Can we put a price on a social media ‘fan’?

What is the value of a social media fan? According to Deloitte, worldwide social media users will reach around one billion in 2011, with average revenue per user (ARPU) of $4*.

However, the Social Media panel at MediaTel’s fourth full-day Media Playground conference last week were unsure if it is possible to value a fan based on one calculation.

Henry Arkell, business development manager at Techlightenment, said defining value is difficult because it depends on the brand and its customer. He also talked of conversion rates, saying it is fairly straight forward to gain fans but “they don’t always go on to buy something”.

“The value of a fan is a good campaign metric but you need a direct strategy to be able to work out what the value is,” he added.

Sam Stokes, managing director of Punktilio, agreed that it is important to set KPIs before defining value, while Pilar Barrio (head of social, Socialyse – MPG Media Contacts) said “brands need to step back and work out what they want to achieve with fans, then they can work out what they are worth”.

However, Barrio said agencies do focus on ‘likes’ and followers because it is tangible. “We have so many metrics, we get lost in data,” she commented. “We need to make sense of it, in terms of what brands want to achieve. It is possible to measure engagement – the activity social media generates – which is positive. And you can sell through social media, but it depends on trust.”

From the audience, Millward Brown’s Martin Ash said valuing a fan is asking the wrong question. “Social media is a conversation / dialogue between a brand and the consumer. We should be asking, what is the value of our page to the fan?”.

Toby Beresford, chair, DMA Social Media Council, agreed that the focus should be on ‘social design’ – what adds to a consumer’s identity online. “It is about the value of a page to the identity of a fan,” he said.

“To get a real insight on value, you need to talk to users and do qualitative research,” Stokes added.

*The Deloitte report calculates ARPU like this: For example, Facebook ’09 revenue neared $800 million. The company started 2009 with the January announcement that it had reached 150 million users. By December, that number had swelled to 350 million. ARPU = 800/350 = $2.3