Pay Per Fan: What Big Brands Are Paying For Facebook Fans

Although it may sound weird or repulsive to some purists, brands have been buying fans on a cost per fan basis for months (some for many moons).

Cost Per Fan Is No Big Surprise

When you step back, it makes sense:

• Many companies operate on a cost per action basis to get emails… fan bases are the social media analogue of email lists.
• Companies have been acquiring emails, downloads, real estate leads and more via pay per click and SEO for years. There’s always a cost per action target and value associated with these efforts.

Acquiring contacts is a business goal. The ultimate goal is ROI through some sort of sale, but the first milestone is building a distribution list or audience. As long as those fans are relevant, you can get ROI in the next step of the social marketing process.

What’s a Fan Worth?

The value of these fans depends on how much money you make from them down the road. On Facebook, if you don’t engage them, you’ll probably lose them. You have to court them – but that’s page management or community management, and beyond the focus of this article.

So one determinant of cost per fan price are questions like:

• What’s your conversion rate from fan to customer?
• What’s your average sale?
• What’s the lifetime value of these customers?

You probably don’t know the answers to this before you get a fanbase. So you can’t really know the ultimate ROI. But that’s probably not your number one concern if you want to pay to acquire fans. And the reasons a company would do this are also beyond the scope of this article.

My number one focus here is: how much should you pay for a fan?

One internet marketer suggested this rule of thumb: double your email value, and that’s the value of a fan.

Why?

Viral potential.

It’s much easier to get a fan to bring you another fan (their friends), than to get someone on your email list to get you another email. Facebook fans multiply easier than email subscribers do.

How Much Are Companies Paying For Fans?

I and many of my peers are under NDA’s not to mention their clients, but I’ve seen or heard of deals like this in 2010:

• 30,000 fans for $1.50 cost per fan
• 60,000 fans for $1.25 cost per fan
• $20,000 per month to acquire 10,000 fans per month ($2.00 CPF)
• 4500 fans for $9,000 ($2.00 CPF)

The average price per fan we’re seeing in the industry is $1.50 – 2.00. But expect this to go up over time, because Facebook ads will become more expensive, just as AdWords costs have steadily increased. And Facebook users may become more fickle about what and how much they “like”.

There’s more that goes into it…

The Vagaries of Fan Acquisition and Cost Per Fan

The cost to acquire a fan depends a great deal on factors such as:

• Can something with broad, no-brainer appeal can be linked to it: sex, celebrity, food, etc.
• Can you get your ideas past the Facebook ad moderators?
• Are you using best practices? Doing Facebook ads the wrong way can increase your cost per fan tenfold.
• Is the brand a household name?
• Do you have any incentives?

To be sure, many of the habits your typical AdWords optimizer has learned over the years come into play.

But it’s different from that, and different from display ads. Interest-targeting is a whole new world, as Aladdin would say.

Creative commons image attribution: Money image courtesy of David Beyer; Policia image courtesy of Sari Dennise; Fairuz image courtesy of Emelec.

Contact HeyGoTo at (702) 475-4227 or go to www.HeyGoTo.com today to find out how we can help you! To read more industry information go to the HeyGoTo Blog at http://heygoto.com/wordpress/