August 5, 2010, 3:31 PM

Measuring the value of a Facebook follower

Just how valuable is the social network—and its members—to a merchant’s bottom line?

Katie Evans

Managing Editor, International Research

Lead Photo

E-retailers often try to accumulate as many fans as they can on Facebook. But just how valuable is the social network—and its members—to a merchant’s bottom line?

A new guide from Omniture, an Abobe Systems Inc. company, aims to help marketers answer that question.

First off, Facebook is too massive and too active to ignore, the guide notes. The network boasts more than 500 million worldwide users and 100 million users in the U.S. alone. What’s more, more than 50% of the user base goes onto the site every day. And, of the 69% of online shoppers who regularly use social media sites, the overwhelming winner in terms of shopper presence is Facebook. More than 50% of respondents in a recent poll say that they use Facebook regularly, according to web satisfaction measurement firm ForeSee Results.

But the popularity of Facebook presents marketers with some interesting challenges, Omniture says. Users spend more time engaging on social media sites than searching, so it is essential that marketers learn how to create relationships with the right customers in their target markets. And then it’s important to measure the return on investment of those relationships.

So far, however, many marketers aren’t doing this. Fewer than one in five marketers say that they measure the ROI or business effects of their social media investment, according to a recent report from Forrester Research Inc. Marketers on average rated their efforts at 4.5 out of 10, the research shows.

Omniture’s SiteCatalyst tool aims to help marketers understand how consumers are using a marketer’s Facebook page, providing data that can help a retailer maximize ROI. For example, it measures how users are interacting with such features as ads, apps, and fan pages, and then shows which features are being used the most and which generate the most revenue. It also shows how much of a retailer’s web site traffic and sales comes from Facebook compared with other online channels such as e-mail, paid search and mobile advertising.

Once a retailer sees which parts of Facebook are generating the most activity and revenue, it can use the demographic information that Facebook provides through its Facebook Open Graph API to garner data on gender, education level, relationship status, and location of those shoppers actively engaging with the retailer on Facebook. A feature called Omniture Discover can further break down the data by showing which countries, towns, age groups, or relationships are generating the most users and revenue, Omniture says.

Another tool, called Omniture SearchCenter Plus, helps marketers specifically with Facebook ads. The tool enables marketers to identify their most profitable customer groups, create targeted ads and evaluate the results based on such metrics as return on ad spend and number of clicks. Then retailers can make adjustments to maximize their ad returns.

Beyond measuring the success of Facebook marketing, retailers also may want to analyze the general demographic of the typical Facebook user before investing time and money on the social network. 40% of active users in the U.S are under 25 years old, and 23% are between 26 and 34. Those over 35, however, represent the fastest-growing demographic, according to recent surveys, Omniture says.

Although young adults are the most active users of the social network the site has a steady stream of traffic from all age demographics, making Facebook a worthy investment, says the guide. Facebook ad spending in the U.S. grew 34.3% from $335 million in 2009 to $450 million in 2010, according to eMarketer research. Facebook ad spending worldwide grew 39.1% from $435 million in 2009 to $605 million in 2010 and non-U.S. ad spend increased 55.0% from $100 million in 2009 to $155 million in 2010. EMarketer predicts that overall online social network ad spend will amount to $1.395 million by next year and  $3.1 billion by 2014—more than $1 billion more than e-mail spending—and a figure that will account for nearly total marketing budgets.

Omniture isn’t the only vendor offering tools to help retailers determine the ROI of social networks. Late last month, e-commerce services vendor Digital River Inc. launched a service called SocialStream designed to help measure returns from Twitter and Facebook. The company says it may add other networks such as YouTube in the future.

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