What’s a Facebook Follower Worth?

As Businesses Build Marketing Programs Around the Social  Network, Some Balk at Paying a Fee to Promote Their Posts

Figuring out the value of a Facebook fan has become more complex for many  small-business owners, ever since the social-media giant began asking businesses  to pay to “promote” their posts.

Under a program rolled out in May, businesses pay Facebook Inc. anywhere from  $5 to hundreds of dollars to promote a post to the news feeds of users who have  “liked” their page, plus Facebook friends of those users. The price depends on  how many users a business wants to reach.

Figuring out the value of a Facebook fan has become more  complex for many small-business owners, ever since the social media giant began  asking businesses to pay to “promote” their posts. Sarah Needleman reports on  Digits. (Photo: AP)

The giant social network, which has to balance users’ desire to broadcast  messages against the need to keep the ecosystem tidy, has always limited the  number of posts users receives via their news feeds. According to the company,  the average business post reaches 16% of its fans. The Promoted Post program is  supposed to make it possible to increase that reach.

Richard Bishop, of Mountain Home, Idaho, is among the many entrepreneurs who  are irked about being asked to pay to reach a larger percentage of their  Facebook fan base, which they have spent time and money building.

[image] Todd Meier for The Wall Street JournalRichard Bishop, a caterer, estimates he would need to  spend at least $9,100 a year in Facebook fees.

16

The average percentage of fans who will see any given (nonpromoted) business  post.

Mr. Bishop says he puts out an average of 35 posts a week, and estimates that  he would need to spend a minimum of $9,100 a year if he opted to pay fees to  promote each one of them to his more than 1,500 followers.

Facebook “lured us in with free Facebook pages,” says the 35-year-old  caterer, referring to small-business owners like himself who have built  marketing programs around Facebook. “Now all of a sudden they’re saying a  minimal percentage of your fans will see your posts unless you pay. They  devalued the value of a fan.”

Using social media has long been a particular challenge for many  small-business owners, who often don’t have a large staff or the free time to  manage Facebook, as well as the other outlets.

A July survey of 400 U.S. businesses with between $5 million and $50 million  in annual revenue found that 77% spend a quarter or more of their marketing  efforts on social media. Slightly fewer, 73%, said they have added social-media  management to the duties of at least one employee in recent years. The survey  was conducted by Edge Research and commissioned by software company Vocus  Inc.

Facebook’s expanding menu of fees has rankled some small-business owners who  say they were initially drawn to the social-networking site because it is free  to join and has a massive user base, now one billion monthly active users. Many  have come to rely on Facebook as their main marketing vehicle to keep their  operating costs low. And some even use its business pages in lieu of a company  website.

Having to pay for social media puts small businesses at a disadvantage over  larger rivals, says Eric Yaverbaum, co-founder of SocialMediaMags.com, a  magazine publisher in New York. “They don’t have the same amount of money to  compete with the big companies,” he says. “They’re going to have to reshape  their online sales strategy or bow out if they can’t afford it.”

According to Facebook, Promoted Posts are gaining considerable traction. In  an emailed statement Tuesday, it said the program “has significantly increased  over the past three months.” The company declined to provide specific data.

Among those using the feature is Joe Sorge, co-owner of four casual  restaurants in Milwaukee and one in Madison, Wis. Since the Promoted Posts  launched, he has been spending about $1,000 a month on it, mainly to highlight  new menu items and special events. He says he is seeing results in the form of  higher sales. “Before I didn’t have as much control over whose feed (a post)  showed up in,” he adds.

In its efforts to educate wary businesses, Facebook has compared Promoted  Posts to search advertising, where organic search results are free but companies  pay extra to show up in sponsored search results. The company is also providing  businesses with data on how many people have seen their posts and what  percentage of this group came through the Promoted Post program.

The initiative is just one example of recent moves by Facebook to prop up its  sagging stock price with new money-making products. In late September, the  social network debuted a gift service that lets users send real-world presents  such as cupcakes or flowers to friends. And earlier this month, it rolled out a  version of promoted posts for individuals, which charges users $7 to amplify a  personal announcement, like an engagement or the birth of a newborn.

Other social-media outlets have also recently begun adding fees for  businesses, including Foursquare Labs Inc., of New York. Since July the  location-based social-networking service has been testing a pilot program called  Promoted Updates in which businesses pay to be listed high in search results on  its mobile app.

Foursquare hasn’t yet disclosed the price of Promoted Updates, which is the  company’s first advertising product, says spokeswoman Laura Covington. It will  be accessible by all users “in the not-too-distant future,” she adds.

Some small-business owners say they weren’t previously aware that their posts  to Facebook only land in a small portion of the fan’s news feeds. But the  discovery hasn’t prompted Lindsay Gonzales of Casper, Wyo., to pay a fee to  amplify the number of users her two-year-old photography business reaches.

“It’s a waste of money because even if you pay they still regulate who sees  your posts,” she says, adding that her business, Making Memories Photography,  has about 1,400 Facebook fans.

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Evelyn M.  Rusli at evelyn.rusli@wsj.com

A version of this article appeared October 11, 2012, on  page B9 in the U.S. edition of The Wall Street Journal, with the headline:  What’s a Facebook Follower Really  Worth?.

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