In order to impress their shareholders Facebook is desperately trying to improve the way companies utilize fan pages to attract customers. The social media giant hopes to develop new methods of advertising that allow companies to identify users’ interests and preferences to increase user interaction.
At the root of all this is the question of "Why bother?" Companies like GM made a great public spectacle about how their FB advertising money went to waste, (although they may now be getting back in the game). So why should other firms concern themselves?
Well, fortunately for Facebook, a recent study by Forrester countered GM’s claims by showing a significantly strong correlation between the number of "likes" a company has and customer engagement.
Here's the gist:
The most significant role Facebook users play in providing value to businesses is word-of-mouth recommendations to friends. If you "like" a page, you are more likely to purchase that company's products and twice as likely to recommend that page's products to a friend.
That being said, it appears there is not much companies can do to attract "likes" to their page, but are better served encouraging those who already visit the page by maintaining an active online presence and rewarding loyal followers.
It is also uncertain if there is causation between liking a page and making purchases, or making purchases and then liking the page.
Business Section: Investment Ideas
Data is still being mined on the success of Facebook fan pages and advertising dollars, but preliminary studies are encouraging.
If, as an investor, you believe a larger presence on Facebook can truly translate into better business performance, then it would be prudent to keep an eye on user engagement.
With this in mind we list below the top nine companies with the most "likes" on Facebook. Who knows…
List sorted by number of “likes”. List Average 1-Year Return: 21%.
1. The Coca-Cola Company (KO, Earnings, Analysts, Financials): The company owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily sparkling beverages but also a variety of still beverages, such as waters, enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. Market cap of $178.58B. Coke’s fan page has 44,024,953 million likes.
2. Walt Disney Co. (DIS, Earnings, Analysts, Financials): A diversified worldwide entertainment company. The Company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products and Interactive Media. Market cap of $86.85B. Disney’s fan page has 36,968,392 likes.
3. Viacom, Inc (VIA, Earnings, Analysts, Financials): Engages audiences on television, motion picture, Internet and mobile platforms through many of the world’s entertainment brands. Its Filmed Entertainment segment produces, finances and distributes motion pictures and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, MTV Films and Nickelodeon Movies brands. Market cap of $25.42 billion.
4. Nike Inc. (NKE, Earnings, Analysts, Financials): Engaged in design, development and marketing of athletic footwear, apparel, equipment and accessory products. Market cap of $41.47B. Nike’s fan page has 9,549,611 likes.
5. Starbucks Corporation (SBUX, Earnings, Analysts, Financials): A roaster, marketer and retailer of specialty coffee in the world, operating in more than 50 countries. Market cap of $39.40B. Starbuck’s fan page has 30,758,334 likes.
6. McDonald's Corp. (MCD, Earnings, Analysts, Financials): Franchises and operates McDonald’s restaurants in the global restaurant industry. These restaurants serve a menu at various price points providing value in 119 countries globally. Market cap of $90.02B. McDonald’s fan page has 20,775,679 likes.
7. Limited Brands, Inc. (LTD, Earnings, Analysts, Financials): Company retail brands included Victoria’s Secret, Victoria’s Secret Pink, Bath & Body Works, La Senza and Henri Bendel. Market cap of $12.85B.
8. Monster Beverage Corporation (MNST, Earnings, Analysts, Financials): The company develops, markets, sells and distributes alternative beverage. Brand names include Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, X-Presso Monster, Worx Energy, Peace Tea, Hansen’s, Hansen’s Natural Soda, Junior Juice, Blue Sky, Hubert’s and Vidration. Market cap of $13.19B. Monster Energy’s fan page has 17,361,509 likes.
9. Wal-Mart Stores Inc. (WMT, Earnings, Analysts, Financials): The company’s operates in three business segments: the Walmart U.S. segment, the Walmart International segment, and the Sam’s Club segment. Market cap of $239.39B. Wal-Mart’s fan page has 17,305,813 likes.
(Written by Dan Connelly and Rebecca Lipman. List compiled by Eben Esterhuizen, CFA. Data as of July 3, 2012. )
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