- Many Cups of Earned Media Value
I recently penned a soon-to-be-published article in a management accounting magazine – or should I say “paid media” publication – about valuating a firm’s social media effort within the accounting framework.
My thinking was triggered by Syncapse, a social media management firm, who released a study in 2010 called the Value of a Facebook Fan: An Empirical Review. As an example, they determined, using data collected from a survey of 4000 brand users, that a Starbucks (SBUX) fan on Facebook was worth about USD$235.22 on an annualized basis. The comparable figure for a non-fan was USD$110.95. If I read this correctly, Starbucks’ Facebook fans of 17M strong are worth about $4 billion annually in sales.
Another study, the Fast Food Industry Media Value Report, by General Sentiment, a New York-based firm specializing in sentiment analysis, brings together online WOM, web traffic and online news readership data as the basis to estimate Earned Media exposure value. In this report, aimed primary at the QSR industry, the quarterly Media Value estimate for Starbucks is USD$67M or $268M on an annualized basis. This compares to the roughly $50-60M adspend on paid media, of all forms, by Starbucks.
In each of case, the Syncapse and General Sentiment analytics generate some big numbers. When I look at the financials, the numbers actually make relative sense: Starbucks’ market capitalization is $24B, revenues are $10B and EBITDA is $1.9B for the most recent fiscal year. They have 17,000 stores are in 50 countries and have a brand legacy reaching back to 1971.
While I’m not suggesting that these numbers are conclusive, they do merit consideration as they attempt to quantify, in financial terms, the outcome of using social media platforms. It’s time to think a little more deeply about some new measures of performance and update the Balanced Scorecard. This might just be the ticket for the CMO and CFO to join forces in moving the New Media agenda forward.
– Ted Morris, 4ScreensMedia
4ScreensMedia 