Many people, when talking about Facebook advertising, end up asking themselves what is the real cost of a single like, although this isn`t a term agreed by Facebook. But what exactly does this mean?
The cost per Like is the actual price for acquiring a new fan for your Facebook page, either from earned media efforts or directly through paid advertisements.
You can use any of the three known ways to get Facebook Likes. The first one is through the known CPM, or cost per one thousand impressions. This is done by bidding to a target audience of desired users and you will pay each time 1000 users see your ad. As a second option, you will be able to pay each time someone clicks on your ad, the so-called CPC, or cost per click. A negative aspect is that none of these two options will guarantee you will get fans, but, the good part is that you will make sure that they will see your page or be exposed to an ad for the page.
A new option offered by Facebook, a new metric for advertising campaign evaluation is the CPA or cost per action. This is the best option because you as an advertiser can pay, but not just for impressions or clicks but for specific actions you need from your customers, like becoming a fan on your page, for example. One example is expecting actions that include offer claims and clicks on third party links, or even asking for Facebook to find a fan for your Page for, let’s say, $2.00.
How to Determine the Value of a Fan
Having a lot of Facebook fans can be a great gain for your business. But how much should you invest in fans and how much will they eventually be worth?
If You Want To Use Adobe Marketing Cloud, Then Be Prepared to Spend This Much
A study conducted by Syncapse, a social media marketing agency, that attempted to give an estimated price for a fan based on brand loyalty, propensity to recommend, collective product spending, brand affinity and cost of acquisition revealed the average worth of a fan for a company of around $174. That isn’t a fixed number, as the value of a fan can differ greatly from one company to another, as shown on the chart below:
After you have determined the possible worth of a target prospect, you will need to decide on how much you want to spend to acquire and continue to have direct contacts with that fan. “[Marketers] really need to bring it down to a cost equation,” says Max Kalehoff, vice president of product marketing at Syncapse. “No one else can say what a fan is worth except the brand itself, and then it has to decide what to spend to acquire fans, and what it costs to communicate with them once a day or week to remind them to buy throughout the year.”
Here’s An Interesting Article: The Cost of Promotional Tweets
Not All Fans Will Be Of Equal Value
Not all fans are equally valuable, so companies should go over just calculating the average cost per fan, says Marc Grabowski, COO of Facebook ad-buying firm Nanigans. As an example, you should understand that a luxury fashion brand could have a big fanbase, but only some of them could be actual buyers and the rest could simply be aspirational customers that want to buy but will never be able to. In the same matter, a T-shirt company could notice fans that will purchase over and over again for months or even years, while other fans may only get one t-shirt. This makes it vital for any successful company to measure the behavior of its fanbase over a long period of time to understand better the possible customers.
The cost equation doesn’t stop at acquiring the fan, thinks Grabowski. After you got a new fan you have to calculate the cost of compelling content that will keep the fan coming back.
Once you have measured the full cost of acquiring a fan it’s very important to see if this option will be better over the cost of, let’s say, pay per click to your webshop.
So should your company invest in acquiring Facebook fans? The honest answer is: maybe. Although you can always test the power of a Facebook fanbase for your company.