the true value from facebook fan pages?

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Just looking at some of the Facebook stats (http://bit.ly/89PpIC ) and an article written by TechCrunch with data from Sysomos (http://bit.ly/78rFap)

350,000,000 active users
30% of active users are in the United States, thats 105M users
305,000,000 is the population of the US
so 34% of the US population is on FB

77% of business’ “fan” pages have less than 1,000 fans

That means that if you are a small business in Milwaukee, you have a potential client base of about 1 million people. 34% of those people are on Facebook, bringing the number of local clients that are on Facebook to 340,000. According to checkfacebook.com, about 11% of FB users are under the age of 18, so we’ll take them out because they probably don’t have any money.

That brings the number down to 302,000 possible users in Milwaukee that could possibly become your fan. But 77% of fan pages have less than a 1,000 fans. If you’re in that 77%, you’ve only captured .3% of the possible Facebook users in your area. If you compare those 1,000 fans to the total population of Milwaukee, you’re only connecting with .1% of the potential customers.

Keep in mind, this is assuming that you have a product or service that is sell-able to literally everybody over 18…if you have a service that has a specific target market (1000 clients), 34% of them are on Facebook (340). Then, how many of the people that follow your updates are people who will actually someday be spending money with you business, as opposed to other friends in the industry, competitors, spammers, family, or employees?

So when you ad up the amount of time and money invested in your Facebook Fan Page, is it commensurate with perhaps only reaching .1% of your potential market? How many paying customers actually come from you Facebook Fan Page, especially if you’re one of the unfortunate people who are in the 77%?

Another point of consideration is that it takes roughly the same amount of time, labor, and commitment to manage a Facebook page whether you have 543 fans (George Webbs, one of my favorites) or 46,366 (Culvers, another personal fave). If you assume every hour of work that is put in to maintain the page for both restaurants costs the same amount, about $25, you’ll see…

George Webbs: $.046 per client per hour
Culvers: $.0005 per client per hour

That $25 instead could have generated probably about 20 clicks to your website using any SEM campaign. If you’re Culvers, you would need to have .o4% of your Facebook Fans click through from your page to get 20 clicks, which is about the average for any banner ad. If you’re George Webbs, you’d need to get a full 3% in order to get 20 people to your site! You can see how it becomes difficult to justify spending the time with such a small user base.

If you are a small business, or are having trouble spreading the word about your Facebook page, don’t worry! You’re not missing out on a huge opportunity, in fact you should do everything in your power to minimize the time (and money) you spend on your page until you implement a unique and appealing strategy. Unless you’re generating consistent fresh content and adding new users, your hard work should be spent on other activities…like cold calls or emails!

Sadly, Facebook seems to be cost prohibitive until you get to a point where you have enough fans to generate actual sales… the more time you spend in the initial phase, the more expensive it is per potential client. For most small and local businesses, Facebook is closer to having a listing in the Yellow Pages – you better be there when people are looking for you!

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3 Responses to the true value from facebook fan pages?

  1. Nice calculation, your math looks good.

    Now take that investment you’re making in Facebook and extrapolate it over a lifetime with an audience vs. a single transaction with an individual.

    A common mis-perception about social media used in marketing, is that it will somehow produce a transaction-based relationship that was like the one before social media came on the scene. Which I suppose it will be – for awhile…

    The use of media with social elements embedded is still at the very early stages and the impact on the way businesses connect with consumers is changing along with it.

    That being said, we can do a lot more in measuring ROI in social media than we can in traditional media (ala the now useless Yellow-pages document), but the perception of a transaction-based relationship and counting on the transaction-based relationship to sustain a company in the new era is poor consulting and counseling.

    When you look at the longer, relationship perspective that can be developed with social media engagement, the investment might take on a whole new light.

    I could be all wet too…

  2. steve says:

    Excellent points, couldn’t agree more. From the perspective of small and local businesses, they easily get frustrated with the lack of early success that they have on Social Media networks – often times they expect ridiculous growth rates for their fan base!

    Instead the opposite is true…you only go viral if you have something really out of the ordinary to say – perhaps a unique value proposition. Taking care of your “virtual” customers is similar to extending great customer service for the walk-in traffic. It may not have bump your transaction counts in the immediate term, but in the long run you will likely see increasing organic growth in the form of revenue per transaction and the like.

    This is why there is no point to merely putting up a FB Fan page with no strategy or thought behind it – a small business with limited personnel and an even more limited advertising budget probably won’t notice an impact and you are likely wasting all of that time and money. Instead, in this scenario that part of their budget would be better spent on a campaign that doesn’t require a daily attention, like SEM or Banner ads.

    However, if a company is committed to actively and creatively giving your loyal customers and new potential customers a reason to pay attention to your brand, then the sky is truly the limit. They may not notice it immediately, but it will come!

  3. Jason Pelker says:

    Gotta say that the *quality* of customer is just as important as the *quantity* of customers. From most valuable to least, I want these people as site visitors:

    1: RSS Subscribers
    2: Facebook Fans
    3: Email Subscribers
    4: Twitter Followers
    5: Ad Clickers

    Why? I want as many early adopters as possible, especially through mediums that don’t encourage accidental participants (i.e. banner ads).

    RSS readers engage and that engagement drives others to engage. The same with Facebook Fans, although their participation is more unique in that it lies in the ubiquity of Facebook as a platform, as well as the excellent and ever-present nature of Fan Page news feeds on everyone’s homepage.

    Those news items get pounded at the page’s fans in a way that no advertisement ever could. Basically, it’s the cheapest, most active and most accurate target advertising you could imagine.

    That’s where the ROI lies–in both constantly updating your Fan Page’s news feed and then allowing “Likes” and comments on those updates to virally draw traffic and attention to your product. For examples, please see Chicago Public Radio: http://bit.ly/5c2U5D (8,300 fans; mostly self update driven) and Flying Dog Brewery: http://bit.ly/5c2U5D (6,600 fans; mostly fan update driven).

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