This concept of valuing intangible assets such as relationships by substitution, was presented in Chris Anderson’s latest book “Free: The future of a radical price” and is an interesting take on monetising the non-monetary.
Earlier this year, Burger King®’s “Whopper® Sacrifice Campaign” gave Facebook® users the opportunity to “de-friend” ten Facebook® friends in return for a voucher for a Whopper®. After a week or so, Facebook® asked Burger King® to close the applet as it breached their privacy agreement (the applet notified those “de-friended” of the action as opposed to Facebook®’s normal non-disclosure procedure) but by then nearly 250,000 relationships had been traded.
So what was the transactional value and where does this lead? The active blogger, Jason Kottke, www.kottle.org, did the calculation.
Facebook® has approximately 150 million users with on average 100 friends. When you de-friend in Facebook®, two relationships are lost so each user has effectively 50 unique relationship units. Burger King® asked participants to give up 10 friends for a Whopper® priced at $2.40 therefore the “friendship” cost per user is $12 (or five Whopper®’s). Scale this up with 150M users and you reach the valuation of $1.8bn.
So is Facebook®’s value $1.8bn? In terms of relationship capital it might be, but as Anderson writes in his book, if we compare this value to the estimated £10 to $15bn placed on it by investors where does the other $8bn or so value come from? Not at this point from revenue generated. With alleged leaked internal documents showing a revised internal valuation of $3.7bn in July 2008.
Has the economic downturn proven that the Whopper® substitution model to be more accurate?
Bill
Love the idea we can begin monitize goodwill in terms of Whoppers. Look forward to your next IA workshop slides.
Ken
Posted by: Ken Green | 08/10/2009 at 08:29 PM