Wednesday, April 21

Defining Engagement: The Value Of People


There seems to be some push back against the notion that social media "fans" can be valued at $3.60 each. But Vitrue, a social media management company, doesn't miss a beat. The $3.60 valuation tag placed on people is just the "tip of the iceberg," they say.

The message seems to resonate with plenty of companies, as Vitrue includes Ford, P&G, Best Buy, Unilever, Pringles, and plenty of others. Companies that ought to know better, in some cases. What's more, Vitrue doesn't seem to consider those fans owned by the brand. It boasts the combined total of its clients as their fans, about 45 million. People they "manage" every day.

Why don't most communicators accept the $3.60 valuation?

Adam Singer provides part of the answer on The Future Buzz. He provides eight points why that valuation is off beat, before pointing out the premise is flawed. Worse, they mislead companies in thinking that hordes of fans are final frontier.

Sean Williams provides another part of the answer on Communication Ammo. He offers four points, before noting that the formula fails because it sells the idea that social media is all about increasing advertising impressions.

Oliver Blanchard, who can be found at The BrandBuilder Blog, had a brief discussion on Twitter. Because he is outcome oriented, he points out the pitfall with two sentences under 140 characters.

Outcomes have value; people are priceless.

The real problem with valuations like the one Vitrue floats is that it mistakes an online environment as nothing more than media. People behave online much like they do offline in that their interactions mimic spatial actions. The only time online actions resemble media is when the engagement is media oriented (like watching a program on Hulu).

Placing a "value" on fans can be likened to claiming a product can earn media impressions simply by sitting on the shelf of a supermarket, based on a ratio of everyone who walks in the front door, even if they skip the aisle where your product is located. And doubling, tripling, or quadrupling those impressions is only a matter of adding another row of product.

Using this logic, Brillo could be placed on every shelf on every aisle and capture all past supermarket visit impressions times the total number of products. It's absurd, especially because many "fans" never return to the product page once they friend it, especially if they were driven there by a one-time incentive. Thus, every fan is not equal to any dollar amount.

And that leads us to the second biggest danger in the formula. An overly formulaic approach that relies on reach as the end measurement as opposed to a singular portion of the equation, devalues customers. After all, if we were to be so brazen in our attempts to monetize the value of people, then the Vitrue valuation gives equal value to window shoppers and customers (which also happens to be the biggest mistake among online crowd sourcing). Except, that temptation is also wrong.

Net, net, as tempting at it is to count up some 1 billion "fans" we've touched online for our clients, beating Vitrue almost 20 to 1, I'm still inclined to believe that the people we've touched are worth more than $3.60 per head. As a matter of fact, people are priceless. Outcomes have value. Engagement is an investment. And impressions are nothing but potential.

When you understand this and do the math, you get different results. You know, the kind that suggests ten people on the showroom floor of a car dealership might have more, um, "value," than 100 people who will never buy one.

Vitrue devalues its industry with a weak message.

All this made me really curious what Vitrue did. So, I took a look. It does offer some value, specifically in providing Facebook and a few other marketing-oriented applications. This, combined with some investor affiliations (like Steven J. Heyer) gave them a leg up despite being a late start-up company in social media. There is nothing wrong with that. It's not an ignorant firm.

What is happening here is the same thing that happened in public relations. Executives wanted someone to put a price tag on the return on investment, so they did. Public relations did it by counting column inches against ad rates or Rolodex card counting. Marketing did it by overemphasizing cost-per-impression. And Vitrue does it here in much the same fashion. All of those formulas did more to devalue their respective industries than any other.

But what's most striking about such counting systems is that people generally want to believe them. They want to believe them much in the same way that they were actually relevant to the clients listed beyond the sale of a single application.

But this shouldn't surprise you. Rule No. 8 in advertising is "people are irrational." That simple truth doesn't change with the favor of a title that can condensed to an acronym. CEOs and other decision makers are equally swayed by all sorts of messages, even when those message value them at $3.60 too.

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