Communication Ammo, by Sean Williams

Vitrue, a social media marketing firm founded in 2006, snagged an AdWeek article this week when it announced that it had caculated the value of Facebook fans. It’s $3.60 per fan.  What’s behind the valuation? A rash of assumptions, according to a piece on the company’s Web site.

Why do I think this is wrong? Let me count the ways:

1. Their data is proprietary. The company says it manages 45 million fans and drew the data from a sampling across industries, but they don’t specify the amount of the sample, the specific firms involved or any other information that might provide clarity as to the methodology. No one can cross-check the data.
2. They make several assumptions: They say they looked at the ratio between wall posts and number of fans — asking how many fans have the potential to see a post. This is similar to using circulation in a print pub. Fine. But unlike circulation (audited) or even Nielsen Ratings, we’re assuming that all fans have an equal opportunity to see, and we’re assuming that a wall post is equivalent to an ad. Then, they say that multiple posts have equivalent impressions — two per day totals 60 million impressions on a one million fan page.
3. They then say that these impressions are free, “similar to earned media.” But we know earned media is not free — someone had to do some work to make it happen. This is one of the insidious problems with ad value equivalency — there certainly are costs associated with generating earned media, and they must be accounted for.
4. Next assumption, cost per thousand impressions. They settle on $5 CPM, based on nothing — wouldn’t this number depend on the specific outlet?  How about some science instead of conjecture? Multiply it out using their figures and it totals $300,000 in monthly value for the two post-a-day million fan page.  They show it like this:

1M impressions x 2 posts x 30 days = 60M impressions >>> 60M impressions / 1000 x $5 CPM = $300,000

But what I believe is most egregious is the idea that engagement on Facebook is really just a game of increasing advertising impressions. This is totally contrary to how social media is designed to work. It’s push-focused instead of relationship-focused. It’s shouting from the rooftops instead of talking to your neighbors.

Look, everyone has to make a living — advertisers are pretty comfortable in their “metrics every marketer is familiar with,” as Vitrue’s article says.  But marketers need to wake up — measure something meaningful!  I don’t know, but perhaps the fans are actually doing something that increases their intent to purchase? That improves their understanding of the product? That makes them have a more favorable attitude toward the company? That they bought something?

Surely any of those is a better metric than one based on made-up numbers, bad methodology, weak assumptions and false equivalencies.

Harrumph.