FONTANA, Calif.—Among tire companies globally, Falken Tire Corp. ranks second, behind Nitto Tire U.S.A. Inc., in its Facebook following, nearing 900,000 fans. But what the company is most proud of is its Facebook engagement rate. "We fluctuate between 14 percent and 19 percent engagement ratio, and there are only a handful of actual brand pages in the world on Facebook that can claim that," said James Yim, creative manager for Falken.
"I'm talking about all brands, not just tire companies. We have very diehard fans." In fact, according to Mr. Yim, the company's engagement rate is more than four times the benchmark average for Facebook, which sits at around 3.5 percent. "At our lowest point we're 12 to 14 percent." What exactly is engagement rate?
More or less, Mr. Yim said, it's the ratio of page fans who "like," comment, share and interact with a page in other ways over a certain period compared with the total number of fans the brand page has. To a large degree, engagement is impacted by EdgeRank, an algorithm Facebook launched in 2012 to filter which posts are displayed in a user's News Feed and how high they appear. It ranks "Edges," or various actions that happen within Facebook.
According to whatis-edgerank.com, posts appear in News Feeds based on three things: affinity, weight and time decay. Affinity can be understood as the closeness of the relationship between a brand and any particular user, and it is grown through repeat interactions, such as liking, sharing and simply clicking on posts. Weight is a value system created by Facebook that assigns values to certain actions on Facebook, such as liking and commenting. Actions that are more involved—such as commenting and sharing—are more valuable than liking.
"There're a lot of brands today jumping on social media really aggressively, and they're just really behind," Mr. Yim said. "They really look at likes—they're counting the likes, they're chasing the likes, they're buying the likes. "When Facebook launched Edge-Rank last year, it was mostly to put that aside and realize that people are using Facebook as a way to get what's perceived as free advertising. So they taxed brands using the platform by reducing the amount of people who actually see their feed and their posts, where it's all likes.
"It's the engagement and the virality that actually allows people to see your post on your News Feed," he said. "That's why the engagement ratio is so important. For us to get that high of an engagement ratio, almost 6 million people a week connect with us on Facebook." Andrew Hoit, vice president of marketing for Falken, explained the algorithm further.
"Let's say I'm brand X and I have a million 'likes.' Facebook has control of how many of those million people see my posts—they control that—and it's based on your engagement, not your likes," Mr. Hoit said. "If your engagement is 20 percent—so 200,000 people are engaged with your brand—that's going to determine how many people see (your post) in their news feed. "If I have 3 million likes, but my engagement is only 1 percent, that's how many people see your new post in the feed.... "Without the engagement you can have all the likes in the world, but your message isn't going to get out there."
Finally, time decay is factored into the equation. The older an Edge is, the less valuable it becomes, helping to keep News Feeds fresh. "The EdgeRank is actually a very simple algorithm," Mr. Yim said. "It's not a complex algorithm like the Google search engine. "You can actually look up the formula. But Facebook definitely taxes you to have a large like base and a low engagement ratio."
The EdgeRank formula favors brands that work to build a community on Facebook, not ones that simply use the site to advertise.
"There are so many companies out there that are afraid or refuse to get into social media because it is virtually impossible to equate anything you do in social media to the cash register ringing," Mr. Hoit said. "When they go into social media they think, 'Oh, well I need to talk about this promotion. Let me post on this promotion or talk about my products.' "It's not about that. You're not going to sell your products there.
"You need to build a community and an engagement," he added. "A lot of companies don't understand. They think it's just a new form of traditional marketing, and it's not. It's completely different. "For us the long-term attraction to our brand is what's going to pay dividends down the line. You can't measure it."