In Ep. 44, A friend of mine’s company is on the verge of potentially acquiring a company whose major source of revenue is a couple of Instagram accounts with a large number of followers. I won’t be sharing those exact accounts – but I will say that the real question at play here is – “are these social following TRULY valuable?”

Does having a 100’s of thousands of followers on Instagram drive real revenue?

Does a company that depends on the Instagram algorithm (or Twitter, or Facebook, or whatever’s next) really retain serious value, and is it something you can count on into the future?

How do you quantify that value? Is it investable?

On Instagram – companies will often pay $10 per 1,000 followers you have, or $1,000 per 100,000 followers.

On Youtube – influencers will usually receive between $.5-$.10 per view, which equals out to about $20 per 1,000 subscribers, or $2,000 per 100,000 subscribers.

People paying for fake followers and engagement is rampant in influencer culture and fraudulent activity is costing advertisers $1.3 billion this year.

The idea that you could pay people who have followings to mention your product – or use P.R. to get solid mentions in the media has been around for much longer than ‘influencer culture’ and an easy way to get the value of following if you are able to see the amount of impressions an account is receiving is  CPM x Impressions = this is referred to as “Earned Media Value.”

Once you have the Impressions an account is getting in a month – you can compare that to the general going rates of a platform – if you just paid them directly for them. An advertiser might have a CPM of $4. This means they pay on average $4 to show their ads to 1,000 people, and while a typical CPM (cost per thousand impressions) on Facebook Ads will be around the $10 mark today, it was closer to $5 on Instagram

( You can follow me on Instagram- Sattyam03)