There is an increasing trend amongst marketers, brands and agencies to look for a magic number in the 'cost per fan' for Facebook pages. It's easy to see why both sides want to pursue this. For the company, they get to turn social media into a more neat, understandable advertising concept - a stream of fans you can buy and control by simply turning on or off. And for marketers, it makes it that much easier to sell to the brand in question ; you put people in the room at ease by putting things in plain monetary terms. A direct return on the investment that will be made through Facebook. There is a danger in this model however, that can seriously impact how you structure a campaign and the true benefit if can hold.
A fan is not a thing
To understand the near absurdity of the idea of a cost per fan, you need look no further than the term itself. A tried and tested advertising model like the cost per click or cost per thousand impressions has been apparently seamlessly translated into a cost per fan. Call it what it really is and it's a cost per person. People, or fans, are not equal to clicks. A click is an action that's taken on a link whereas a person is not a commodity that cannot be bought, and even if they could be, determining that the person is now actually a fan is wholly misleading. The science behind the concept may seem simple - you just look at the amount of people that 'Liked' your page from your ad. But to think of fans in terms of a commodity, even if it's a case of semantics, should be avoided. This is the unfortunate side effect of Facebook making public the number of Likes on pages. You are inevitably on a race to acquire more fans, at whatever the cost.
The other danger in a cost per fan model, is in assuming that the benefit to the advertiser or brand ends at the point that they click on your ad or join your Facebook page. It is in seeing Facebook simply as a marketplace to trade in the commodity of fans instead of thinking how you can get these real people to invest in your brand beyond the click and possibly drive even more revenue for you. You may be able to boast about a cheap cost per fan, but what is the interaction like on your page? What's the true value of these fans that you've acquired? If you're not able to answer this, or would rather not as it's not all that positive, then you're in danger.
Is the cost of a fan $1.07 ?
A recent study by Webtrends found that the average cost of a fan through advertising on Facebook's ad platform is $1.07. This might sound like a nice number and indeed it's easy to see how you can calculate this. Analyse the advertising spend, the attributed 'Likes' to those ads and you have a cost per fan. But this is only a cost per fan based on your direct advertising spend. It doesn't take into account the fact that the community on your page is social, that your fans will be growing as they're drawn to the page by their friends that join or comment, actively finding your page by searching, or being referred by another campaign promotion you might be running. And the danger in putting a number on how much your fans cost is that you begin to base it on other, unrelated media. The brand begins to make calculations such as how many people they can reach through the equivalent in ad spend, editorial etc..
Now I do recognise the temptation to work on a cost per fan model, but I honestly think that this is a dangerous trap for both brands and marketers to fall into. I'm not impervious to measuring the business value of Facebook pages, but a better way to spend your time in analysing your Facebook page or campaign is to find out the value this it is really driving for your brand. Find out what your fans mean to you first, and then focus on all the avenues that you can use to increase those loyal fans or simply focus on strengthening the community around you. This is what Facebook is for after all. The brands that do this will likely find that their advertising spend can decrease while the value from the fans increase.
An interesting point that was uncovered by Web Trends was that the cost of ads on Facebook is increasing. What started out as a very cheap cost per click is slowly getting more expensive. As the article states, the average CPM was around 17 cents in 2009 compared to 25 cents in 2010. This should be another warning sign for brands. If the cost of your ads is going up then this would mean that your cost per fan is rising as well. But this is at odds with the massively growing Facebook pages that we see today. People aren't less interested in joining pages, but you do need to work harder for them. The strategy of buying a load of fans in will become harder, as users become less likely to click on ads, combined with an increase from competitor bids. The smart brands will realise this and quickly switch strategy to keep up.
Facebook Ads done well
Facebook's ad platform is still an incredibly useful tool for brands - I am a big advocate of Facebook advertising providing it's done well. First of all remember that it is an ad platform and should be treated with the same time and consideration as the likes of Google Adwords. Lots of people make the mistake of blanket targeting their ads and not really making use of the targeting options that Facebook make available. And you should continually optimise and test new strategies just as you would within Adwords. But unlike Google Adwords, remember that this is social advertising and if you want it to, it can work for you in completely new ways. Facebook ads are done best when they are part of a complete social strategy - a first step in a wider customer journey or campaign that you have considered. And if you're really into making your ad spend work hard for you, then make your advertising a way to push a clever campaign you're running, as opposed to just buying fans for the sake of it.
I really hope that the cost per fan advertising model doesn't become an accepted marketing practice as it's pretty bad news for everyone involved and turns social media into a race for the highest number, or the cheapest fans. Find a way to communicate the value of what you're doing, but don't focus on the cost of your fans as an indicator of success.