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Valuation of Social Media Data: What’s a Like/Follower/Retweet Worth?

Social media is omnipresent in today’s society. Everywhere you look, Facebook, Twitter, Instagram, YouTube, and many other services offer the ability to share photos, links, videos, tweets, and posts. The proliferation and growth of these communication mediums have allowed everyone, from individuals to multinational companies, to use them as a way to spread their message.

Of particular interest in the business world is how to use these social media tools to gain market share and to attract and engage consumers. However, use of these communication tools is also creating a number of interesting intellectual property (IP) questions, such as: what type(s) of IP rights are generated, who owns those rights, who can share or use content developed from social media platforms, and what is the value of the resulting rights and content?

The traditional rights provided by trademarks, copyrights, and laws of privacy are being interpreted and applied to this new type of content at; the same time, many companies are trying to determine the return on their investments in social media. In this article, we will address some of the issues associated with ownership and valuation of social media data.

Social Media Spending Is Dramatically Increasing

As the world continues to adapt to the increasing role of social media in everyday life, so, too, have companies in an effort to continue to reach potential consumers. Corporate America is making significant investments in social media without a clear game plan or manner to measure its effectiveness. These investments in social media are reaching unprecedented levels and are showing no signs of letting up.

Many studies and reports detail the trend in increased social media spending. Mediapost reports that “…seven out of ten marketers expect their companies to increase spending on social media in 2014.” However, in that same survey, approximately 80% of marketing professionals reported measuring online social media and demonstrating return on investment as two of their biggest challenges.1

According to a 2015 survey from Duke University’s Fuqua School of Business, digital marketing spend is expected to increase by 14.7% in the next year, while at the same time, traditional advertising spend is expected to decrease by 1.1%.2 Salesforce surveyed 5,000 marketers at the end of 2014 on their 2015 budgets and found that 70% of them planned to increase social media advertising spending on platforms such as Facebook, Twitter, Instagram, and Snapchat. Additionally, 66% of those surveyed believe that social media is core to their business and 66% have a dedicated social media team.3 Those statistics naturally lead to a predicted overall increase in social media spending: BI Intelligence found that U.S. social media spend will top $8.5 billion (2014) and reach nearly $14 billion by 2018.4

Many companies have seen a positive impact associated with the billions of dollars being spent on social media. One such benefit is increased brand recognition and customer loyalty. According to a major social media marketing study, which asked 3,700 marketers how they used social media to grow their business, 90% indicated that their social media efforts have generated more exposure for their business.

Moreover, nearly 70% of marketers use social media to develop and maintain customer loyalty.6 Social media may also boost sales — more than half of marketers who’ve been using social media for at least three years have reported increased sales following a social media campaign.7 Finally, social media presence may attract potential customers to the brand. Over 80% of marketers indicated that their social media efforts increased web traffic.8

Businesses clearly seek more engagement with consumers — and social media seems to be an engine that can drive such engagement. Companies enjoy various benefits through this increased engagement, such as: 1) better tracking of consumer preferences, 2) increased consumer loyalty, 3) more effective introduction of new products and services, and 4) improved brand recognition and awareness. Throughout this social media engagement process, companies create content, collect data, and interact with consumers at unprecedented levels, creating assets of value that must be examined concerning ownership and protection issues.

What Assets Are Being Created, Who Owns those Assets, and What Is Protectable?

Follower base, customer/email lists, blogs, mobile apps, hashtags, slogans, and social media account names are examples of protectable assets that companies can create by investing in social media IP. Although companies create many assets through these investments, it is still somewhat unclear as to whether and how such assets can be protected. For example, companies often create hashtags in conjunction with advertising campaigns. These hashtags can be registered as trademarks with the U.S. Patent and Trademark Office if they are extensively and prominently used to promote the company’s products or brands.9 An example is Coca-Cola who recently filed for trademarks for #smilewithacoke and #cokecanpics, which it has never done before.10
Other forms of IP protection may also be available for social media: copyrights for developed content; trade secrets for customer email/follower lists; or trademarks for other brand-related identifiers.

The question of content ownership also arises when a company’s social media sites are interactive — who owns the photos, videos, and comments that are added by users? Who owns the web sites, email lists, followers, hashtags, etc., when a band breaks up? Companies can decide the extent to which they claim rights to the content, and that may also affect the value of their social media IP. On one hand, claiming exclusive rights can help avoid future litigation, but on the other hand, content contributors might then be discouraged from posting.

User-generated content isn’t the only area where ownership rights come into play. Numerous lawsuits have arisen regarding the ownership of company-related accounts used by employees.11 Establishing clear policies about ownership of such accounts can mitigate the risk associated with the social media IP.

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Courtesy of Stout, Risius, Ross – Stout, Risius, Ross is a member of the EACCNY