Perceived value


A while ago I noticed that a particular piece of thinking that has been carried over from the tangible world of sales and product/service driven business into the less tangible, more abstract world of social and non-sales orientated online business.

In the world of tangibles if a particular action has a perceived value, then there is a push from the business to lower the barrier to action, this can vary from access to a brochure or information pack all the way through to a sale of an item. The reason this works is because a sale has a physical price there is a physical value, so by looking at conversion ratios we are able to attribute a value to the brochure.

The problem with lowering these barriers starts to come when the entire value proposition of the action is the effort that went into it.

Case in point; Facebook removed ‘Fan’ and replaced it with ‘Like’ as they noticed people “liked” things with a lot less thought, therefor brands would be able to grow their pages with more ease. The issue here is that by lowering this barrier they have diluted the value proposition. If we make some very generous assumptions and say that a customer that is also a Facebook ‘Fan’ spent on average $5 more per year than a customer who is not a Facebook ‘Fan’ then this number will inevitably go down when the brand starts to attract less interested ‘likes.’

In many ways we can draw a comparison to what has happened to online advertising, publishers inflated their impressions in an attempt to squeeze more money from advertisers, however by inflating volume the response rates dropped. Advertisers realised that this meant they needed to serve more of these impressions to get the same value, thus the per-impression value of the site was diminished and the incremental gain to the publisher was lost. Thus the downward spiral begins.

Of course, all of this is based on the assumption that there is any real incremental value to a Facebook fan to begin with. So far all attempts I have seen to report on dollar values for this kind of activity have been using methodology that ranges from questionable to retarded.

Moving beyond this some would argue that the value is the ability to deliver messages to this audience and engage with them on an ongoing basis, which is terrific, as long as they are spending more money than people who aren’t involved in that engagement, because every line you read, every word you type has a head hour against it and those cost the business money.

So if you’re attracting more ‘Likes’ than you were ‘Fans’ you might want to hold off on that self congratulatory back pat and avoid sending out that smug tweet to all your social media strategy expert guru pals, because it’s highly likely that you’re increasing quantity at the sacrifice of quality.


5 thoughts on “Perceived value

  1. I like it Joel, very much a fan of your thoughts!!

    There is no question in my eyes that quality beats quantity in the majority of cases. Although quantity can yield its on benefits such as increased awareness, it is the richer level of engagement that I think is vital to then see those engaged customers spending more money.

    Social is one channel in the mix however new highs in consumer engagement levels are the opportunity!

    I like Mandi’s view on a ROI and if we want to see these consumers spending more money then there needs to be the drive and path to purchase!

  2. I agree, a great piece Joel. It really highlights the fact that agencies need to be fully aware of the client’s end objectives and goals. Their idea of success may look very different to what the agency may perceive it to be.

  3. Nice one Joel.

    By ‘Liking’ a brand potential consumers are fulfilling some kind of need to convey to their online community that they wish to be associated with or are as ‘cool’as the brand.

    The issue that I think advertisers face is that potential customers are engaging with their brands for free. They are able to engage with a brand merely by clicking a hyperlink as opposed to buying a t-shirt which promises some form of ROI.

    Is the mere click of a like hyperlink really true “engagement”. What happen’s after you click like ? Are you likely to go and like it again ? Probably no, so liking doesn’t mean much..

    The disadvantage to the advertiser here is that people are able to express their association with a brand/product in the public domain without actually ever having consumed or having plans to consume a tangible product.


    How can you place any value on that ?

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