Is It Possible To Valuate A Business' Social Media Accounts?

8 December 2017
 Categories: Business, Blog

There's no doubt that social media is an invaluable tool for connecting with current and potential customers and disseminating your brand. However, the various websites (e.g. Twitter, Facebook) don't easily lend themselves to calculating just how much revenue is generated from engaging with people online. This can make it difficult to get a true understanding of how valuable your social media accounts are, but here are two ways you can come up with a general idea of their worth.

Figure Out the Worth of an Individual Follower

One way to evaluate your social media accounts is to determine the value of one follower. This can be hard to do because followers don't always take a straight path from your Twitter post to the checkout page on your website. More often than not, a follower will absorb your content and then make the purchase days, weeks, and sometimes months later.

Still, you can use tracking software to estimate the number of clicks you get from your social media sites and use that to determine how many convert into sales. For instance, if you notice you're getting about 1,000 clicks from Twitter and 20 percent of those clicks convert into $100 purchases, then the value of 1,000 followers would be $2,000 or $2 per follower. Thus, if you have 5,000 followers on Twitter, the basic value of the account would be $10,000.

This is only a rough estimate, however. The actual value of the account may be higher due to the goodwill and brand recognition you have established using it. However, it's challenging to put a number on something so intangible. Therefore, it's a good idea to enlist the help of professionals who can help you figure out that aspect of your account.

Use Market Metrics

Another way to evaluate your social media account is to use metrics developed by other companies. For instance, an analytic company estimates the value of one Facebook like is 0.33 cents. Thus, if your company receives 500 likes per day over 30 days, your account would value at about $4,950 per month/$59,400 per year.

Be aware, though, that different companies vary in the amounts they assign to social media accounts and the types of engagement customers have with the company's brand. Try to find metrics that apply to your industry and as close to your business as possible, and choose one that appears conservative. It's generally better to slightly undervalue an asset than overvalue it and lose money.

For more information about evaluating your company's social media accounts or help with performing this task, contact a business valuation company.