The Cost of Engagement

I stumbled across some data about Facebook engagement rates the other day. Apparently Michael Leander has been analyzing how Facebook fans react to brand posts based on how big a following that brand has on Facebook. It’s made me wonder – If we know engagement rates, and we know how much it costs to acquire a Facebook like, we should be able to calculate the cost of fan engagement. How much does it cost? And is it really worth it?

Leander found that the rate of people who like or comment on a post starts at less than 1% for a brand of 10,000 Facebook followers and then plummets the larger the audience. Here are his statistics:

Number Of Fans/Likes	Average Engagement Rate
10,000	0,96 %
20,000	0,29 %
50,000	0,21 %
100,000	0,19 %
200,000	0,16 %
500,000	0,13 %
1,000,000	0,11 %
1,500,000	0,09 %

Compared with banner ad engagement rates, those numbers might look good. I’m also starting to wonder what the cost of all this is. For the sake of simplicity, I’m not going to calculate the cost of what it takes to manage the Facebook channel or to create all of that content people are engaging or not engaging with.

Instead, I’m going to look at the cost of attaining those fans and calculating what the cost per interaction is.

Let’s take one year. I’m going to assume that brands might reasonably attain 10,000 fans without buying any likes (a leap, I know, but bear with me). For each number above 10,000, I’m going to assume that 1/3 of those total fans were purchased. That is, brands spent money on Facebook ads to get people to “Like” them.

According to a WebTrends report in 2011, the average cost for a Facebook Like acquisition was $1.07. Maybe that’s gone up or down since then, but let’s use that as a starting point.

Let’s also assume that, on average, a brand posts on Facebook once a day, or a total of 250 posts per year. With that, the cost per interaction for a smaller Facebook brand starts at $0.49/interaction over the year. For a big brand, the cost jumps to $1.59/interaction for a year. 

Fans	Bought Fans	Cost	Posts Per Year	Total Interactions	Cost Per Interaction
10,000			250	24,000
20,000	6,667	$7,133	250	14,500	$0.49
50,000	16,667	$17,833	250	26,250	$0.68
100,000	33,333	$35,667	250	47,500	$0.75
200,000	66,667	$71,333	250	80,000	$0.89
500,000	166,667	$178,333	250	162,500	$1.10
1,000,000	333,333	$356,667	250	275,000	$1.30
1,500,000	500,000	$535,000	250	337,500	$1.59

 

Remember, that’s not covering the cost of managing the channel or creating content. That’s just the interaction cost. Of course this is only for a year, if you spread that over 2 years it gets a little cheaper.

 The number of interactions isn’t terribly impressive either. But it starts putting things into perspective, such as:

• What is the real impact of an engagement?
• If people engage more with emotional imagery, say of kittens, is it worth the cost to the brand?
• None of this starts connecting interactions to real business goals. Does that matter?
• Is it really worth it to purchase fans on Facebook?

Actually, it’s that last question that’s important. Based on this calculation, however imprecise, I’d say no.

What do you think?

The Five Stages of Digital Strategy

The business of strategy is a funny one. Lots of people talk about strategy and ask for it. I seriously doubt that there’s a lot of commonality in what people believe strategy to be. In its essence, a strategy is a plan for what to do. Bud Caddell has modern spin on a digital strategy that I think is a good one. 

Is that what businesses want when they ask for a digital strategy? I don’t think so. So here is what I’m calling the Five Stages of Strategy: What businesses ask for when they ask for “strategy.”

1. Tactics – This is by far the most common intent. We see this in a lot of web strategy but social media has taken this to a completely new level. Social media strategy has in many cases come to simply mean: set up our accounts on Facebook and Twitter. Social agencies are complicit in this bastardization; they’re really selling implementation services. Strategy is just a way to open the door. Tactics without strategy are usually not sustainable, though, which is probably why many companies end up paying big bucks for Facebook Likes and even bigger bucks to communicate with those new likes through Promoted Posts.
2. Cover My Butt – One of my favorite stages, this usually happens in companies with larger internal marketing staffs. The cover my butters come in a couple of flavors. One flavor is someone who needs a smokescreen with upper management to ask for more money. It’s also useful for those who feel pressure from above to move on digital initiatives and want a way to insure themselves from blame in case things don’t work out. In either case, the strategy process can be a long one that ends up having little impact on the actual work.
3. Prove I’m Right – Many organizations listen to employees very poorly, if at all. Organizations contain a huge amount of intelligence, creativity and innovation. Unfortunately no one has time from his or her busy day to mine that intelligence. In the Prove I’m Right strategy, one quite often uncovers a plan or idea that some of the key players have pushed for, without any luck. The strategy from the third party validates that and provides impetus for implementation. Of course, if you prove someone wrong, then results may vary.
4. I Know We’re Behind – It’s easy for people to look at the success of others and to feel that they don’t measure up. This is a good place to start, strategically. There’s an uncomfortable acceptance that people don’t like the place they’re in and want to move somewhere, they just don’t know where. Strategy has the potential to move organizations like this along a continuum by providing a plan to do so. The best part about this is that people who ask for this are already willing to try something new, one of the key conditions for implementing a successful strategy. The challenge for the strategy is to not overshoot reality, something that’s easy to do given both the market place and the desires of the organization.
5. Help Us Change – The holy grail of strategy is working with organizations that embrace and recognize the need for change. Face it; if things were working perfectly, no one would need a strategy, a plan, for doing things differently. In this phase there’s not only support from upper management but also a desire from employees to do things differently. While not all strategy is change, change is a critical part of most great strategies. When organizations reach this stage of strategy they are usually poised for great success.

The red thread through all of this is tolerance for internal and external change.  Many organizations have no desire or tolerance for anything beyond cosmetic changes. That’s why the first stage, tactics is so popular.

While Elisabeth Kubler-Ross would probably turn in her grave if she read this, it’s worth thinking about before that next strategic engagement. Ask the question to determine what strategy stage your organization, or client, is at. It will make the results that much more palatable.