Tech billionaire and Dallas Mavericks owner Mark Cuban says he is fed up with Facebook and will take his business elsewhere. He’s sick of getting hit with huge fees to send messages to his team’s fans and followers. Not so fast says an article published by LoudDoor founder Jeff French:
Acquisition Costs
The going rate for most brands to acquire an email subscriber at scale is $4-$5. Therefore, acquiring 100,000 email subscribers would cost $450,000 at the mid-point.
Mailing Expense
A mail provider with good delivery rates such as ExactTarget would charge between $6-$8 per thousand to deliver email to this list when you consider all data management and mailing fees. This is assuming a mid-point of $7 would peg us at $700 per mailing. To mail to the list 3 times per week would total $109,200 per year.
Reach
According to the widely referenced SilverPop Email Marketing Metrics Benchmarking Study, the average email open rate in the United States is just under 20%. This means that 20,000 of the subscribers in our example would open each message accounting for 3,120,000 unique user impressions in a year (assuming 3 emails sent per week as previously mentioned).
Total cost per unique user impression:
Take a look at the totals for our hypothetical email example:
$450,000 acquisition costs plus $109,200 mailing cost equals $559,200 to deliver 3,120,000 unique user impressions. This is an all-in cost of $.18 per impression delivered via email.
Now that we have email covered, we’ll take a look at Facebook and apply the same math, starting with user acquisition.
FACEBOOK LIKES
Acquisition Cost
Facebook created a low friction experience for a consumer to “Like” brands and while the cost to acquire fans will vary we consistently deliver “Likes” to our clients at $1.50 or less depending on the targeting criteria. This means $150,000 to acquire 100,000 users.
Promoted Posts Expense
Cuban referenced the suggested “Promoted Post” pricing using the standard in-line buying mechanism provided by Facebook. His quote was $3,000 to reach 1-1.8 million fans. The midpoint of 1.4 million fans in this example is a CPM of about $2. Assuming we pay the same rate to reach our 100,000 fans on each post this would be $200 per post or $31,200 per year for posting 3X per week.
Reach
Unlike the 20% open rate of email 100% of our budget spent on promoted posts will go to reaching 100,000 on each post or 15,600,000 unique user impressions for the year at 3 posts per week.
Total cost per unique user impression:
So let’s look at the totals for our hypothetical Facebook example. $150,000 acquisition costs plus $31,200 Promoted Post expense equals $181,200 to deliver 15,600,000 impressions. This is an all-in cost of $.01 (yes, a penny) per unique user impression delivered via Facebook.
This is 18 times more cost effective than email.
Now obviously these are big budgets used in these examples, but it is all relative. Put your own numbers to it and the equations are going to be very similar. If you are using Social Media the way it should be, as a communication tool, you can grow your “community” with Ads and then promote your content in a very economical manner.
