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Social Economics: How is Social Data Valued

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You could argue that your clever Facebook status updates and Frank Bruni-esque Yelp reviews are priceless, but the user data you generate can be converted into actual dollars and cents. How much does a social media message worth? Thanks to the folks at Backupify.We are able to turn it into theoretical cash values. As it turns out, Yelp reviews are valued at $9.13, while individual tweets translate to a paltry $0.001. A Foursquare check-in? $0.40. Updates on Path came in slightly higher at $0.50 each. And Facebook message worth $0.024.

As for why there are such vast discrepancies, Rob May of Backupify explained to Business Week that, “The reason that Yelp reviews are valued so highly is that every review creates lot of value for other users,” he said. “You can’t create a lot of value for a lot of Path users because by its nature, it’s limited.”

The mathematical calculations Backupify used were pretty basic: They took the amount of content users provide and divided that number into either the companies’ valuation or annual revenue. They also figured out how much each user is worth by taking the valuations of each company and dividing those numbers by how many users they have. Backupify determined each person antiquing photos is worth $18.52 to Instagram, and that those actively repinning duvet covers and brownie recipes represent $28.09 per user for Pinterest. Users of Facebook and LinkedIn are valued the highest, at $104.46 and $118.34, respectively.

History has proven that Facebook interaction and tweets can end up being worthy in the marketplace. But seeing this metrics, it makes me wonder if people who have small businesses should be regularly earmarking time to cultivate their fan base on Facebook and Twitter. Given the number of message they can attract and the price of each message worth, basically, I see no such thing as ROI. The lack of economic scales makes it unrealistic to convert what they invested into actual margin.

So many times small business acts as a publisher on Facebook. However, it’s reasonable to ask why this means to them. After all, it has nothing to do with their core business. Instead, you might ask why don’t just buy ads on publications with which it wants to be associated rather than trying to become those publications. That’s the way that advertising has worked for 80 years or so. Why reinvent the wheel? If you argue that small businesses would save money by enhancing their Facebook and Twitter feed rather than buy ads, consider that it takes money to create compelling content and that to reach all of your fans you still have to buy ads on those platforms.

But yelp acts differently. If you see the metrics, you can find out the value of every single yelp review worth $9.13. It’s the average of positive and negative reviews combined, so think of how much a positive review works. Finding a way to increase your Yelp review is definitely something worth a shot in the future.   

Source:http://www.huffingtonpost.com/2012/04/12/the-value-of-tweets-status-update-yelp-reviews_n_1420598.html

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