Three Places to Measure the Value of Friends

In the column, “Monetizing Social Networks,” I wrote about the potential for individual users of social networks to seek value from the collections of friends and contacts they’ve made or organized. That is, if you picked someone off a social network who was deeply passionate about cross-country skiing, you could be pretty sure that his friends’ list would also include some cross-country skiers. That list would be immensely valuable to, say, a company that made cross-country skis.

OK, the idea that the network could allow people to send each other ads is maybe a bit of a stretch. The e-mails I got certainly suggest that we won’t see this happening anytime soon. Still, we know that there is a rush on all of the networks — MySpace and Facebook primarily — of brands seeking to establish their presence and make friends.

Putting up a page on a social network is distinctly different from putting up a Web site, remember. Putting up a site is all about generating traffic. “Eyeballs” as we used to say. But a page or a profile isn’t about the eyes, it’s about the hearts. The goal of a page on Facebook is to generate a large number of friends, people who want to not only visit but to make their connection to you in a structured and public way.

That’s an amazing leap we’ve taken with this new social medium. Making a friend, of course, is not easy either in the real world or online. There very clever strategies and tactics that can help to amass a large group of friends, none of which I am going to talk about here.

I am more concerned about how to put some kind of value on these friendships — not only to demonstrate a return on the social media investment, but also to develop some practices around the management of this group of people who have now taken a key action to connect themselves to you and your brand.

In short: What is the value of a friend, in real dollars?

Hunting — and Gathering — of Friends

Suppose you have set up a page for your company on a social network, and are offering something of real value — maybe special offers on products or unique content. Word begins to spread and people begin to seek out your page and, best of all, add your brand to their list of friends. You’ve been added and you’ve got a list of people who want to be connected to you in a structured, formal way. Well, semi-formal at least.

The question, then, is what is this group of friends actually worth? If you have made any sort of reasonable investment in your social networking presence, and you’re looking at friend-adds as a success metric, there should be some way to figure out how much value you are actually generating.

There are three different axes that you can begin measuring the value these friends are generating for you. The key thing to making this work, of course, is being able to actually track and measure these elements, which we’ll discuss at the end of this column. But first, think about how these friends could potentially generate value.

Volume: Perceived Value of Your Page

The single most important number is the number of friends you have actually generated, and the rate at which they have joined up. Part of the value that each friend gives you is not only the actual connection, but — because the connection is made public (that is, the number of friends you’ve made is put right on your page for all to see) — that connection also communicates to other visitors. It’s the difference of walking by an empty caféversus walking by a caféwith a line out the door. Friends increase the perceived value of the page, and the best way to get more friends is to have friends.

Strategy note: When you launch your page on a social network, reach out to your best customers and ask them, directly, if they would add themselves as friends.

Conversion: Take up of Your Offers

Just as you don’t put up a Web site just to have a Web site, you must have some kind of call to action on your social network page. Most frequently, this is either in the form of some unique content or offers, and sometimes it is a direct connection to key people inside of your company. Whatever it may be, the key thing here is to keep careful track of how well these offers are being picked up. This is a key conversion rate that you must measure, although it may not be easy on all the networks to measure the number of visitors to the page.

Strategy note: Have a very clear single call to action on the page and make sure it is communicated via e-mails, alerts, or RSS feeds. Many of the networks now offer status updates, which can be used to communicate a new offer being available.

Advocates: The Best of the Best Friends

Whenever you gather a group of people around your brand, you can be pretty sure that 10 percent of that group will just drop in once or twice, take you up on an offer and move along. You can also be sure that there will be another 10 percent who come constantly, take every offer and provide tons of feedback. The key task is to be able to isolate this top group and have a plan for bringing them more closely into a relationship. A big part of the reason you’ll be on a social network is to have your messages passed along by others. The top 10 percent are probably your best chance of catalyzing that spread.

Strategy note: Have some elements of your social network campaign that you can hold back. If, for example, you are posting up some videos, keep one or two and give them directly to this top group.

The Key is Measurement

The last piece of this puzzle, of course, is the actual ability to measure your social network campaigns. This is going to be the next wave of analytics, I think. We should be able to pull relevant statistics from this campaign into a dashboard to make it easily visible and totally actionable. At some point, we’ll start to see the same kind of measurement tools from the social networks as we see from the search engines. If, as brands, we’re going to be serious about using social networks, we’re going to have to be serious about measuring the value being generated.

What’s your favorite marketing tool or service? Which one made your campaign a success? We want to know! Nominate your choice in the 2008 ClickZ Marketing Excellence Awards. Nominations are open until August 14. Nominate now!

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