How Much Is a Social Media Participant Worth?

  |  December 23, 2010   |  Comments

If you guessed 29 cents, you're right and wrong. Here's why.

I don't think my eyes actually rolled when David Berkowitz of 360i feigned frustration and asked the question.

David had made sure the panel was well prepared for the  OMMA Social event. Carla Bourque from Six Apart, Steve Kerho at Organic, Amber Naslund of Radian6, Bill Stephenson with Nielsen Online, and I had received the questions in advance, but this one was slightly off kilter. We were expecting: "When a marketer wants to know the value of a Facebook fan, a Twitter follower, or a blog commenter, what do you tell them?"

I had a lot to tell them. But when David asked, "Just how much is a social media participant worth?" I popped out with, "$0.29."

I earned a chuckle from the audience before the rest of the panelists tried their best to cram years of experience and an hour's worth of explanation into an under-a-minute sound bite. They were all accurate and cogent, but it was like trying to explain where babies come from in the space of a fortune cookie.

Later, I know I rolled my eyes and then prayed the audience member wasn't looking at me when, actually frustrated, he asked, "How do I prove the ROI (define) of social media to senior managers who control the budget? These guys want direct correlation from blog to conversion."

What's the ROI on a phone call, a plane ticket, or a pair of pants? What's the value of your logo on a racing car, your name on a stadium, or your product on a billboard?

Don't misunderstand, I don't mean that social media cannot be used for direct response - far from it. But without an understanding of branding for branding's sake, there will be no understanding of the power of social media.

Here's the bare minimum you need to know to get by: branding used to be the art of creating awareness of your product/company/service ("brand") in the hearts and minds of the marketplace and a particular perception. When three TV channels, two newspapers, and the mailbox were the communication options, everybody knew that "Coca-Cola refreshes you best," "You'll wonder where the yellow went when you brush your teeth with Pepsodent," and "Winston tastes good like a cigarette should." Or, for those who paid attention to Mad Men: Lucky Strike, "It's toasted."

The brand managers selected an image and projected it out onto the blank screen at the back of potential consumers' and prospective clients' eyeballs. Then a funny thing happened: the owners of those eyeballs started cogitating about that chosen image, manipulating it, and projecting it back out to each other.

The Internet has always been social and now it's über social. So much so, that your brand is truly in the hands of the public.

The question is no longer about the conversion value of a single voice in the crowd, but the cost of sitting in the corner with your fingers deep in your ears, humming loudly while your precious brand is dragged through the mud. What is the lost opportunity cost of not joining the conversation when your product is hailed as a savior?

Does that mean calculating the value of one pair of social eyeballs is impossible? No. But your mileage will vary. Your situation is different.


  • 10,000 people are talking about shampoo
    (hair cleanser not Mike Grehan's beverage of choice)
  • And, a new customer has a lifetime value of $29 (profit)
  • And, joining that conversation causes 5% of them to try your product
  • And 5% of those remain loyal
  • Then:
    • 10,000 x 5% = 500
    • 500 x 5% = 25
    • 25 x $29 = 725
    • 725/10,000 = $0.0725 per participant

On the other hand, if you sell brain scanners at a quarter of a million dollars each and the entire universe of interested parties is 10,000, and 1,000 of them are in the same discussion group of social network, each one is worth considerably more.

It's vitally important to understand the value of branding: "Bob's Medical Gear? Never heard of them. General Electric Medical Imaging Systems? Yeah, I'll take that call."

If you can then tie that value to a conversion event (white paper download, Webinar registration, and eventually a sale) then you have discovered the pot of gold at the end of the rainbow and I'd like to interview you for a future column, PowerPoint presentation, or book.

Jim is off today. This column was originally published on Feb. 4, 2010 on ClickZ.

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Jim Sterne

Jim Sterne is an international consultant who focuses on measuring the value of the Web as a medium for creating and strengthening customer relationships. Sterne has written eight books on using the Internet for marketing, is the founding president and current chairman of the Digital Analytics Association and produces the eMetrics Summit and the Media Analytics Summit.

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