As he says, he's not asking the question, it's brand managers that are asking for the equivalency number as a way to justify their social media spend. There are, however, 2 problems with this.
The first is to paraphrase Jim Grunig: measurement isn't about reward or punishment, it's about having data to know what programs should be continued as is, modified or scrapped in favor of a more effective approach. Ad Value doesn't give you that information, because it answers the wrong question: how many eyeballs did I reach? Isn't the question really, which eyeballs did I reach and what did they do afterwards? Put another way, as I told my session at PRSA's Travel & Tourism conference yesterday "So what if 300 million people see a blog posting about your destination? If the blog posting isn't compelling or interesting, and no one visits your state or your destination, how can you put any "value" on those eyeballs."
Let's assume that those brand managers that Eric is talking about really want to know whether Social Media is working for them. By using Ad Value Equivalency, first they are defining "working" based entirely on reach not action. Worse, they are assuming that a blog posting that is seen by 1 million people has the same impact on the brand as a paid advertisement in a media outlet with a circulation of 1 million. But THERE IS NO SCIENTFIC EVIDENCE THAT THIS IS THE CASE. No one has ever shown that people's reactions are the same.
More to the point, why waste time counting eyeballs when you can measure outcomes? Isn't it much more useful to set up a web analytics program that tells you whether, after reading the posting, people went to your web site and requested more information? Or, if you calculate the ultimate value of that visitor in terms of how much he/she spends at your destination.