Social Networks and their Economics: An interview with author Daniel Birke

Features

  • Author: Statistics Views
  • Date: 06 Sep 2013
  • Copyright: Image appears courtesy of Daniel Birke

This week, Wiley is proud to publish Social Networks and their Economics: Influencing Consumer Choice by new author Daniel Birke, Visiting Researcher at Aston Business School, Birmingham, who also works in a leading international management consultancy in Germany.

Intuitively, we all appreciate that we can be influenced by our friends and peers in what we do, how we behave, and what products we consume. Until recently, it has been difficult to measure this interdependence, mainly because data on social networks was difficult to collect and not readily available. More and more companies such as mobile phone carriers or social networking sites such as Facebook are collecting such data electronically. Daniel Birke illustrates in compelling real-world case studies how companies use social networks for marketing purposes and which statistical analysis and unique datasets can be used.

thumbnail image: Social Networks and their Economics: An interview with author Daniel Birke

Social Networks and their Economics:
• Explores network effects and the analysis of social networks, whilst providing an overview of the state-of-the art research.
• Looks at consumption interdependences between friends and peers: Who is influencing who through which channels and to what degree?
• Presents statistical methods and research techniques that can be used in the analysis of social networks.
• Examines SNA and its practical application for marketing purposes.
• Features a supporting website www.wiley.com/go/social_networks featuring SNA visualizations and business case studies.

Aimed at post-graduate students involved in social network analysis, industrial economics, innovation and consumer marketing, this book offers a unique perspective from both an academic and practitioner point of view on how social networks can help understand and influence consumer behaviour. This book will prove to be a useful resource for marketing practitioners from companies where social network data is available and for consulting companies who advise businesses on marketing and social media related issues.

1. Congratulations on the publication of Social Networks and their Economics: Influencing Consumer Choice. How did the writing process begin? What was it that initiated the project?

After moving from academia to industry, I wanted to write this book for a long time as there are very few books on social networks that show both the statistical analyses and how they can be applied to real-world marketing. The availability of social network data – be it from the likes of Facebook or from telecommunications companies – has massively grown in recent years and I felt it was time to write a book about it.

2. What were your main objectives during the writing process? What did you set out to achieve in reaching your readers?

The study of social networks has grown tremendously in both areas and there is a great hunger to better understand how we are shaped in our behaviour by social networks. I wanted to show some of the statistical techniques that can be used to analyse social networks and show using real world case studies how these can be used for customer marketing.

When identifying influence in social networks, the challenge is to identify true causal influence and not just correlation. For example, that my friend uses the same mobile phone network as myself might be due to influence processes or due to chance. In a statistical sense, the problem is that the standard assumption that observations are independent does not hold. One of the ways I have addressed this is the book is through a permutation technique called QAP, which “scrambles” the dependent variables in order to test how often using the same mobile network could have evolved purely by chance.

3. Were there areas that you found more challenging and if so, why?

One of the biggest challenges was probably to balance these two audiences and to bridge the academic methodological rigour and writing style with the interests of a practitioner audience arguably more interested in understanding the concepts and the key impacts on their business rather than minute details of a statistical analysis. Hopefully, the approach of preceding each chapter with a case study proves useful for the practitioner reader in this respect.

4. Can you give us a taster of how a statistical technique can be used to measure influence in a social network?

When identifying influence in social networks, the challenge is to identify true causal influence and not just correlation. For example, that my friend uses the same mobile phone network as myself might be due to influence processes or due to chance. In a statistical sense, the problem is that the standard assumption that observations are independent does not hold. One of the ways I have addressed this is the book is through a permutation technique called QAP, which “scrambles” the dependent variables in order to test how often using the same mobile network could have evolved purely by chance.

5. What will be your next book-length undertaking?

I ran this year's London Marathon which was a project of similar length and intensity than the book. As I am working in a busy job as a management consultancy, my next book-length undertaking will probably have to wait for a bit!

Daniel Birke

6. You are currently working for a large international management consultancy and have previously worked as VP Innovation and Analytics at Idiro Technologies. Please could you tell us more about your role there and what it entails?

Currently, in my role at a large international management consultancy I am advising large corporates in Sales & Marketing and using big data is a big topic in many sectors. Previously, I co-founded the analytics company Idiro Technologies that developed social network analysis software for mobile phone companies. As part of my role as VP Innovation and Analytics I was in charge of research and developing and of helping our customers to implement our recommendations on how to run social network marketing campaigns.

7. What do you think the most important recent developments in the field have been? What do you think will be the most exciting and productive areas of research in economics during the next few years?

For me, the most important development has been the availability of Big Data. I think this is both exciting from a business and an academic perspective. I find it very exciting to see how many businesses are trying to get to grips with the huge amounts of available data. For example, at my previous company Idiro Technologies, we have developed software for mobile phone companies to identify influential users in their customer base. Likewise, I find academic studies, like Eytan Bakshy’s work on the impact of social advertising on Facebook very exciting.

In research and here especially in economics, the wide-spread availability of social network data allows a relaxation of the standard assumption that consumers make consumption choices independent of each other. Especially in empirical research, it is now easier to take social interactions into account and I expect many more studies to do so in future.

8. What do you see as the greatest challenges facing the profession of economics and business analytics in the coming years?

One of the beauties of economics is the simplification of simplifying difficult problems by making assumptions. In network studies, the great assumption was that all members in a network are of equal importance. This assumption has helped to explain things like competitive equilibria in markets with network effects. However, with the availability of very rich social network datasets, other additional questions can be answered and it is now possible to much better explain how consumers influence each other than was possible before.

9. Are there people or events that have been influential in your career?

Probably the biggest impact on my professional development has been to set up a Germany-Chinese joint-venture on my own when I was 22. Spending time in a foreign country teaches you a lot about yourself and makes you focus on bringing your points across even without verbal communication. And it can be a lot of fun!

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