This is a story about Social Media evaluation, and like most of those stories, it doesn’t have a neat ending. It starts off, though, as a story about Public Relations, but only — I hasten to add — because they’ve been struggling with the AVE problem for a long time, and we may be able to use their experience to inoculate ourselves.
In his role as chair of the PR judging panel at Cannes this year, Ketchum’s European CEO David Gallagher tweeted:
Reviewed 200+ @Cannes_Lions PR entries so far. Many are good too many use AVE or impressions for main results.
— David Gallagher (@TBoneGallagher) May 27, 2013
Later still he noted:
too many entrants mistake advertising equivalency value – the estimated value of earned media – as a useful measurement of a result, and some as a result itself.
What is AVE?
Put very simply the AVE (Advertising Value Equivalency) was an attempt to value Public Relations activity by attempting to establish what Earned Media would cost if it were Paid Media.
A decade ago, in a brutally simple take down, the Institute for Public Relations’s Commission on PR Measurement and Evaluation pointed out that:
In summary, the use of this technique can perpetuate two major fallacies: (1) that editorial is “free advertising,” and (2) that dollar cost equals dollar value. Many senior managers believe these absurdities, and we marketers should always be looking for ways to debunk them, not reinforce them. If you’re trying to educate your management about how PR works, this technique is counterproductive.
most rational humans in the PR profession have finally rejected AVEs as an irrelevant silly and inaccurate measure.
Where are we now?
Today AVE is widely regarded as a bit of a joke by the PR industry – but like the best jokes, it’s still being told. The place it’s being told most often is in Social Media programme evaluation. This represents a real danger; a metric that has been derided and dismissed by an entire industry has leapt to a new host; a host that lacks the natural immunities built up over time.
It’s no secret that ‘Social Media ROI’ and ‘The Value of a Fan’ are still big issues for many marketers. I’ve been keeping track of some of the best known ‘fanalytics’ studies that have attempted to establish universal dollar value for Facebook Fans.
The first thing to notice is that there’s not much agreement in methodology or value (and that Syncapse are enthusiastic evaluators.) But the valuation to which I’d like to draw your attention is the first: Vitrue’s 2010 ‘Value of a Fan’ — which was instrumental in introducing the AVE model to Social Media evaluation — was widely (often unquestioningly) covered by the traditional advertising press; and dominated search rankings for more than two years.
Here’s how that model works.
Each fan delivers an incremental media impression. Assuming that a Page with a million fans is posting twice a day, that’s 730m incremental impressions per year, which using Vitrue’s estimated CPMs delivers $3.65m AVE. Divide that by the number of fans, and we get to Vitrue’s value(not wanting to compromise their credibility by claiming undeserved precision in their predictions, they’ve rounded down.)
Vitrue’s AVE Model Debunked
It does feel a little odd and unfair to be attacking a paper that’s already more than three years old; but we’ve seen from the PR industry’s experience that AVE is the unstoppable zombie, the annoying Magic Relighting Birthday Candle, the herpes of metrics. Also, Vitrue has already been acquired by Oracle, so they’ll be crying all the way to the bank.
Here’s what’s wrong with Vitrue’s model.
1. Cost is not Value
As both Gallagher and the IPR clearly point out, the value of advertising is not its cost. Or to put it another way, the Return is not the same as the Investment.
Nathan Gilliatt, founder of Social Media analytics consultancy Social Target puts it even more neatly:
Half the AVE I get from Facebook is wasted; the trouble is I don’t know which half.
2. Ignores Inefficiencies
Most media plans try to cap frequency to avoid unnecessary inefficiency and burnout.
In Vitrue’s model, the average fan is exposed to 720 impressions a year. Can we realistically claim that 720m impressions that reach 1m fans over a year offers the same value as those same 720m impressions spread across an audience of 10m or 20m?
In reality, Facebook’s editorial algorithms kick in pretty quickly, so that on average, only 5%-20% of Page fans will be exposed, most more than once per post. So our reach declines even further.
At some point, we’ll have to assume that the law of decreasing returns kicks in, and the fans are as aware of our product and message as they’re ever going to be.
3. Wrong Audience
Which brings us to the final point: Vitrue is focusing on the people who already like the Brand enough to Like their Page — and who probably are approaching saturation in terms both of purchase behaviour. They are focusing on this audience at the expense of the remaining billion Facebook users who represent the new audience that needs to be persuaded to buy their products, or to increase purchase frequency.
In a best case scenario, this fan-directed activity may, of course, succeed in retaining some of the Brand’s most valuable customer segment. But at what opportunity cost?
The problem with AVE
Here’s all you really need to know about the AVE model: if anyone really believed in it, it would be reflected in their budgets. They’d consider reducing their spends in Paid Media to reflect the value that they’re gaining through Earned Media. That they don’t probably tells you all you need to know about this metric.
The reality is, while they may pay lip service in their Cannes award entries, no-one believes in AVE. It’s just a convenient fiction to claim that (for example) the ridiculously catchy Dumb Ways To Die campaign for Melbourne’s Metro Trains has received “US $60m [of earned media] and rising.” Most of the YouTube video’s 55m plays will have been viewed by people well outside Metro’s catchment area, just as Sussex Safer Road’s 17m video plays are unlikely to have been viewed by residents of Sussex. Paid media is targeted, negotiated, controlled, audited. Earned media isn’t.
We’d argue that social media programmes cannot be valued independently of other marketing activity; that we don’t need special “Social Media value”, but should instead assess activity in terms of its contribution to established (and trusted) marketing value metrics.
In short, valuations are complex and nuanced, and can’t be reduced to catchy soundbites about “the value of a fan”. If you’re looking a serious answer about the value of your social media activity, we’d be pleased to talk to you about it. We’ve thought about it a great deal, and while we don’t pretend to have all the answers, we’d be happy to tell you what we already know, and to help you find what works for you.
Many thanks to Michael Blowers for prompting this post.