What’s the value of a community?
Marketing profiles are created by way of collecting, analysing and grouping content or interest data from social media channels. What moves the group of people who follow an artist, DJ or footballer on Facebook, Twitter or YouTube? Which clothing brands are popular within the group who follow a certain artist, DJ or footballer?
Followers of artists “speak” to each other. Not only in the bar, but also online within certain networks which are made available for this. They chat, tweet and blog about cars, telephones, music, films, energy, sustainability, watches, scooters, etc…
‘Targeted marketing can be applied when an artist collects fans and the profiles of his/her followers are known more than ever before. A mobile telephony provider such as Vodafone will, depending on the target group and knowledge about that target group, make the decision to advertise widely, or not. Wide advertising by Vodafone is preferable when the audience of the artist often calls via another provider. The focus and objective of Vodafone will be to acquire and consolidate new consumers, the so-called switchers. Vodafone’s promotion will be focussed on making the switch and not only on name recognition. Specific actions can be devised by Vodafone in collaboration with the organisation of the event in order to get more people to switch to Vodafone.’
What applies to telephone providers can also apply for energy suppliers or brands such as Samsung or LG. Watch brands (TW Steel, Breitling, Swatch) can further develop name recognition, but also promote a new model.
Skin/hair care products can be actively promoted, when it is known that followers discuss these within social networks.
How to determine the value?
Firstly, the basic information available is looked at. Name, address, town/city of residence, telephone number and e-mail address. Can these people be reached and will they allow this via the same social media? If a comprehensive profile can be gathered from the connection, this will result in a standard value. The standard value is an average of what the market is willing to spend to purchase data based on the rates of the normal traditional marketing data suppliers. The standard value is now formed in its own eco system. With the standard profiles, overlaps are eliminated and also the fact people stop following an artist will be kept in mind, the so-called “churn rate” or “quitters”.
In addition an estimate is made within the model whether a brand has a low, average or high marketing budget. Underwear and socks will have lower marketing budgets than energy suppliers or jewellery makers.
Subsequently a value is coupled to the product/service itself and the type of artist. A DJ will be less able to promote insurance products, but rather audio equipment or a certain clothing brand. The so-called suitability. A product or service is suitable on a scale of low, average or high with a particular artist.
With this data, a total sum is made for each category, on top of the fixed value of the standard data of the profiles. An artist who has collected and can use all standard data from all of its followers quickly has a high initial value.
When in addition data can be collected on which activities these people are interested in, accurate marketing profiles which can be targeted can be created for each product group, such as cars, clothes, cosmetics, etc …
A financial example
For each product group, which can consist of multiple suppliers, the value of the contacts is determined of the future cash flows for each marketing profile on top of the standard rate. This is shown in the table below:
|Type||Standard budget||Suitability (1 – 5)||Weighted value||Standard value||Total value|
|Clothes||€ 1.50||2||€ 0.60||€ 4||€ 4.60|
|Watches||€ 1.75||4||€ 1.40||€ 4||€ 5.40|
Within the valuation the standard position is taken from the fact that for only 35% of all Tweets, chats and shares on a network it can be retrieved what really interests people. From the total number of followers only 35% are calculated with, naturally this percentage can be reduced for a more conservative calculation. A calculation example using 35%:
- An artist has 650,000 unique profiles and followers. When the standard information of all followers is complete, this will offer € 4 for each complete profile (in this case € 2.6 million).
- Of the 650,000 followers, a “catch” ratio is set at 35%. This means that marketing profiles can be compiled from 227,500 followers.
For the clothing industry that can result in an amount of 227,500 times € 0.60 = € 136,500 for the artist. For the watch industry, where the artist has, and can create, much more support, this will result in another € 318,500 (namely 227,500 times € 1.40) for the artist.
In this way you can create the value for various other product groups for the artist which will add up to the total value. See the table with 10 Dutch artists who have been valued according to such a model as an example. With the valuation of the below artists the position is taken of 20% of the standard profile with the collection of data and a 25% catch ratio via the networks such as Facebook, Twitter, Hyves and Youtube.
With the right Internet Strategy, definition of KPI’s, Plan of Approach and Social Media and Internet Monitoring DDMCA is able to extract data from the various networks and enrich your data to capitalize the value of it.
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DDMCA and Performance & Investment Management (P.I.M) are currently collaborating to refine the valuation models based on data from Social Media channels, among other things. If you have queries or would like to value a brand, artist, DJ or athlete do not hesitate to contact.