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(Fort Collins, CO) – New Belgium Brewing Company has the largest Facebook fan following of any craft brewery with 200,000+ fans on its primary page and another 200,000+ across brewery subpages like beer-specific pages and regional pages. According to Ad Age, the company has paid hundreds of thousands of dollars to help build that fan base. So how valuable are all these fans?
It set out to figure out how valuable they are this fall by asking Facebook fans to fill out a survey, which nearly 3,000 completed. Based on the findings, they concluded that the typical fan bought $260 worth of New Belgium beer per year, assuming that respondents drank 10 beers a week and that New Belgium made up 25% of their consumption, which adds up to $50.7 million spent yearly by unique Facebook fans. New Belgium committed roughly $235,000 to its social-media presence last year that was mostly dedicated to Facebook, including both app development and advertising.
$51 million. A Year. If we take New Belgium’s reported 2009 revenue of $127.6 million, we can estimate that Facebook fans’ beer purchases accounted for around 1/3 of company revenue in 2011 (including sales of non-beer items included).
It isn’t necessarily far fetched that New Belgium Facebook fans have spent somewhere in the tens of millions on the company but did the brewery use a logical method to arrive to its estimate?
First off, the question of, “how much New Belgium beer do you buy?” does not answer the question of how valuable you are to the company as a Facebook fan. What may answer that question is, “how much more (or less) New Belgium beer do you buy as a result of being our Facebook fan?” And that is just an impossible question to answer. I buy Sierra Nevada beer. I am a fan of the Sierra Nevada Facebook page. Even I wouldn’t know how to calculate how valuable I am to the company as a Facebook fan.
I am also a fan of New Belgium’s Facebook fan though the beer isn’t available in my market. There are, no doubt, thousands of Facebook fans of the brewery that are in a similar situation and we should all probably be presumed to buy at or near $0 of New Belgium beer each year.
New Belgium conducted the survey by posting a link to it on its Facebook page twice. The survey respondents are likely not a fair representation of the more than 200,000 fans the brewery has. The survey respondents are probably largely New Belgium’s most passionate fans that are engaging with content from the brewery regularly.
The Facebook algorithm works like this: the more someone engages with a Facebook page, the more frequently that person will see New Belgium Facebook posts in their newsfeed. Most people have the Facebook newsfeed filtered by “Top Stories” as opposed to “Most Recent Stories.” The former is Facebook’s default setting.
At the time of publishing, just over 2,200 people are commenting on New Belgium status updates regularly or a rate of between 1 and 1.5% of all the fans it has. That number doesn’t include the number of people that regularly ‘like’ New Belgium status updates. Again, it is that group of loyal fans that likely filled out this survey.
What does that 1 to 1.5% tell us? For every one Facebook fan of the brewery, there are at least 95 or so more that are casual fans and certainly don’t buy a 6-pack of New Belgium beer every other week.
A lesson for companies to learn…some want so badly to be able stick a price tag on Facebook fans and social media efforts in general but it just isn’t that easy. If even remotely possible.
And what about the merits of “buying” fans to begin with…that is another topic to explore in itself.
The value of a Facebook fan comes from the fact that it’s vastly cheaper, more personal and more quantifiable to engage with and advertise to their customers via Facebook than thru traditional advertising channels.
@Mike, how exactly is it cheaper, they claim that they spent nearly a quarter of a million dollars on Facebook marketing in way shape or form in 2011. That is an ENORMOUS sum for a craft brewery, even of New Belgium’s size.
The thing to note about the 1-1.5% number, those can be deceptive because it will not nearly always be the same 1 or 1.5%, especially as the audience of page increases on facebook. Taking a wild guess via the facebook fanpage stats I have seen and pages I have “Insights” data from, by the end of given week, New Belgium probably gets status updates across the view of somewhere between 15-25% of their unique “likers”. Over a 28 day period, probably near 40%, which is not insignificant.
Certainly it is an efficient way to build connections and reach, but that is already dwindling for some brands, craft beer probably not so much yet. I would argue you might be able to roll that $230 across a segment of their audience, but not the complete audience by any stretch. Moreover, they would need to do that research study more than once to get a gauge on its potential validity.
You all bring up some valid points, but one thing may have been overlooked. I agree that these are NB’s biggest fans and they skew the results of the survey.
That being said, it’s a great way to build a relationship with their most avid drinkers. If they can maintain/increase the frequency of beers their core fans drink this will really pay off. For every NB beer someone chooses, they are turning down competition from new breweries and other belgian oriented craft beers
Actually that isn’t being overlooked at all. The analysis was strictly about the validity of the study and the bold claim.
I don’t think anyone is questioning that its a great way for New Belgium to connect with their customers Nick. It’s just a stretch to believe that you can extrapolate one survey into fact or in this case ROI. In the end New Belgium is continuing to invest in social and digital marketing that is all the ROI I think we can truly get. They believe its working.
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