Be the first to know. Get our weekly newsletter.

newsletter_popup Join 25,000 of your peers. Get our stories delivered to your e-mail inbox every week.
Edit Interests

Articles Selected for You

No unread stories
 
ViralBlog Logo
Close this box

Sign-up to get the content you like


Our readers can personalize ViralBlog in Zite alike ways, and schedule e-mail alerts to get the most relevant answers to their specific questions.

Choose your sign-up method:

 

By signing-up you agree upon our terms and conditions

 
22/01/2013 by
1903 views

What’s A Facebook “Like” Really Worth?

What do retailers Burberry, Starbucks, and Forever 21 have in common? Their brands are all in the top echelon of brand health, according to a new Facebook Likes Per Million (LPM) equation.

FBLPM 500x282 What’s A Facebook “Like” Really Worth?

Brand strength has traditionally been measured by the number of consumers actively engaged with a product or service—often requiring marketers to employ costly, complicated analytics. Now there is an alternative.

Using a simple formula, you can calculate brand value according to the size of your brand’s Facebook community, adjusted for company size.

Simply measuring the total number of Facebook “likes” doesn’t provide a true indicator of your brand’s shape. Larger companies predictably attract more followers simply because of their scale, and that doesn’t tell the whole branding story.

To find out the true popularity of a brand, you also need to take into account the size of your company’s revenue stream. In other words, how many brand zealots do you have per million dollars of revenue?

At Booz & Company, we developed the Facebook LPM ratio to answer this question. LPM requires two steps. First, tally your total Facebook likes and divide them by your company’s revenue. Then, do the same thing for your competitors to find who is really winning the branding race in your industry.

This formula is immediately illuminating in comparing your brand with its peers and measuring overall consumer engagement. And it’s quick and easy to explain.

To test this theory, we evaluated a variety of consumer-facing companies in December 2011 and then again in May 2012 (see Exhibit 1 below). We found that company size doesn’t correlate with brand health. In fact, some of the leaders of the branding pack aren’t the companies with the most fans.

Specialty retailers Burberry, Forever 21, and Levi’s are winning the branding race over retail giants Walmart, Sears, and Target, when revenue to total brand advocates on Facebook is adjusted.

Similarly, Yahoo towers over Google, and Subway edges out McDonald’s, Pizza Hut, and KFC. See the following stats below:

Bar chart2 v3 500x707 What’s A Facebook “Like” Really Worth?

Many recent studies—and indeed a whole startup industry—have focused on trying to quantify the brand value of a Facebook “like”—whether it comes from a brand zealot (a truly engaged consumer) or a “mercenary” (a consumer who just “liked” your brand because of a particular offer).

Figuring out these numbers can be unwieldy, confusing, and inaccurate, which is why we simplified the equation.

The LPM formula isn’t a perfect measure, but it does offer a powerful and easy way to measure the impact of your branding activities in real time. Use LPM to track immediate spikes in brand value if you’re running a major campaign.

Regularly track the brand health of competitors in your industry, compared to your own, for a pulse check on your brand’s relevance. Tapping into these findings can help position you to accurately evaluate consumer engagement and brand strength.

Watch the video to find out how you can use Facebook to measure brand value:

0 What’s A Facebook “Like” Really Worth?

What About You?
How does your company value a like? We’d love to hear your ideas in the comments below.

Follow & Share
Want to see more studies? Select our category Research & Cases, follow ViralBlog on Twitter, grab our RSS Feed or join our Facebook movement.


About the author

Nick Hodson is a Partner based in Booz & Company’s San Francisco office. He is a member of the firm’s Consumer, Media & Digital professional community. He has over 15 years of consulting experience, specializing in retail strategy and performance improvement.

 

Follow Category?

Follow Author?

Nick Hodson
3 more

Follow Tags?

advertisingFollowUnfollowfacebook likesFollowUnfollowlikes per millionFollowUnfollowlpmFollowUnfollowmarketingFollowUnfollowPoe mediaFollowUnfollowsocial networksFollowUnfollow
 

Comments (6)

  • Igor Beuker 22/01/2013, 16:52

    Great story and inisghts Nick, thanks for sharing.

    Hopefully more brands will follow Nike’s example and take social in-house. A “brand” for sure is a company’s most valuable asset, right?

     
  • benn achilleas 22/01/2013, 17:50

    Sounds great, but I’m struggling with the math. You state Forever 21 is the leader with over 5,000 Likes Per Million USD$ Revenue but how does that work out?
    Forever 21 has revenue of $2.6bn (http://en.wikipedia.org/wiki/Forever_21) and has 7,794,743 likes (http://www.facebook.com/Forever21). Whichever way I divide those numbers I get nowhere near 5,000 Likes per $mUSD. Can you explain? Thanks

     
  • Nick Hodson
    28/01/2013, 17:13

    Thank you, Benn, for your note. We realized that we made a miscalculation with the data set, and have updated the data. My sincere apologies for the mistake—I do hope you’ll take a minute to look at the new data chart, which shows data analyzed in December 2011 and then again in May 2012. – Nick Hodson, Booz & Company

     
    • Igor Beuker 28/01/2013, 17:20

      Hi Nick

      Thanks for your prompt reply! Thanks as well Benn!

      Cheers

       
  • benn achilleas 28/01/2013, 17:30

    That made a few changes to ranking huh? Thanks for updating.

     
    • Igor Beuker 28/01/2013, 17:46

      Thanks Benn, pretty sharp of you. Or very sharp, thanks!