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22/01/2013 by

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.

What’s A Facebook “Like” Really Worth? By Nick Hodson for

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:

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:

YouTube Preview Image

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

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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.


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