What’s the value of a ‘Like’?

If lots of people like your Facebook page you’re in the clear. Or are you? The quality of a like varies a lot. Some of them are ‘duty-likes’ given by the Facebook user in exchange for a piece of content. Other likes are by fanatic brand fans with a big network. In the statistics both users count for the same.

Behind every like that your company, your good cause or your brand gets on Facebook, there is an engaged client, a possible ambassador, a valuable fan base – or so the story goes. Without plenty of likes you’re poor, unloved and publicly humiliated because one’s number of likes is on display so everyone can see the total number, right there on your Facebook page. Having plenty of likes gives prestige and reeks of how streetwise your company behaves in the virtual space.

Click the image to enlarge. The like hitlist is an image of popularity. Here there are plenty of consumable products – entertainment and fashion, sports and games, and a couple of good causes like support groups against breast cancer to salve the conscience. A couple of big, traditional companies have succeeded in making it to the hitlist with their corporate Facebook page, including LEGO (#1) and Carlsberg (#18), while other companies – not surprisingly – are on the Top 50 list from their advertising universes alone, having their own Facebook pages, including Wupti Pede (#12), the Viasat Garden Gnomes (#15) and Britta and Claus (#16).

If likes represent engaged customers

Of course the hunt for likes is not just about reputation management. It’s also about client relations, sales leads and sales. Because when someone makes the effort to like your brand it can – to some extent – be viewed as a sign of engagement, and engaged customers can be expected to:

pay more for your products (i.e. buy the premium versions)
consume more of your products
make a bigger effort to get hold of your products
recommend your products to others.

That’s why it’s interesting for the individual business-to-consumer company to track the number of likes over time. If the company makes an effort to be visible with a campaign or product launch, you would like to be able to see the effect on Facebook in the shape of likes. Does the number go up? When? With what frequency? That’s a simple measuring tool.

If the company’s number of likes is to be compared to those of the competitor or other companies, the number of likes will be misleading. Some big companies will be able to generate a big number of likes just on the basis of their many client relations, and not because of a genuine and recognised quality that triggers a like on Facebook.

Click the image to enlarge. Selected American companies’ LPM (the number of Facebook likes divided by the company’s revenue in USD millions). Just like Denmark has Pandora at the top of “Fashion and accessories”, the American hitlist has Forever 21 and Burberry. More interesting is the high LPM figure for Starbucks, confirming the general impression of this chain as a brand with a lot of fanatical admirers. Apple is placed in the middle which possibly reflects the company’s comparatively modest effort on social media. Walmart’s low placement is of course due to the chain being such a money maker that the number of likes never will be able to match the financial results.

What’s your company’s LPM?

So, American marketers have devised a way to show the number of likes in relation to the company’s size. In other words calculate the company’s LPM, as likes per million dollars in profit. LPM is the number of likes purged for the company’s size. The argument is that LPM reflects the brand’s value and a comparison with other statements of brands’ values shows a certain coherence (and a few confusing differences).

A high LPM is in any case an indication of an above-average ability to attract likes, while a low LPM is an indication of a below-average ability to attract likes.

LPM as a measuring method has the advantage that it’s quick for companies to read and is based on easily-accessible information. KForum has tested the method on a number of bigger companies, each targeting Danish consumers and having an official Facebook page. We have chosen customer-facing companies, where there is a clear convergence between brand name and the company as a legal entity. In our calculations of LPM we’ve use revenue instead of profit as an expression of company size.

The LPM for selected Danish companies (with huge numbers of likes on their Facebook pages). LEGO is not on the top of the list, as it is with the pure like list mentioned above. The explanation is that LEGO, in view of the company’s size, should have twice as many likes. Also Carlsberg’s 200,000+ likes are, according to the LPM conversion, on the low side. Carlsberg does not have an impressive ability to attract likes. Best are Fitness World and Pandora whose clients seemingly are above-averagely dedicated in comparison to the other brands and products in question. Graphics: KForum.

The above companies have been chosen because of their many Facebook scores. A slightly different picture appears when we look at companies chosen because of their huge revenue.

Selected C20 Companies’ LPM. Danske Bank is the unwanted worst in the class among the five consumer-oriented C20 Companies that have Facebook pages. In comparison Carlsberg appears to have more – but notice that Carlsberg still has an LPM of just four. Outside the circle of C20 Companies LPMs are often much higher. As can be seen from the previous table, Pandora’s LPM reaches above 160. Graphics: KForum.

The LPM number is a simple but unclear target

While the LPM number can give certain pointers it’s far from being an exact measurement tool, because a like represents several things. You can like a company, but you can also like certain activities on a company’s Facebook page. They do not have the same meaning in the overall numbers. You can also like other people’s likes of a company without actually going to this company’s Facebook page. In this light the like changes character since you can say that the like is both for a friend and for the company at the same time. Who do you like the most?

Another question concerns whether likes are not too narrow a description of engagement. Someone might make a post on the company’s wall, share a friend’s posts on the company’s wall or a combination of these and likes. A total engagement number is used, for example, by Page Analyzer from Komfo.com.

A third question is about where a company may have multiple Facebook pages, e.g. one for each major product. Can all the likes of these pages simply be accumulated when calculating the LPM from a known total revenue figure for the company? There can also be problems with compiling likes collected from a Facebook page in just one language but with global revenue numbers, and vice versa.

A like is worth 22 kroner – or close to zero

Likes give companies an opportunity to post on the wall of someone who clicks on them and thereby exposing that person to an advertising message. This has, tentatively, been quantified by some American marketing people (converted to kroner). A fan base of one million people exposed to two daily postings get exposure for an equivalent of a least 22 million kroner compared to buying similar media. That means that a single click is worth 22 kroner.

But this cost conclusion is challenged by other marketing people who argue meticulously that a like is worth much less: only the lower 8 per cent of a brand’s fan base see the daily postings from the liked companies. Even worse, for brands with more than one million likes, the group of fanatic customers who actually read the company’s postings, are even lower, specifically less than 3 per cent.

This means that when, for example, LEGO or Pandora communicate with their impressive Facebook fan bases, well beyond a million each, they are – to a certain degree – talking to the deaf, and that’s not worth a whole lot.

Critics of the like-hype also note that many companies gain likes by offering a piece of content in exchange for a like. Many who like the company for this reason never return because they were only interested in the particular piece of content that resulted in the like.

Finally it must be emphasised that the algorithm that Facebook itself uses to evaluate interactivity has placed the number of likes in the bottom of the hierarchy. When Facebook users comment, click on videos, view pictures and participate in polls it gives a far higher interactivity score.

The bottom line: if interactivity is a sign of engagement, is a like, by itself, an unstable engagement? And if this wobbly engagement is on top of one that comes from a random passer-by the currency of the like is greatly devalued.