

Pages

Your

Places

FansFriends

of Fans

Targets

Owned Space

Your

Site

Your

Apps

Your

eCRM

User Data

Social Signals

Traffic

CRM messages

Targeting Data

50

It’s less about your brand on Facebook,

more about putting Facebook in your brand comms

• Used in varying ways by

publishers (HuffPo,

Independent, TechCrunch,

Travelocity), retailers (Amazon,

ASOS), and advertisers (Aviva,

Intel, Heineken Group)

• Recent f8 announcements

make it even more important to

begin integrating Facebook

elements into your site.

51

Are we looking at this the right way?

Valuation Approach Publisher Date

$3.60 Media

Value

Vitrue Apr 2010

$71.84 Incr. Spend Syncapse Jun 2010

$136.38 Agg. Value Syncapse Jun 2010

$2.53 Incr. Sales EventBrite Oct 2010

470% Incr. Spend WFA/Millward Brown/

Dynamic Logic

Mar 2011

$2.10 Incr. Sales Spinback May 2011

52

So for our purposes, is a fan…

Someone who engages with your content?

Someone who promotes your products?

Someone who promotes your content?

Someone who buys your product?

Someone who becomes content for campaign?