June 21, 2010

The Value Of A Facebook Fan

This weekend I had the misfortune of reading a mind-numbing piece of work called "The Value Of A Facebook Fan: An Empirical Review" by a company called Syncapse.

I knew this report would be a lot of bluff and bananas when I saw the word "empirical" in the title.

Syncapse modestly describes itself as "a global leader in the areas of community building, technology solutions, and digital measurement." Is that all? Not world peace or Hungarian folk dancing?
The study purports to calculate the value of a Facebook fan. But it's riddled with problems. One of which is the problem of correlation versus causality.

People not trained in research or logic often have trouble understanding the difference between correlation and causality.

Here's a quick explanation.

If you were to study people who are hard-of-hearing you would probably also find that they have a much higher likelihood of being bald. Does this mean that bad hearing causes baldness? Of course not. It occurs because old age causes both hearing and hair loss. So there is a correlation between deafness and baldness, but there is no causality. One does not cause the other.

Syncapse clearly shows that there is a connection between Facebook fanhood and certain financial and marketing benefits to a brand. But to demonstrate that Facebook fanhood has value, they need to show that the connection is causal, not just a correlation.

In other words, it is clear that a Facebook fan is worth more than an average user*. But it is not clear that this has anything to do with being a Facebook fan. It may just be that Facebook fans are typical brand loyalists and that all brand loyalists are more valuable, whether they are Facebook fans or not.

In order to show that Facebook fanhood has value, Syncapse needs to demonstrate that "fanning" on Facebook actually causes higher value and doesn't just correlate with it. Which they have not done.

You might expect ignorant knuckleheads like you and me to confuse correlation with causality. But a "global leader in...digital measurement?" I'm shocked!

Tomorrow we'll discuss the second fallacy in this study. 

* When they compare "fans" to "average users" it is unclear whether they are talking about average brand users or average Facebook users. It seems that they have only studied Facebook users. However, I'm going to give them the benefit of the doubt and assume they have calculated their Facebook fan value using average brand users as their baseline, rather than just average Facebook users. Otherwise their calculations are even more goofy.

Thanks to Redstarrevolt for sending me this study.

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