Can We Calculate "Community Equity?"

A guest post by Radian6‘s David Alston.

For me, like a brand, a community is an asset.  Here’s how Wikipedia defines ‘brand equity’:

Brand equity refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name.

The Wikipedia entry goes on to say, “The study of brand equity is increasingly popular as some marketing researchers have concluded that brands are one of the most valuable assets that a company has.”


But isn’t there another valuable corporate asset to consider?  What about a brand’s community equity?

What if we tried to define community equity in a similar way?  What if the definition went something like this:

Community equity refers to the marketing, public relations, sales, recruitment and customer service effects and outcomes that accrue to company that engages in community building compared to what would accrue if the same brand did not invest in efforts to find, build & care for their community.

Traditional marketing professionals have been using brand equity or brand value as way to demonstrate ROI for years.  So why can’t community equity emerge as the basis for evaluating the community building efforts of a new breed of PR, marketing and customer service professionals?

Communities gathered around brands have always existed but in the past finding and nurturing them has been difficult on a large scale.  But with the advent of the social web all of this has changed.  It finding and nurturing becomes entiring possible and cost effective.

  • They can listen to find and connect with others in their industry space.
  • They can easily see trends, share ideas, and easily collaborate with community members.
  • And because of the digital nature of the social web, they can track and measure their efforts.

And from the number of discussions I’ve had recently with brands, the concept of building community equity helps them see where social media fits into the overall context of their business strategies.  It becomes clear why 500 passionate community members on Facebook or Twitter are no comparison to the 500 eyeballs or even 1 million eyeballs purchased in a media buy.

It becomes evident that community building goes in the investment column while buying media buy goes in the expense side.  After all, audiences of media pay attention to your brand as long as it is paying for that attention while communities have the potential to stick with you for a lifetime since the focus is on building and maintaining relationships over the long haul.

So does the concept of community equity resonate with you?

If so, then how should we calculate it?

What would various formulae be?

What elements should be included?

David is the VP Marketing & Community with Radian6 (, a social media monitoring, measurement and engagement platform used by PR, marketing and customer service professionals.  David blogs at Community Instinct ( and can be found on Twitter at @davidalston (

Posted on: February 17, 2010 at 9:00 am By Todd Defren
14 Responses to “Can We Calculate "Community Equity?"”


  • Nicola says:

    I am somewhat late to this discussion! I am doing a PhD in this area, specifically I am seeking to assess the contribution of brand community to brand equity. I’ve had a hard time convincing academics of the need for a tool/method to calculate brand community equity and yet as discussed community is an asset and therefore has a competitive value to a business in “real life”. In time, I hope to share my findings with marketers in practice but just wanted to say how heartend I am to find the subject being discussed online. Best Wishes. Nicola

  • Hi David:

    Loved the post, very interesting. The concept of community equity does fascinate me, and I wonder what formula could be devised. I am a fan of Fishbein-Ajzen’s Theory of Reasoned Action, and I think I would start there with:
    CE= Community Equity
    W= Weights
    A= Activities that the Company does in the community

    So then, a formula could be:
    CE= A1W1 + A2W2 + A3W3

    But then, like you state, it must be accrued over time, so then is it

    CE= (AW)^X where x= the length of investment or campaign time.

    I’m not too sure. If you have any ideas David, I think we could have a fun conversation.


    • David Alston says:

      @Peter – Great points. Indeed tracking the first contact is important and yes customer tracking is definitely done now so the focus could be on potential.

      @Dwayne – Wow, I wish I had your gift for formula making. You seemed to whip that up effortlessly and it’s definitely a great start on something. I love to see you go further with it because I think you are on to something.

      Cheers. David

  • Lisa Dyer says:

    There is a community equity specification (on which a patent was filed last year) which calculates different facets of a social value system:

    One obvious application is recruiting and rewarding talent (commentary: But seems clear it could roll up to team and corporate equity as well.

    Do you think that some of what you describe is expressed or expressible by this spec?

  • I would want to tie this in some way to organic social media growth; for example, if I am using a lead-capture page from twitter, I would ask the question ‘Was Twitter your first interaction with the brand?’ While you would be enhancing brand through interacting with customers, interaction with potential customers is really a sign of building community equity as it shows that word of mouth is having a positive effect on the brand.

  • dominiq says:

    I really like this concept.

    Overall I think this is great. Two suggestions.

    - I don’t think that brands build communities (very few of them do but this is the exception rather than the norm). Community are forming themselves naturally around center of interet or center of expertise (anywhere where you’ve got knowledge and/or passion).

    Thus to mo the capital would be more “the level of connectivity between the brand and its target communities”.

    As an example, let’s say I’m a brand marketing to Moms. The # of moms that I can reach directly – because they joined my private community, my FB page or are connected in Linkedin with some of my employees is my “community capital”.

    - It’s not that different from the offline world where sales people are valued by they Rolodex.

    - This reminds me to the debate around Knowledge Management is the 80′s … Another way to look at that would be a capitalization of the “know who” versus the “know how” that people put as goodwill in the past.

    Would love continuing the dialog !


    • David Alston says:

      Thanks for the comment Dominiq. A lot of great points there. Agreed, that communities indeed naturally gather around a common interest. I’m a big fan of telling companies that they need to try to find folks that are as passionate about what they are passionate about (and while that may be a product or service I think its generally more like a mission or goal that their product or service may be tied to in some way).

      For sure connectivity to this community is a big part of it – the first part for sure – though after that I think equity be built on the strength of those connections or the relationships that form over time.

      I like your analogy to the Rolodex (connections and relationships around a passion/industry). And the Rolodex is only reaches its maximum value within the same industry/community of interest.

      Thanks for adding to the conversation here.


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