master thesis - daniel baur - social brand value

Master Thesis

Social Brand Value

Measuring Brand Equity

in Social Media

by

Daniel Baur Forren 54 9056 Gais

Tel. +41 (0) 76 /499 81 04 Student No.: 04-206-389

supervised by

Prof. Dr. Dirk Morschett Chair for International Management – Liebherr/Richemont Endowed Chair

Fribourg, 13. August 2010

To Kate, Charly and Julia

Table of Contents I

Table of Contents

List of Abbreviations......................................................................V

1. Introduction................................................................................ 1 1.1. A New Media Behavior ............................................................................... 1 1.2. Brand Equity Measurement ....................................................................... 2 1.3. Social Brand Ranking................................................................................. 3 1.4. Design and Limitations of the Thesis ....................................................... 3

2. The Web 2.0 and Social Media ................................................. 5 2.1. Web 2.0, Social Web and Social Media ..................................................... 5

2.1.1. Web 2.0 ............................................................................................. 5 2.1.2. Social Web ........................................................................................ 7 2.1.3. Social Media ...................................................................................... 7

2.2.Using Social Media for Brand Management................................................ 8 2.2.1. The New Rules of Communicating in a Digital Market ...................... 8 2.2.1.1. n:n – Changing the Communication Pattern........................ 8 2.2.1.2. Marketing in Virtual Consumer Networks .......................... 10 2.2.1.3. Social Consumer Networks ............................................... 11 2.2.1.4. Electronic Word of Mouth .................................................. 12 2.2.2. User Control and Participation......................................................... 13 2.2.2.1. The Social Consideration Cycle ......................................... 13 2.2.2.2. Permission Marketing and Privacy Regulations ................. 15 2.2.2.3. From Push to Pull ............................................................... 16 2.2.3. Velocity and Disintermediation ........................................................ 17 2.2.4. “The Long Tail” of Marketing ........................................................... 17 2.2.5. Better Measurability......................................................................... 19

2.3.Facts and Figures of the Social Web......................................................... 20

Table of Contents II

2.3.1. Internet Usage ................................................................................. 20 2.3.1.1. Media Consumption Patterns ............................................ 20 2.3.1.2. Internet Behavioral Patterns .............................................. 21 2.3.2. Defining Social Media Channels...................................................... 22 2.3.2.1. Blogs.................................................................................. 22 2.3.2.2. Social Networking Services ............................................... 23 2.3.2.3. Facebook........................................................................... 23 2.3.2.4. YouTube ............................................................................ 24 2.3.2.5. Twitter................................................................................ 24 2.3.3. How Brands Use Social Media ........................................................ 24 2.3.4. Implications...................................................................................... 26

3. Measuring Brand Equity ......................................................... 28 3.1. Literature Overview on Brand Equity Measurement ............................. 28

3.1.1. What is a Brand? ............................................................................. 28 3.1.2. Brand Equity Measurement ............................................................. 29 3.1.3. Consumer-Based Brand Equity ....................................................... 31 3.1.4. Conceptualizing Keller’s Brand Knowledge Theory......................... 31 3.1.5. Measurement of CBBE.................................................................... 32 3.1.5.1. Indirect Measurement of CBBE......................................... 33 3.1.5.2. Critics on Indirect Measurement of CBBE......................... 33 3.1.5.3. Direct Measurement of CBBE ........................................... 33 3.1.5.4. Critics on Direct Measurement of CBBE ........................... 34 3.1.5.5. Measurement of CBBE by Practitioners ............................ 34 3.1.6. Measurement of CBBE in Social Media .......................................... 35 3.1.6.1. Vitrue Social Media Index.................................................. 35 3.1.6.2. Altimeter Group ENGAGEMENTdb................................... 36 3.1.7. Conclusion on CBBE....................................................................... 37

4. Research Design ..................................................................... 38!4.1. Research Objective................................................................................... 38 4.2. Data Collection Period.............................................................................. 39 4.3. Quantitative Content Analysis................................................................. 39 4.4. Defining Social Brand Value .................................................................... 40 4.5. Segmentation of Brands .......................................................................... 40 4.6. Identifying the Main Variables ................................................................. 41

Table of Contents III

4.6.1. Brand Awareness ............................................................................ 42 4.6.1.1. Social Reach ..................................................................... 42 4.6.1.2. Social Buzz........................................................................ 43 4.6.1.3. Video Buzz ........................................................................ 44 4.6.1.4. Calculation of Brand Awareness ....................................... 45 4.6.2. Brand Image .................................................................................... 46 4.6.2.1. Sentiment Analysis ............................................................ 47 4.6.2.2. Calculation of Brand Image ............................................... 48

4.7. Identifying the Research Objects ............................................................ 49 4.7.1. Calculation of Brand Awareness in Social Media ............................ 50 4.7.1.1. Facebook’s Social Reach .................................................. 51 4.7.1.2. Twitter’s Social Reach ....................................................... 51 4.7.1.3. Social Buzz........................................................................ 52 4.7.1.4. Video Buzz ........................................................................ 53 4.7.2. Calculation of Brand Image in Social Media.................................... 54 4.7.2.1. Calculation of Brand Image on Blog/News Sites ............... 54 4.7.2.2. Calculation of Brand Image on Social Networking Services55

4.8. Discussion and Delimitation.................................................................... 55 4.8.1. Sampling Error................................................................................. 55 4.8.2. Sampling Unit .................................................................................. 56 4.8.3. Brand Awareness ............................................................................ 56 4.8.4. Brand Image .................................................................................... 57 4.8.5. Overlapping Customer Segments ................................................... 57 4.8.6. Reliability ......................................................................................... 57 4.8.7. Exclusion of Research Objects........................................................ 58

5. Data Collection and Results ................................................... 59 5.1. Brand Awareness...................................................................................... 59

5.1.1. Social Buzz on Blog and New Sites ................................................ 60 5.1.2. Social Reach on Facebook.............................................................. 60 5.1.3. Social Reach on Twitter................................................................... 61 5.1.4. Video Buzz ...................................................................................... 61 5.1.5. Calculation of Brand Awareness ..................................................... 62

5.2. Brand Image .............................................................................................. 63 5.2.1. Sentiment Analysis of Blog and News Articles ................................ 64 5.2.2. Sentiment Analysis on Facebook .................................................... 64

5.3. Calculation of the Social Brand Value .................................................... 66 5.4. Discussion and Managerial Implication.................................................. 69 5.5. Problems and Further Research ............................................................. 71

Table of Contents IV

6. Conclusion ............................................................................... 72

Appendix A – House of Brands/Branded House ....................... 73

Appendix B – Sub Brands/Endorsed Brands ............................ 77

Appendix C – Brand Awareness Evaluation .............................. 79

Appendix D – Brand Image Evaluation....................................... 87

7. References ............................................................................... 93 !

List of Abbreviations V

List of Abbreviations AT&T American Telegraph and Telecom

BP British Petroleum

CBBE Customer-Based Brand Equity

eWOM electronic Word of Mouth

FBBE Firm-Based Brand Equity

P&G Procter and Gamble

RIA Rich Internet Application

RSS Really Simple Syndication

SEO Search Engine Optimization

SMO Social Media Optimization

WOM Word of Mouth

Introduction 1

1. Introduction Social Media, communication and interaction on digital channels have become an important part of our daily life. One group who is particularly affected by this new media behavior are companies and their brands. The new communication channels demand different marketing methods. Ad spending has been constantly increasing and is expected to see an upswing in the near future.

Brand managers need a reliable approach to measure their marketing efforts, and the possibility to justify marketing expenditures in digital channels. This paper offers a new approach for measuring, analyzing, and predicting a brand’s equity. The research proposes the first brand equity measurement method for social media channels, based on a quantitative content analysis. Furthermore the study defines the most important parameters and measures brand equity-building efforts during one month. A brand ranking is proposed and the most important brands in social media evaluated.

1.1. A New Media Behavior To understand the new usage patterns of the Web 2.0 and social media, we observe how an average American young lady, lets call her Lisa, uses the new digital communication channels.

An important part of Lisa’s life takes place on the Internet. Lisa spends twelve hours on the Internet every week (Forrester Research 2010). She communicates via e-mail and utilizes her Smartphone to organize the day. One of her favorite activities is passing time on Facebook, where Lisa spends nearly six hours every month (Nielsen Media Research 2010, p. 20). She sends messages to her (digital) friends, chats with her family, creates new events or investigates the newest pictures from the latest college party. With over 500 million people registered on Facebook (Facebook 2010), Lisa finds old acquaintances and ties digital relationships. Lisa has joined 60 different groups within Facebook, where she finds promotions of brands she likes, exchanges her opinion on the restaurant she visited last evening, and tells her friends about the new play at the local theatre.

Lisa has recently opened an account on Twitter, a service that lets people exchange messages no longer than 140 characters between a network of associates. As a passionate cook she can help her digital friends within seconds, if they need a recipe for Swiss Fondue. Lisa listens, communicates, and informs herself all with only 140 characters. Twitter has over 130 million registered users who daily send 50 million messages via this service (Sanford 2010).

Introduction 2

The 140 characters on Twitter not always suffice. Therefore Lisa has decided to write a digital journal (also known as “blog”) where she publishes her stories accessible to anyone. In her free time Lisa spends several hours writing new entries. She has established a group of frequent readers, which rely on Lisa’s opinion on where to find the most delicious hamburgers in New York, the best Italian restaurant in Seattle, or which coffee shop in San Diego makes the best brownies. Up to know there are over 145 million blogs registered (BlogPulse 2010). Blogs are an important source of information and are influential in several situations of our life (Nielsen Media Research 2010, pp. 19 et seq.).

Lisa is an enthusiastic fan of cooking shows. With the video sharing service YouTube she can find new shows, instructions, tips and tricks, and additional useful information on any topic she is interested in. Every minute, 24 hours of video material are uploaded to YouTube. Every day Lisa spends 15 minutes on this service (YouTube 2010).

Digital channels are a crucial part of our life. We are influenced on a daily basis and it is important to understand the impact of these channels. This study aims to measure the influence of advertising on digital channels on a global scale.

1.2. Brand Equity Measurement This new media behavior has changed the way we communicate, search for information, and where, when, and how we are influenced by our environment. The passive consumer has transformed to an active influencer. Charlene Li and Josh Bernoff (2008, p. viii) define this trend as the “Groundswell”: “People use technologies to get the things they need from each other, rather than from traditional institutions like corporations”.

These circumstances have forced companies and advertisers to change their branding efforts. Digital advertising has become a core component in successful branding strategies. In 2009, US advertisers spent 22.7 billion dollars on advertising in digital channels (Interactive Advertising Bureau 2010). It has become increasingly important for brand managers to justify these expenditures and measure the efficiency of online branding programs.

The measurement of branding efforts has been seized both by academics as well as practitioners. Several measurement methods have been established during the last decade. All of these tools have one common ground: they are based on qualitative measurement techniques. With the vast amount of data aggregated in social media, researchers have the possibility to measure brand equity on a quantitative and evidence based foundation. This data has only been available for a short time. No research has yet been conducted based on a quantitative brand equity measurement approach.

Introduction 3

Therefore this study is the first measurement approach in calculating brand equity on a quantitative content analysis. Further, the paper seeks to measure the efficiency and success of branding strategies in an online environment, defined as social brand value. The vast amount of data aggregated in social networking, video sharing, and blogging services allow academics and practitioners to understand and quantify online branding efforts. This research proposes an algorithm to measure social brand value and the calculation method is also applicable to specific customer segments.

1.3. Social Brand Ranking The paper evaluates the most successful brands during the month of June 2010, based on the established measurement algorithm for social brand value. The calculation of the most successful brands, during the selected month, includes over 360 different brands. The ranking is composed by 332 million user actions and 11’000 user comments on social networking services. The calculation extracts Google, Starbucks, and Apple as the brands with the highest social brand value. Furthermore, the study sheds some light on interesting topics spreading on social media sites. For instance, the oil crisis in the Gulf of Mexico has spurred discussion around British Petroleum (BP). Apparently, BP has sustained a high level of awareness but with a negatively attached image.

1.4. Design and Limitations of the Thesis This thesis is organized as follows: The first, theoretical part addresses the framework of and defines the Web 2.0 and social media. Chapter 2.2 highlights the new communication patterns within these channels and how brands can use social media as advertising and customer relationship management tool. Chapter 2.3 points out usage statistics of the social web and the most important social media sites.

Chapter 3.1 analyzes the research objective. Chapter 3.2 recapitulates the state of the art on brand equity measurement. A selection between different measurement methods is made and brand rankings by both practitioners as well as academics are introduced. The findings achieved in chapter 3 serve as a basis for the calculation method on social brand value.

Chapter 4 constructs the proposed measurement method and defines the parameters to be calculated. The different channels are identified and the algorithms to measure a brand’s awareness and a brand’s image with the data received from social media sites are suggested.

Based on the algorithms developed in chapter 4, chapter 5 calculates the social brand value of the most prominent brands in social media. A brand ranking is completed and the top 20 brands in social media are presented.

Introduction 4

The examination of social brand value is conducted against the background of a quantitative content analysis. This paper offers new perspectives in brand equity measurement with the usage of social media and the vast amount of available data. The study does not intend to identify the reasons for brand equity in social media, but rather aims to show the aggregated brand equity generated within a certain amount of time. This allows brand managers to compare between chosen advertisement methods and to identify strengths and weaknesses of their brand building, and customer relationship management efforts within social media. The calculation method developed in this study can be applied to all brands and market segments where online brand building methods have been set in place. The longitudinal analysis of the social brand value can help identify influences and reasons for changes in brand equity. This study may offer managers strategies to justify brand-building efforts in social media.

The Web 2.0 and Social Media 5

2. The Web 2.0 and Social Media Collaboration and communicating in online communities, social networks and virtual realities are fundamental characteristics of the Web 2.0 development (Jansen et al. 2009, p. 2169).

2.1. Web 2.0, Social Web and Social Media With the new communication patterns and the usage of digital channels, different terms such as “Web 2.0”, “Social Web”, “Social Networks”, or “Social Media” have emerged rapidly. This section is an overview and classification of the different terminologies used in the context of the thesis. An in depth analysis of the different terminologies will not be made as it would go beyond the scope of this paper.

2.1.1. Web 2.0 The definition of the term “Web 2.0” is not consistent throughout literature. Several definitions have emerged since the first mentioning of “Web 2.0” in 2004 (O’Reilly 2005).

Table 1: Definitions Web 2.0

Author Definition

Lytras et al. 2009, p. 55 Web 2.0, as a perceived or proposed second generation of Internet-based services, such as social networking sites, wikis, communication tools, mashups and folksonomies that emphasize on online collaboration and sharing among users.

Constantinides and Fountain 2008, p. 8

Web 2.0 is a collection of open-source, interactive and user-controlled online applications expanding the experiences, knowledge and market power of the users as participants in business and social processes. Web 2.0 applications support the creation of informal user’s networks facilitating the flow of ideas and knowledge by allowing the efficient generation, dissemination, sharing, and editing/refining of informational content.

O’Reilly 2006 Web 2.0 is the business revolution in the computer industry caused by the move to the internet as platform, and an attempt to understand the rules for success on those new platforms. Chief among those rules is this: Build applications that harness network effects to get better the more people use them.

Vossen and Hagemann 2007, p.64

It is justified to say that the essence of Web 2.0 boils down to the following three core aspects:

Ways to utilize and combine data and data streams from various


sources into a representation that allows for the derivation of new information or added value; the appropriate and intelligent (and legal) utilization that is kept current by its owner has a driver of many new applications that nowadays come under the name “mash-ups”.

Functionality- as well as service oriented approaches to build new applications as a composition of other, already existing ones and in order to enrich users experiences on the Web, or to create “Rich Internet Applications” (RIAs), and services provided let the Web exhibit features previously known from stationary computers only. Tagging, blogging and “wiki-ing” as important steps into a socialization of the Web, where all of a sudden a user no longer considers his personal entries private anymore, but makes them available to friends, a certain community, and ultimately the general public, and where this often leads to an improvement of the underlying platform.

Own source

The terminology “Web 2.0” will be used in this paper as an umbrella term for the differentiated usage and perception of the evolution of the Internet. It has evolved into a system of collaborative dimension that offers new ways of cultivation and exploitation of knowledge (Levy/Hadar 2009, p.55). The term Web 2.0 is used in a sense of “read-write Web” meaning that many elements of the Internet are constructed in a bottom-up perspective rather than a top-down approach (Bernes-Lee 1999, cited in Levy/Hadar 2009, p. 56).

Anderson (2007, pp. 14 et seq.) summarized the core ideas of the Web 2.0 as follows:

Individual Production and User Generated Content – New sites, such as bloggin1, video- and photo sharing-sites have lowered the barriers for user entry and self-publishing. Through these channels individuals have the possibility to reach any Internet user.

Harnessing the Powder of the Crowd – This concept derives from the theory, suggesting that a group can solve a problem more effectively rather than the most intelligent individual of the group could achieve on his/her own.

Data on an Epic Scale – The increasing amount of generated data requires Internet services to handle the immense amount of data produced. Applications, such as Google or Amazon, “learn” through user participation to structure and process this data.

1 The term web-log, or blog, was coined by Jorn Barger in 1997 and refers to a simple webpage consisting of brief

paragraphs of opinion, information, personal diary entries, or links, called posts, arranged chronologically with the most recent first, in the style of an online journal (Doctorow et al. 2002, cited in Anderson 2007, p. 7)


Network Effects – With increasing user participation the value of the used service increases as well. These are services that usually require some sort of interaction between the participating parties (e.g Facebook).

Architecture of Participation – With normal use of the application or service itself the service becomes better the more people use it (e.g. Bit Torrents).

Openness – The Internet offers immense resources of free data, innovations, applications, open standards and open software to re-use or exchange.

2.1.2. Social Web “Social Web” does not concentrate on the architecture of the programming. However it integrates the “social consequences of the Internet [...] and focuses on the primary social environment and interactions” (Nie/Hillygus 2002, p. 2). According to Ebersbach et al. (2008, p. 29) the “Social Web” contains the following points:

• Web based applications, which support people in the exchange of information, help them to communicate and collaborate, develop and maintain relationships in a social and communal context

• Managing the occurring data

• The relationships between the people using these applications

Ebersbach et al. (2008, p. 30) integrate both a social component as well as a communal element, meaning, that the members become a part of a society because of rational reasons while they join a community for emotional motives.

2.1.3. Social Media Ebersbach et al. (2008, p. 31) delimit “Social Software” from the “Social Web”. “Social Software” is more focused on the applications that use the technical architecture of the Internet as a carrier medium, whereas the definition of “Social Web” additionally integrates the generation of data of the social network of involved parties.

“Social Software” is often referred to as “Social Media” and defined by Kaplan and Hänlein (2010, p.60) as “a group of Internet-based applications that build on the ideological and technological foundations of the Web 2.0 and that allow the creation and exchange of user generated-content”.

“Social Media” can therefore be seen as a part of the “Social Web” with the main focus on the exchange of information, creation of new networks, maintenance of relationships, communication, and collaboration. “Social Media” excludes data creation, data storage,


and the interpersonal connections established by any application (Kaplan/Hänlein 2010, p.60).

For comprehension reasons this paper will mainly refer to “Social Software” as “Social Media”. Since this expression is commonly used throughout literature, the expression “Social Software” seems intuitively more focused on the technological aspect of Internet applications.

2.2. Using Social Media for Brand Management “It is clear we have entered a digital age, and the strong brands of this era will be those that best utilize the Web as building tool” (Aaker/Joachimsthaler 2000, p. 230).

The new possibilities of social media allow organizations to inform their buyers, interact, participate in conversations, gain credibility, and deliver content directly to their audience (Scott 2010, pp. 25 et seq.).

The question for companies is, what is new with social media, what are the threats and opportunities of the new communication channels and how can I manage them?

2.2.1. The New Rules of Communicating in a Digital Market Before the digital revolution, companies had only two main possibilities of attracting the awareness of their customers, either through advertising, third party exposure from the media, or direct contact to the consumer. Social media has changed the rules enabling new possibilities to directly communicate with the customers and reach a vast amount of clients at the same time (Scott 2008, p. 23).

2.2.1.1. n:n – Changing the Communication Pattern

The “old” communication pattern that companies followed was the 1:1- or the 1:n-communication model. Companies tried to reach the consumer directly through different exclusive channels, for example E-Mail or telephone (Göldi 2008). This form of communication gave the user the possibility to provide a direct feedback to the companies’ message (Schweiger/Schrattenecker 2001, p.8).

Figure 1: 1:1 – Communication Model

Source: Adapted from Göldi 2008


The second way companies could obtain attention or interact with the consumer was to interconnect with mass media channels. This communication activity aimed to reach as many (relevant) people as possible and relied on people to pay attention to certain messages (Göldi 2008; Scott 2008, p. 23). The communication flow on these channels was only one way, prohibiting the consumer to directly reply to messages. Since the message was sent to a variety of customers, it was not able to customize the message to the individual needs of every recipient (Schweiger/Schrattenecker 2001, pp. 8 et seq.).

Figure 2: 1:n – Communication Model


The 1:1- as well as the 1:n-communication interaction is characterized by the exclusiveness of the transmitter and the receiver. For example, if a consumer calls the companies’ customer service, other customers are excluded from this communication. The consumers are on their own (Göldi 2008).

With the progression of the Internet and social media, new communication patterns and possibilities have appeared. The architectural design of the new web platforms and applications is constructed in a way that many transmitters can reach many recipients on a public level. This means that exclusivity and one-way communication is no longer a set framework for the communication patterns of the communicators. The new form of communication has changed to an n:n- communication integrating the characteristics of mass communication, sending the message to a variety of customers and integrating the direct feedback possibilities of the 1:1 – communication (Göldi 2008).


Figure 3: n:n – Communication Model


The direct implication of this new communication pattern for companies is that the customer landscape has become more complex and confusing. These circumstances can make marketing difficult. Companies have to give up a certain level of control. Customers tend to interact whenever, wherever, and about whatever they want. This is a fundamental alteration of the communication process. “Call centers and customer relations departments tend to look at consumers in a vacuum; they do not consider customers’ circle of influence” (Weber 2007, p. 56).

However, the customers have left their closed bubbles and companies have to adjust to a networking and communicating customer. An active conversation and engagement with the customer influences brand awareness and brand image (Harridge-March/Quinton 2009, p.172). Either way, the customers are already connected to their digital world.

2.2.1.2. Marketing in Virtual Consumer Networks

Virtual communities and consumer-initiated communication with other consumers by using the world-wide-web, also known as “social networks”, have become a strong influence on the customer’s buying decision. As Harridge-March and Quinton (2009, p. 172) see it “virtual communities and social networks provide the connections to allow consumers to form strong relationships that influence consumer behavior”. A main focus for brands in social networks is to promote products, videos, texts, or other goods available in the digital and physical world (Jansen et al. 2009, p. 2169).


2.2.1.3. Social Consumer Networks

Social consumer networks show special characteristics. The level of engagement has been an interesting topic for researchers and different segments of consumers have been identified. Studies have categorized consumers into four different divisions. “Lurkers” are present on a service but do not contribute actively, “tourists” occasionally contribute to a network but do not show a commitment for a network. “Minglers” are active but without any regularity and “devotees” are enthusiastic members of a community (Harridge-March/Quinton 2009, pp. 176 et seq.). This classification is important for brand managers to identify the right target group and serve this group with the right advertisement.

The term “relationship marketing” postulates that marketers should build long-term relationships with their customers (Berry 1983, cited in Harridge-March/Quinton 2009, p. 174). Especially social communities can foster strong ties between a buyer and a seller. “The development of relationships between consumers within social networks results in social and even emotional bonds being formed. Social bonding can create a sense of loyalty where there may be multiple other sources of supply of information – i.e. the more you participate, the stronger your social bonds and the less likely you are to look elsewhere” (Harridge-March/Quinton 2009, p. 175). Research further suggests an additional categorization of the most devoted customers. The so-called “evangelists” are lead members devoting time and resources, standing in for the brand, and having developed social ties with the network. These are usually the most influential customers, defending and promoting the brand and spreading information by word of mouth (Lee/Hwang/Lee 2006, p. 229).

Augie Ray (2010) from Forrester Research identified three different types of influencers.

Figure 4: Online Peer Influence Pyramid

Source: Adapted from Ray 2010


2.2.1.4. Electronic Word of Mouth

Word of mouth is the process of passing information from one person to the next. “Word of mouth plays a major role in customer buying decisions” (Richins/Root-Shaffer 1988, cited in Jansen et al. 2009, p. 2169).

Word of mouth (WOM) is perceived as a powerful, but hard to control marketing tool. It involves consumers sharing attitudes, opinions, or feedbacks about businesses, goods, or services. Positive WOM strongly influences buying decisions, since the recommendations are based on trust. People rely on family, friends, or other groups in their social networks (Jansen et al. 2009, p. 2169). Customers trust their closest relationships and “people appear to trust seemingly disinterested opinions from people outside their immediate social network, such as online reviews” (Duana/Gub/Whinston 2008, cited in Jansen et al. 2009 p. 2169).

With the step we’ve taken into the digital age, new forms of WOM are becoming widely popular. Microblogging systems, one of several social web communication services, have gained recognition during the last couple of years. With the new paradigm of “attention economy”, brands compete for the awareness of potential customers with and on modern social networking services (Davenport/Becker 2002, cited in Jansen et al. 2009, pp. 2170). Microblogging, a new form of communication and spreading the word of mouth via digital channels, is also known as electronic word of mouth (eWOM). Hennig-Thurau et al. (2004, p. 39) define eWOM as a: “statement made by potential, actual, or former customers about a product or company, which is made available to a multitude of people and institutions via the Internet”. Users can describe their experiences with products and express their opinions with others in posts no longer than two sentences. Microblogging has great impact on brands, since people can share their thoughts almost anywhere, at any time, and with anyone (Jansen et al. 2009, p. 2170).

As research from Hennig-Thurau et al. (2004, p. 42) could show, eWOM is less personal than face-to-face communication but has a more significant reach, is credible by being visible on a display, more accessible to others, and therefore more powerful and influential than traditional WOM.

Goldsmith and Horowitz (2006, p. 12) specified several reasons for this online information seeking and the effectiveness of eWOM. The study reported reasons, such as risk reduction, popularity, lowering costs, easy access to information, encouragement from offline channels such as television, and comparison of products and services online.


Additional research from Jansen et al. (2009, p. 2184) on microblogging services showed that these services had strong impact on brand awareness and brand knowledge. This has strong implications for corporations, organizations, and individuals. The study found that 19% of all reviewed microblogging posts mentioned an organization or product brand in some way. “This is a good percentage and indicates that the microblogging medium is a viable area for organizations for viral marketing campaigns, customer relationship management, and to influence their eWOM branding efforts. […] Microblogging is a social communication challenge affecting brand awareness and brand image, that managing brand perception in the microblogging world should be part of an overall proactive marketing strategy, and maintaining a presence on these channels should be part of a corporation’s branding campaign” (Jansen et al. 2009, p. 2184).

The study further reveals that 50% of posts mentioning a brand are positive while 35% are negative. Negative customer feedback through digital media can be useful for identifying customer preferences or correcting accidental product defects. Therefore monitoring eWOM can be used as early warning system. Since branding on microblogging services is a dynamic process and customers can give direct feedback to an individual’s experience of a product or service, it requires constant and continual management (Jansen et al. 2009, p. 2185).

Microblogging services have bridged the emotional gap between the buyer and businesses. With microblogging posts customers can express their feelings, provide feedback, ask questions, and get answers (Jansen et al. 2009, p. 2185). For companies, this bears new challenges on their overall branding strategy and customer relationship management: including the customer in the decision process and engaging in the communication. “Customers are screaming to be engaged with the companies that affect their lives, [...] they want to be asked and the want to be involved”2 (Weber 2007, p. 19).

2.2.2. User Control and Participation The following section will show the particularities and mechanisms of marketing in the social web.

2.2.2.1. The Social Consideration Cycle

Classic marketing models have focused on four different phases along the timeline. The model of consumer behavior (Figure 5) shows how a purchasing decision is formed (Engel, Blackwell and Miniard 1995, cited in Schweiger/Schratenecker 2001, p. 22).

2 Weber quotes Diane Hessan, president and CEO of Communispace


Figure 5: Consumer Decision Making Process

Source: Adapted Schweiger/Schratenecker 2001, p. 22

Marketing literature created several additional consumer decision models, such as the theory of “reasoned action”, “image models” or the “risk reduction model” (Schweiger/Schratenecker 2001, pp. 25 et seq.). The different consumer behavior models have one common element: they are all unidirectional, meaning that they only run in one way (Evans 2005, p. 2). With the new digital communication and information channels, eWOM and electronic information seeking is also an influential factor when it comes to purchasing decisions (Evans 2005 pp. 2 et seq.). After-sales marketing gets widely influenced by user-generated content.

Figure 6: Decision Making Process of Future Customers

Source: Adapted from Evans (2005), p. 5

Figure 6 explains the decision making process in an online environment. Consumer generated media influences a potential customer the moment he considers to buy a specific product. This user-generated influencing factor has an effect on the “decision making” process. People who have already bought the product of a certain brand generate information to the product and participate in consumer-to-consumer conversation. “It’s after the purchase that “satisfaction” is assessed and the tone (positive vs. negative) of subsequent conversations is set” (Evans 2005, p.2). “No matter what I hear, read, or find on TV, radio, in a magazine or newspaper, I can verify it on the Internet”3 (Evans 2005, p.1).

3 Evans quotes a consumer comment on Forrester Research


The possibility for customers to retrieve information on a product through social media wherever and whenever they want, allows people to effectively distinguish between what a product promises and what a product delivers. These circumstances give the consumers more power in shaping product and brand reputation, since they can actively influence brand knowledge and brand image (Evans 2005, pp. 3 et seq.).

2.2.2.2. Permission Marketing and Privacy Regulations

Until the rise of social media, marketers were limited in their possibilities to enhance brand awareness. Ads were placed in magazines, newspapers, radio, or television in front of a prospective customer, who would be most likely to buy the company’s product. The goal was always to reach as many potential customers as possible (Weber 2009, p. 11).

On the other hand, the advertisement delivered to the customers was usually placed in a way to disrupt the consumer in his consumption session. Consumers accepted the “unspoken contract”, advertising exposure in return for free news, entertainment, and diversion. The new technological innovations have changed the rules. Pop-Up blockers, spam filters, or advertising blockers give the web users (restricted) power on what advertisement they receive (Weber 2009, p. 12).

Alternatively, the user’s activities on social networking sites, credit card purchases, or the users active appreciation of a product or a brand, generates extensive data to every individual user on the web. With these complex user profiles, advertisers can specifically tailor advertising messages to the users preferences (Rapp et al. 2009, p. 51) but “only at significant cost to consumers, associated with loss of privacy that may result in a virtual invasion by unsolicited advertisements along with relinquishing ownership of information that might compromise their future options“ (Rapp et. al 2009, p. 51).

Brand managers can gain insights in the customers’ preferences since they are able to monitor the precise movements and behavior of their clients. Rapp et al. (2009, p. 59) highlight some critical points for this data collection. “When collection techniques include brain scans, privacy issues take on a new dimension due to potential for misuse that ultimately may reduce access to employment, insurance, credit, and other essential services“.

Rapp et al. (2009, p. 60) advise users and advertisers to actively control their shared data and should actively participate in the relevant political discussion “that inform voluntary self-regulation and legislation since the terrain is too large for any one organizational form, including government, to effectively control regardless of intentions“.


Evans (2005, p. 13) highlights the fact that ”people don not want to be sold. They are doing their best to avoid commercials. [...]. People do want news and information about the things they care about – and they want it right now”. Evans (2005, p. 13) gives marketers the solution for this balancing act between user data aggregation and advertising. He proposes that in the social web marketers should less actively turn to disrupting advertisement, but should more actively aggregate customers: “You aggregate customers [...] by providing compelling content on your web site [...] that your customers want to visit, and by going out and participating in the public area“ (Evans 2005, p. 15).

This marketing method gives the customers the option to choose which information they would like to receive. They have to actively request the information flow towards their account (E-Mail, News Feed, Facebook Feed, ect.). The user consensually gives permission to receive news concerning a brand or product, and can easily deactivate the automated news posting. This technique is also known as opt-in4 (Evans 2005, p. 13 et seq.).

It has not been the aim of the previous chapter to define or elaborate on the problems and discussions on data-mining and personalized advertising, since this would go beyond the scope of this paper. The primary point of this chapter has been to highlight the importance of aggregating customers through content and participation and show, that customers have the possibility to actively choose which content they want to have displayed. This is important for the continuing research on brand awareness.

2.2.2.3. From Push to Pull

The idea behind the paradigm of permission marketing envisions people actively requesting certain information. The paradigm wants to avoid that people are flooded with information they do not want. With past media channels “marketing on request” was hard to establish and associated with high costs (both on the consumer side, as well as on the producer side). The new media channels have reduced the cost of information seeking and the cost of delivering information (Henning-Thurau et al. 2008, p. 43).

The new challenge for brands is to target the information seeking users and “pull” them to a certain destination. This new marketing method implies a paradigm shift from the conventional “push” advertising methods, to a more “pull” oriented approach. These

4 The BNET Business dictionary defines opt-in as: “a type of subscription process for users of a Web site wanting to

sign up to receive specific information or services. An opt-in approach is where a user actively decides to provide their e-mail address, so the Web site owner can send them e-mail. However, the emerging convention is double opt-in.” (BNET 2010)


pull-mechanisms are heavily influenced by the customer’s willingness to seek content and therefore cultivate the viral effect of advertising in social media.

2.2.3. Velocity and Disintermediation As we have seen in chapter 2.2.1 companies used to have two major ways of generating attention through mass media: “Either they bought advertising in media channels or get third party ink from the media” (Scott 2010, p. 5).

The Internet as a consumer influencing channel has not (yet) dispatched other mass media channels, but it has comprised its status. Every company now has the possibility to directly reach out to all customers and create a relationship with them. This erodes the trade-off between reach and richness (Scott 2010, p. 5 et seq.). Evans and Wurster (1999, pp. 86 et seq.) attribute several characteristics to richness. For example, bandwidth or amount of information, customization of information to an individual buyer, interactivity between buyer and seller, reliability, security, currency (in terms of how current or up to-date the information is), exchanges with other readers, personal recommendations, communication, and interviews or exchanges with other authors (Evans/Wurster 1999, pp. 86 et seq.).

By generating attention with social media, new customers can be won and bound to the company. An additional advantage is that products can be developed in cooperation with the customer and therefore can better meet the needs of the consumer (Scott 2010 pp. 5 et seq.; Weber 2009, pp. 12 et seq.).

The disintermediation and the strong link within social media lead to an acceleration of the communication process. This has both advantages and disadvantages for brands. One the other hand, there is less time to react, e.g. when confronted with crises and the need to deescalate them. Then again, brands can profit by passing on information in a short time to a large-scale consumer base. (Scott 2010, pp. 8 et seq.; Weber 2009 pp. 19 et seq.).

2.2.4. “The Long Tail” of Marketing Anderson first published the concept of “The Long Tail” in 2006. “The Long Tail of Marketing” expresses the digital storage possibilities and that the digital markets do not have to concentrate on a few blockbusters. The new digital distribution methods offered by the Internet make it possible for companies to offer niche products that only get sold a couple of times. The sum of all the niche products, however, accounts for a great market share (Anderson 2006, p. 18 et seq.).

The book gives several reasons for this new trend and why it is so successful: there are a lot more niche goods than “hits” and the cost of reaching consumers in the niches is


falling constantly. Thanks to virtual market places, such as eBay or Amazon, it is possible to offer a massively expanded variety of products. Through consumer participation, tools, filters or eWOM, these techniques can drive demand down “The Tail”. These factors all help reveal the natural shape of demand, without the influence of bottlenecks, scarcity of information, and limited choice of display and storage area (Anderson 2006, p. 53).

Figure 7: BMW MX1 Media-Mix Advertising Campaign

Source: Douglas / Lorenz / von Oheimb, BMW MX1 Campaign 2009, p. 12

Anderson (2006, p. 24) questions Pareto’s equation that constitutes that 95% of the sales are generated by 20% of all offered products. Anderson (2006, p. 24) gives examples for certain industries. One significant business which is affected by “Long Tail”-purchasing behavior, is the music industry where he compares an online to a physical one. Rhapsody, an online music download database offers 1.5 million tracks, whereas Wal-Mart, an American retailer, offers 55’000 music tracks. Anderson states that 40% of all sales made by Rhapsody are not offered by Wal-Mart, presenting the big market share “The Long Tail” can harvest5.

For brand managers this knowledge is important, since in certain industries “The Long Tail” can account for a significant market share – especially in digital markets. Brands which are able to capture this market phenomenon and serve several niches can increase their brand awareness in niche markets.

Even though social media channels do not have the reach of conventional channels such as television, brand managers still tend to underestimate the power and the reach of “The Long Tail” (Scott 2010, p. 23). He thinks that social media should not replace conventional advertising, but complement it and use the advantages social media offers as compared to mainstream advertising. Direct customer participation or influence at the 5 Anderson (2006) presents these numbers without quotation of a source or a specification of date or year


point of sale, via digital channels, are just some advantages of how to persuade the consumer. “Marketers must shift their thinking from the short head of mainstream marketing to the masses, to a strategy of targeting vast numbers of underserved audiences via the Web” (Scott 2010, p. 18).

2.2.5. Better Measurability One advantage (or disadvantage, depending on the point of view) of social media and the Internet in general is that every user leaves traces wherever he/she goes. These traces can be followed and measured by marketers and then advertising messages can be tailored individually towards the customers and their needs (Weber 2009, p. 113). As Weber (2009, p. 117) states, “[...] they know absolutely everything about the paths users take through their sites, so they can optimize the browsing and buying experience”.

In the past websites have been, and still are, aggregating data and detailed integrated personal data e.g. requested by subscriptions.

Many users give away their personal data reluctantly, since they fear the usage of their personal data for illegitimate business use and/or creation of business profiles (Buchholz/Rosenthal 2002, cited in Rapp et al. 2009, p. 55). “Few consumers are wholly aware of how their information will be used as they relinquish full control to marketers and advertisers” (Foxman/Kilcoyne 1993, cited in Rapp 2009 et al. p. 57). Internet users “are only willing to disclose personal information on the Web if they have a preexisting relationship with the same organization offline“ (Milne/Culnan/Greene 2006, cited in Rapp et al. 2009, p. 56).

This restrictive handling of personal data has changed dramatically with the growing popularity of social media networks, such as Facebook, LinkedIn, and Twitter. Millions of Internet users offer personal data that is easily accessible to everyone (Kassensturz 2010). Applications offered by these social networking services enable the customer to connect to external sites without having to pass through the registration process. This permits the external site to access personal data from within the social network service. Additionally, unclear (usually unread), or questionable private policy statements are willingly accepted by the social networking service user (Kassensturz 2010).

These circumstances allow researchers and brand managers to better understand brand awareness and brand image by monitoring social networking services. Data acquisition is made more effective and consumer preferences can be measured more accurately since the panel for a quantitative analysis includes every participant inside the social networking services.


2.3. Facts and Figures of the Social Web Everybody is talking about the rise of the Internet and the vast expansion of social media. Therefore an overview will be provided on how people around the world are using social media as a communication and information channel.

2.3.1. Internet Usage According to the Internet World Usage Statistics (2009), there are currently over 1’800 million Internet users worldwide. This accounts for approximately 26.6% of the world population. While some regions, such as Europe, North America or Oceana, have an Internet penetration of over 50%, other regions like Africa or Asia have strong growth rates, but do not have such high penetration rates. In Latin America 31%, in Asia only 20%, and in Africa, only 8% have access to digital channels (Internet World Usage Statistics 2009).

Since North America, Europe, and Oceana provide high Internet usage data, most research on customer usage patterns are conducted in these countries. Generating customer data in other regions, such as Asia, is more difficult for marketing research companies and scholars. Since data on Internet usage is mainly available for North America and Europe, the research results included in this paper are focused on Internet behavior of North Americans and Europeans.

2.3.1.1. Media Consumption Patterns

A study conducted on 216’739 adults by Forrester Research (2010) outlined the media consumption patterns of different age groups in Europe.

Young European adults spend around 40 hours per week on different media channels. The media usage declines the older the consumer age group gets.6 The most popular channel among young adults is the Internet (Forrester Research 2010). Figure 8 outlines the consumption pattern of the European population.

6 Reineke Reitsma, writer of the paper differentiates tough: “However, these numbers are for the total European

population and include countries like Spain and Italy, where Internet uptake is lower both in general and especially among older consumers. When we look at these numbers for the UK Internet population, for example, all age groups spend around 41 hours per week on different media activities.”


Figure 8: European Media Consumption Pattern

Source: Forrester Research 2010

2.3.1.2. Internet Behavioral Patterns

As already seen in the previous section, the Internet is used among all age groups. For young adults the Internet is the most important media consumption channel (Forrester 2010). The next chapter will outline which online services are most popular.

A survey on 1’700 US Internet users presented several interesting facts about the consumption pattern. Nielsen Media Research (2010, p. 8) found that one of the most used services on the Internet was connecting to social media sites. The study shows that 73% of online users visit a social media site at least once a week. Social media is defined as: “Blog reading, writing, commenting or message board reading, or commenting on Facebook, Twitter, LinkedIn or other social networks“.

The research further showed a detailed listing (Figure 9) on how the online population uses the Internet.


Figure 9: Online Consumption Patterns

Source: Adapted from Nielsen Research 2010, p. 11

Nielsen Media Research (2010, pp. 11 et seq.) quantified social media usage. According to the researchers 313 million people visit a social media site every month. The global audience spends 113ʼ062 million minutes on social media channels every month. The average user thus spends 6 hours every month on a social media services.

2.3.2. Defining Social Media Channels For the following evaluation on social brand value, we will look into the most important social media services offered on the World Wide Web. The paper will also look at the different services, how they function, and how people on the Internet engage with these different services.

2.3.2.1. Blogs

A blog, derived from the original word “Web-log“, is a written statement by an author, also referred to as “blogger”, composed with a special software that puts the most recent update, “post”, at the top of the site in reverse chronological order (Merman Scott 2010, p. 59). Posts can be tagged and classified in specific categories. This makes it easy for people to find texts on blogs and in search engines. The integrated content management system makes it easy for authors to publish their texts without the knowledge of programming skills. Blogs mostly allow visitors to post comments, which can spark conversation on a website and instantaneously records the dialogue (Merman Scott 2010, p. 60).

To date, BlogPulse7 counted over 145 million8 blogs (BlogPulse 2010). Blogs are influential in different life situations. As Nielsen Media Research showed (2010, pp. 19

7 BlogPulse is a software developed by The Nielsen Media Research Company


et seq.), 21% of the US population visited blogs for recommendations or advice. 27% visited blogs to get information and people saw blogs as the best source to find new products in 22% of the cases. In 53% of the cases, people saw blogs as a source of information for future purchasing decisions and 32.4% of the 18-24 year olds claimed that blogs influenced their purchasing behavior. In summary, it can be stated, that blogs are mostly used for entertainment, research and purchase recommendations.

2.3.2.2. Social Networking Services

Social networks have always been a big part of life. The church, the lodge, masons, soccer teams, or student organizations are all social networks and important in building connections and friends. With the step into the digital age, virtual social networks have emerged (Weber 2009, p. 195).

Social networking services are a big part of the social media cake. These services are member-based online communities, where people can link to one another and share common interests. With these linkages and the possibility to reach anyone registered in the community, people get a sense of “togetherness”. Content is built mostly by the user, also know as “user-generated” content, but can also be produced by professionals (Weber 2009, p. 195).

There are several different social networking services growing in the Web 2.0. In general these platforms offer a particular service or are specialized in some kind of way. Well-known examples of social networking services are YouTube, MySpace, Facebook, Flickr or LinkedIn (Weber 2009, p. 195).

The most popular services and their demographics and usage patterns will be shown below. These services are crucial to evaluate social brand value.

2.3.2.3. Facebook

Facebook was founded in 2004 by Mark Zuckerberg (Business Insider 2010) and has rapidly grown to one of the most widespread sites on the Internet. The service allows members to create a personal profile and enables them to connect with friends and exchange written messages.

According to Facebook (2010) the social media service is used by over 500 million people and 50% of the users connect on any given day (Facebook 2010; Guardian 2010). As statistics from Stat Counter (2010) revealed “Facebook is the primary source of traffic to global websites [in their category] with almost half (48%) of social media hits [...]“ (StatCounter 2010).

8 Active and inactive blogs


Facebook is used by every age group, although usage among 18 – 44 year olds is the highest in proportion (Insidefacebook.com 2010).

Figure 10: US Facebook Users by Age

Source: Insidefacebook.com 2010

2.3.2.4. YouTube

YouTube is the most visited video-sharing platform. It was created in 2005 and users can upload their own videos and comment on third-party content (Hopkins 2006).

YouTube reaches approximately 25% of all Internet users worldwide (Alexa 2009). Every minute, 24 hours of video material is uploaded globally by users. An average user spends 15 minutes on YouTube and the website is viewed 2 billion times per day (YouTube 2010).

2.3.2.5. Twitter

Twitter is currently the most popular microblogging service and an influential driver of electronic word of mouth. The service, created in 2006, enables users to send updates no longer than 140 characters (a.k.a. “tweets”) to a network of associates (a.k.a. “followers”) from a variety of electronic communication devices (Jansen et al. 2009, p. 2172).

According to Twitter (2010) their service has over 106 million user accounts worldwide and users send 50 million “tweets” per day (Weil 2010). While English is the most prevalent language for Twitter users, over 60% of the registered members come from outside the United States (Sanfort 2010).

2.3.3. How Brands Use Social Media For many people, young and old, social media has become an integral part of their daily life. Millions of Internet users spend hours on social media channels, sending messages to friends, chatting or cruising through the social media labyrinth. With the change in


media usage patterns, companies are starting to engage with their customers by using social media channels. Advertisement budgets are being utilized to reach out and interact with the customer.

A study on the development of social media usage of brands was conducted by Barnes and Mattson (2010, p. 5). They explored how the Fortune 5009 and the Inc. 50010 use social media. The study found that 22% of Fortune 500 corporations have a public-facing corporate blog, including three out of the five top cooperations. This is a rise of 6% from the year before (Barnes/Mattson 2009, p. 3). 45% of the Inc. 500 use blogging as a communication channel (Barnes/Mattson 2009, p. 5).

Microblogging service Twitter is even more common among Fortune 500 companies. 35% have a Twitter account and actively participate in the discussion with their “Followers” (Barnes/Mattson 2009, p.6).

Video blogging also seems to be an accepted form of communication among big companies. 31% of the Fortune 500 have an active video blog or podcast channel to communicate with potential customers (Barnes/Mattson 2009, p.7).

As research concludes ”the continued steady adoption of blogs and the explosive growth of Twitter among Fortune 500 companies demonstrate the growing importance of social media in the business world” (Barnes/Mattson 2009, p. 8).

The year 2009 was a hard year for all media channels due to worldwide economical difficulties. The US online advertising expenditures declined slightly by 3% to 22.661 billion dollars compared to 2008 (Mane/Silverman/Kanwaya 2009, p. 5).

Compared to the average of all media industries (9%), this is a comparatively small decline and fourth quarter revenues of 6.3 billion in 2009 were at an all time high for interactive advertising (Mane/Silverman/Kawaya 2009, p. 5).

Shar Van Borskirk from Forrester Research analyzed how future marketers will manage online advertising and predicts an increase in interactive advertising. This will cannibalize traditional media advertising expenditures (Van Borskirk 2009). According to their research direct mail, newspapers, and magazines will lose the most advertising share in favor of online advertising. The predictions further show (Figure 11) that marketers will continue to invest in social media. This section of online marketing will

9 US Pages defines the Fortune 500 as such: “The Fortune 500 is a list compiled by Fortune magazine raking the top

500 public corporations of the US as measured by their gross revenue. The names that grace the list however command such power and wealth that the Fortune 500 has come to define American business, as well as being defined by it” (US Pages “no date”)

10 The Inc. 500 is a list of the fastest-growing privately held companies in the United States (Inc. 500 2010)


see the largest raise of all online advertisement possibilities followed by online video, search engine optimization (SEO), and mobile marketing (Forrester Research 2009).

Figure 11: Forecast: US Interactive Marketing Spend (US only), 2009 to 2014

Source: Forrester Research11, p. 7

2.3.4. Implications Chapter 2 shows how social media has found its way into our lives. Millions of Internet users read blogs, have subscribed to social networking services, and are influenced on a daily basis by the new interactive media channels.

Brands use these new communication pathways and actively participate in conversation on their own Facebook, Twitter, or YouTube accounts. Dollars are moving from traditional media to online channels and online marketing activities are increasing.

Data aggregation and new tools to measure marketing actions more precisely have become important. Optimizing advertisement messages and tailoring them to the needs of the customer is an important step in utilizing the vast possibilities of social media.

With social media the customer is given the opportunity to affect others. Direct communication between customers and electronic word of mouth are now strong influence models and actively form people’s opinions.

11 Forrester predicted 25.5 billion $ of advertising revenue in 2009, while the real advertising revenues only reached

22.7 billion $ (Interactive Advertising Bureau 2010)


With growing advertising budgets and the participation of companies in this market, brands need a reliable and significant possibility to measure their online advertisement effectiveness in the social media landscape.

Therefore the research goal of this paper will be to quantify how brands market themselves in the social media environment. A new measurement method will be proposed and a “Social Brand Index” established to measure advertisement and social media efforts in the social web.

This will help brands measure their performance on a longitudinal axis and determine where a brand has already gained ground or needs to grasp new possibilities.

Measuring Brand Equity 28

3. Measuring Brand Equity “To communicate effectively and efficiently, marketers have to go where the customers are and increasingly that is on-line“ (Keller 2009, p.147).

Online advertising has seen exponential growth rates. Interactive ad spending is predicted to grow for the next couple of years and few brand-marketing programs are designed without some type of online advertising. Online advertising can be tailored to the needs of the recipient and measured more precisely (Keller 2009, p. 149).

The main focus of brand building measurements is not to increase short-term sales revenues. Brand building is a long-term development of an intangible asset; an asset that requires consistent reinforcement over years and may not bring a short-term profitability. It may feed on current earnings and can cause difficulties (Aaker/Joachimsthaler 2000, p.14). However, as Aaker and Joachimsthaler (2000) point out, ”[...] brand building not only creates assets but is necessary for the success (and often the survival) of the enterprise” (Aaker /Joachimsthaler 2000, p. 14).

It is often hard for marketers to justify their brand building expenses. Brand equity measurements can help marketers to quantify their marketing efforts. Several attempts to measure brand equity have been suggested by scientific literature. A number of marketing agencies offer brand equity measurement solutions and brand equity rankings (Christodoulides/de Chernatony 2009, p. 43 et seq.).

3.1. Literature Overview on Brand Equity Measurement

3.1.1. What is a Brand? Kotler (1991, p. 1991) defines a brand as “a name, term, sign, symbol, or design, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors".

Defining a brand per se in a theoretical framework might not seem difficult but brands are complex formations. When we look at the presence of brands in our daily life we are exposed to numerous branding variations. Intel, Microsoft Office, Toyota Corolla, or Pampers all can be seen as brands, but the structure of each “Brand” is different.

Therefore David Aaker (2004, p. 46) gives a brand relationship spectrum to classify a brand and to help marketers and researchers develop a clear brand portfolio strategy and categorization.


Aaker (2004) proposes four main options of classification, all having several variants:

• Branded House

• Sub brands under Master Brand

• Endorsed Brands

• House of Brands

With the branded house strategy a brand takes a dominant role as driver and serves as

the master brand on top of all other brands (Aaker 2004, p. 60). For example, “Virgin”

serves as branded house, in which the other sub brands such as Virgin Cola, Virgin

Airlines, Virgin Express are included. Virgin acts as an umbrella for all the other brands

(Aaker 2004, p.60).

By following a sub brand portfolio strategy, the master brand allows the sub brand to add the attributes of the master brand. For example the large Pepsi franchise brand needed to create sub brands to appeal to the customers in niche segments and introduced the lemon–flavored Pepsi Twist (Aaker 2004, p. 58). The sub brand can both stretch the master brand where it otherwise would not fit and signal that the new product is reliable (Aaker 2004, p. 58).

The endorsed brand strategy is not limited to creating a new brand or having a brand with a description. The company endorses the sub brand by adding its name, providing an assurance that the endorsed brand will live up to the customer’s expectations (Aaker 2004, p. 52). Examples for endorsed brands can be found in the fashion segment, such as Obsession by Calvin Klein or Polo by Ralph Lauren (Aaker 2004, p. 53).

In contrast to the branded house strategy “the house of brands involves an independent set of stand-alone brands each focusing on maximizing the impact on a market” (Aaker 2004, p. 48). Procter & Gamble (P&G) follows this strategy of several major brands, which have only small or no apparent links to P&G. This strategy allows firms to position brands clearly and therefore dominate a niche segment (Aaker 2004, p. 50).

3.1.2. Brand Equity Measurement Christoduliedes and de Chernatony (2009, p. 44) define Brand Equity as follows: “Brand equity is a key marketing asset which can engender a unique and welcomed relationship differentiating the bonds between the firm and its stakeholders and nurture long-term buying behavior”.


Yoo, Donthu and Lee (2000, p. 208) found that if companies understand the extent of brand equity creation, and cultivate this intangible asset, competitive barriers are raised and the brands wealth is driven.

The conscientiousness of brand equity measurement has been growing in the last 15 years. Several solutions on how to measure brand equity have been proposed by academics and practitioners (Interbrand, WPP, Millward Brown, Young & Rubicam and Research International).

Christodoulides and de Chernatony (2009, p. 44) list the main findings in brand equity measurement. Studies have shown that brand equity has a positive effect on consumer preference and purchase intention (Cobb-Walgren et al. 1995); market share (Agarwal /Rao 1996); consumer perception of product quality (Dodds et al. 1991); shareholder value (Kerin/Sethuraman 1998); consumer evaluation of brand extensions (Aaker and Keller 1990; Rangaswamy et al. 1993; Bottomley/Doyle 1996); consumer price insensitivity (Erdem et al. 2002); and resilience to product-harm crisis (Dawar/Pillutla 2000).

Measuring how marketing performance influences brand equity has become an important endeavor for academics and practitioners. Keller and Lehman (2006, p. 754) state that identifying brand equity and measuring it is a significant research topic. There is extensive literature available on how to measure brand equity. However, this literature is mostly fragmented as well as inconclusive. As a consequence a definite agreement on how to measure brand equity has not yet been found (Christodoulides/de Chernatony 2009, p. 44).

Figure 12 shows an overview on the rough classification of the methodologies used to measure brand equity. Since this paper evaluates brand equity through social media usage, the methodology used is a consumer-based approach. Accordingly, firm-based measurement methods will only be briefly discussed.

Figure 12: Brand Equity Measurement Methodologies

Source: Christodoulides and de Chernatony 2009, p. 45


3.1.3. Consumer-Based Brand Equity Aaker (1991, p. 15) defines brand equity as “a set of assets and liabilities linked to a brand, this name and symbol, that add to or subtract from the value provided by a product or service to a firm and/or that firm’s customers”.

Although Aaker (1991) attempts to define brand equity, no methodological approach or generally accepted definition has been provided. Different studies describe different aspects of brand equity and propose ways to measure this asset (Christodoulides/de Chernatony 2009, p. 45).

One perspective focuses on the financial value brand equity creates for a company. This is often referred to as firm-based brand equity (FBBE) and measures only the behavior of a customer reaction towards a brand trough the manifestation of a monetary preference (Christodoulides/de Chernatony 2009, p. 46).

A second branch of brand equity measurement is the customer-based brand equity (CBBE). This theory sees the source of increasing market share and profitability in the perception of the customer. The consumer attachment and the associations the customer has with a brand are the main variables measured by the CBBE-approach (Christodoulides/de Chernatony 2009, p. 46).

The leading stream in consumer-based brand equity mainly results from cognitive psychology and information economics (Christodoulides/de Chernatony 2009, p. 46). Keller (1993) is one of the advocates of consumer-based brand equity from a psychological perspective. He defines CBBE as “the differential effect of brand knowledge on consumer response to the marketing of the brand” (Keller 1993, p. 2). This conceptualization claims that a person reacts favorably to the marketing mix of a company that uses branding compared to an identical unbranded company (Keller 1993, p. 2).

3.1.4. Conceptualizing Keller’s Brand Knowledge Theory Keller (2009, p. 143) sees the role of CBBE-measurement as a means to understand the different types of marketing elements and the ways they affect the value of a brand. According to his brand equity model, brand knowledge is created in the minds of the consumer by marketing activities. He defines brand knowledge as “all the thoughts, feelings, perceptions, images, experiences and so on that become linked to the brand in the minds of consumers”.

Keller divides brand knowledge into two different components, brand awareness and brand image. On the one hand, Keller (2009, p. 143) defines brand awareness as “relation to the strength of the brand node or trace in memory as reflected by the


consumers’ ability to recall or recognize the brand under different conditions.” Brand image, on the other hand, is understood as “consumer perceptions of/and preferences for a brand, as reflected by the various types of brand associations held in the consumers’ memory”.

Figure 13: Keller’s Brand Knowledge Theory

Source: Adapted from Keller 1993, p.7

Strong associations and a unique brand identity are important as points-of-preference which can operate as sources of brand equity. This can improve brand loyalty, price premiums, communication, and channel effectiveness as well as enhance growth opportunities for a brand (Keller 2009, p. 143).

Keller’s conceptualization of brand image integrates several factors such as brand positioning, brand experience, brand loyalty, brand personality or brand reputation (Keller/Lehmann 2006, p. 740 et seq.). The image of a brand is a framework of several factors with complex interaction mechanisms.

The investigation of all of these factors would go beyond the reach of this paper. The study therefore directs the research on a simplified view of brand image and proposes a measurement system investigating the sentiment manifested by users on a specific platform. This may not measure the entire complexity of brand image but can capture an image trend.

3.1.5. Measurement of CBBE Aaker (1991) and Keller (1993) have conceptualized brand equity measurement, among others, but they never provided a solution as to how to measure brand equity on an operational scale (Christodoulides/de Chernatony 2009, p. 46). This generated different methodologies to measure brand equity. Scholars have devised two different approaches of CBBE measurement, each depending on the approach they take to operationalize the value of a brand. The first process indirectly measures brand equity through the customer’s manifestations (e.g. Yoo/Donthu/Lee 2000; De Chernatony et al. 2004; Buil et al. 2008). The second method is a direct approach focusing on the


customers’ preferences (e.g. Srinivasan 1979; Park/Srinivasan 1994) or utilities (e.g. Kamakura/Russell 1993; Swait et al. 1993).

3.1.5.1. Indirect Measurement of CBBE

As mentioned in chapter 3.2 CBBE is measured by scientists and practitioners. This section will take a look at selected studies, which operationalize customer-based brand equity measurement through an indirect approach.

Yoo, Donthu and Lee (2000) based their studies on the theoretical framework of Aaker (1991) and Keller (1993) and measured brand-equity on a multi-dimensional scale. They found that brand equity correlated with price positioning and advertising exposure. As Yoo, Donthu and Lee (2000, p. 206-207) state that “as consumers are exposed to a brand’s advertising more frequently, they develop not only higher brand awareness and associations but also a more positive perception of brand quality, which leads to strong brand equity”.

3.1.5.2. Critics on Indirect Measurement of CBBE

Indirect measurement of CBBE tries to shed light on the source of brand equity rather than quantifying the brand at a monetary scale (dollar-metric level) (Christodoulides/de Chernatony, p. 51 et seq.).

This approach, analyzing the sources of brand equity, is helpful to identify influencing factors that brand managers can implement into marketing programs. The down side is that the performance of marketing methods are not quantifiable with a indirect measurement tactic and do not give brand mangers the possibility to observe performance or monetary value of the brand. Also, managers cannot compare each other with competing companies and do not have the possibly to measure marketing performance on a longitudinal scale (Christodoulides/de Chernatony 2009, pp. 52 et seq.).

3.1.5.3. Direct Measurement of CBBE

The main intent of these studies is the separation of the value of the brand from the value of the product often by the means of a monetary scale (Christodoulides/de Chernatony 2009, pp. 51 et seq.).

Leuthesser et al. (1995) postulate a certain “halo effect”12 of a brand name and brand attributes. The difference of a branded product to a non-branded product and the

12 Cooper (1981, p. 218) defines the halo effect formally as ““high intercategory correlations or low intercategory

variance”


difference a consumer is ready to pay for a branded product is the aggregate value of the brand (Leuthesser et al. 1995).

Up to now most direct measurement methods choose to measure brand equity at an aggregated level and specifically look at certain brand associations. For example, Kamakura and Russel (1993) focused on perceived quality and the brands intangible value. Srinivasan, Park and Chung (2005, p. 1447) proposed a brand equity measurement system by conceptualizing brand equity at the individual level. The researches propose a qualitative approach by measuring “enhanced brand awareness, enhanced attribute perceptions, and enhanced non-attribute preferences” (Srinivasan/Park/Chung 2005, p. 1447).

Since this study conducts the research on the basis of aggregated data available on social media services, a quantitative evaluation method for brand equity has been chosen. This step will be explained in greater detail in chapter 4.1.

3.1.5.4. Critics on Direct Measurement of CBBE

Christodoulides and de Chernatony (2009, p. 52) also see weaknesses in measuring CBBE directly. The method cannot provide any indication on how consumer-based brand equity originates. It does not identify specific parameters, which account for brand equity but measures the entire utility value attached to a brand. Brand equity cannot be measured at an individual level, but only an aggregated level.

3.1.5.5. Measurement of CBBE by Practitioners

Parallel to academic research on brand equity measurement, several market research companies and consultant agencies have developed their own methodologies of measuring brand equity. Practitioners’ brand equity measurements are irregularly mentioned in academic research (Christodoulides/de Chernatony 2009, p. 58).

The difficulty of CBBE-measurement by practitioners is that the evaluation algorithms are usually not available and only a general overview of measurement variables are described in publications. Christodoulides and de Chernatony (2009, p. 58) state that “consultancies and academics show little common ground in terms of the constituent dimensions of brand equity”.

Nevertheless the most important practitioners measurement evaluations have to be mentioned and are shown in the following table.


Table 2: CBBE Measurement by Practitioners

Symbol Measures of CBBE

Millward Brown Performance, Market Stability, Brand Support, Brand Image

Y&R brand Asset Valuator Knowledge, Esteem, Relevance, Differentiation

Interbrand Brand Strength Market Stability, Brand leadership, Trend, Brand support, Diversification, Protection

WPP Brand Dynamics Presence, Relevance, Performance, Advantage, Bonding

Research International Equity Engine

Affinity, Perceived functional performance, The interaction between the brand’s equity and its price

Source: Adapted from Christodoulides/de Chernatony 2009, p. 59

3.1.6. Measurement of CBBE in Social Media With the rapid rise of social media and several brands actively forming brand knowledge in this field, a handful of consulting firms have seized the opportunity to meet the demand for social media analysis and try to offer a valid brand equity measuring system for brand equity generation through social media channels. Since this field is very young and changes occur on a monthly basis, it is hard to evaluate the parameters important in this field. The attempts have not fully met the requirements of marketers so far and generally only measure one specific section of social media.

3.1.6.1. Vitrue Social Media Index

One of the most quoted social media rankings (e.g. mashable.com, Advertising Age) is Vitrue’s “Social Media Index”. This index is based on the frequency a brand is mentioned in social media networks such as Facebook, MySpace, Twitter, YouTube, Vimeo, Flickr, Google Blog Search, and Technorati (Strutton 2009). The strength of the brand is measured on a point scale according to how often the brand name appears in the examined networks (Strutton 2009).

Vitrues Social Media Index has several limitations. The brand ranking is composed by the frequency a term appears in social media. This scale can only measure the rate of recurrence of a specific word. This means that brand names linked to a specific object (e.g Apple) appear more often than brand names which are not related to an object (e.g. Microsoft). This evaluation method scores brands with object relations higher and the brand receives index points, even though there is no relation to the brand (e.g. a blog post on how to cook apple pie would result in a higher ranking of the brand “Apple”).


Additionally the index includes so-called “tags”13 in their indexation results. Several mobile devices include these tags in the document information (e.g. a picture taken from an iPhone will includes a tag in the picture saying “iPhone”). Therefore mobile devices are mentioned more often than other products in this indexation.

Also the evaluation method does not differentiate between the dates of appearance of the different brand names and can therefore not measure brand occurrences at a specific time interval. This implies the accumulation of how often a brand has been mentioned since the existence of the Internet.

Additionally this method cannot measure a brands image in social media since the indexation is merely based on a word counting procedure. This implies that brands receive a higher point score when they are prominent in social media, even if the conversation concerning the brand is highly negative (e.g. the oil-spill incident in the Gulf of Mexico caused by BP would result in high index scoring, event though conversation is highly negative).

It may thus be concluded that the Virtue Social Media Index is an appropriate tool to measure the appearances of a certain word or brand name. However, it does not represent a valid tool when it comes to measuring brand awareness, brand image or brand equity.

3.1.6.2. Altimeter Group ENGAGEMENTdb

Ben Elowitz and Charlene Li (2009, p. 1) ranked the top 100 global brands (Interbrand Ranking) according to their engagement in social media. They also identified a correlation between financial performance and engagement in social media.

The research objects were the top 100 global brands of the 2008 Interbrand ranking (Interbrand 2010). Elowitz and Li (2009, p. 2) used this foundation to evaluate how these 100 brands engaged in social media. The study scored each brand’s engagement in different social media services (e.g Facebook, Twitter, YouTube) and identified how intensively the brands performed in these channels. The more frequently networks were used and the higher the overall engagement was, the better the brands ranked. They were than classified according to their usage of channels and overall engagement (Elowitz/Li 2009, p.3).

One key question was if engagement correlates with financial performance. The researchers therefore analyzed revenue growth, gross margin growth and net margin

13 Sara Render (2009) defines a “tag” as In social media blogs and other content (such as photos, music, etc.,) can

be “tagged” or labelled with a keyword, such as “politics” or “gardening”. This makes it quick and easy to search for all content that is tagged similarly (Render/Nun 2009).


growth of the examined companies. Elowitz and Li (2009, p. 6) came to the conclusion that ”companies that are both deeply and widely engaged in social media surpass their peers in terms of both revenue and profit performance by a significant difference”.

The research by Elowitz and Li (2009) shows a more in depth exploration of a brands presence in social media compared to the Vitrue Social Media Index.

The limitations of the ENGAGEMENTdb report’s limitation are, that only the top 100 global brands are considered in the study and excluded other brands. Additionally the ranking only sheds light on how many channels a brand is active on and how intensively these channels are used. However, it cannot reflect if engagement is negative or positive and therefore a brand’s image cannot be evaluated.

The study does not show a full spectrum of the evaluation. Therefore a validation on the scientific level cannot be administered.

3.1.7. Conclusion on CBBE Customer based-brand equity measurement has been and remains a prominent topic for both academics and practitioners. Several agencies claim to offer valid measurement methods. Since these companies do not share their calculation of brand equity measurement, a validation is hardly possible.

In academic circles brand equity is mainly calculated by qualitative methods. Up to now no quantitative approaches have yet been established. This of course due to the fact that reliable data sources could only be indentified with difficulties or not at all. The new possibilities of tapping into the vast amount of available data on social networking platforms, has

Social media companies have seen the opportunity the vast aggregation of data offers and have tried to develop algorithms based on a quantitative approach. However these companies do not follow an academic approach and are not reviewed by peers and are therefore difficult to validate.

This research paper will propose an algorithm to measure brand equity on a valid quantitative scale.

Research Design 38

4. Research Design The goal in measuring “Social Brand Value“ is to find an algorithm which is quantifiable for all brands and applicable to every market segment. The vast amount of data aggregated in social media allows researchers to explore customer reflection and the popularity of selected brands. To calculate brand equity in social media a quantitative content analysis has been chosen. This choice is indicated because of vast amount of data which is aggregated in social media and accessible to researches.

4.1. Research Objective With the rise of the social web, new promotional and advertisement methods have found their way into the marketing league. Managers have always been confronted with the same problems they had all the time: How to measure brand equity with social media campaigns. This research paper aims to measure brand building efforts placed on social media channels.

Esch, Lagner, Schmitt, and Geus (2006, p. 103) evaluated a branding model in an online branding environment. They could show with their research “that current purchases were affected by brand image directly and by brand awareness indirectly.

Figure 14: Branding Model in an Online Branding Environment

Source: Adapted from Esch et al. 2006, p. 102

The findings of Esch et al. (2006, p. 13) suggest that online branding efforts are important for a brands image and awareness.

Research Design 39

The main objective of this paper is to develop a methodological approach to quantify brand-building measurements in social media and evaluate them. Additionally, an index with the top 20 social brands will be proposed. This index is seen as resource to monitor changes in social brands and will help managers to understand how their social media marketing efforts have affected their brands reputation in the social media landscape. The evaluation process will be measurable for all brands based on the calculation of the algorithm.

4.2. Data Collection Period Brand equity is per se not an easy factor to measure. Unexpected influences and unforeseeable incidents can have a great effect on brands equity. The consumer’s perception of a brand can change rapidly and marketing programs to enhance brand equity have a specific half-life.

The study proposes a brand equity measurement interval of one month. Selecting a monthly rather than a yearly measurement period has several advantages:

• The impact of marketing programs on brand awareness and brand image can be measured more precisely.

• Different marketing methods and their impact can be compared to each other. Therefore successful marketing programs can be identified accurately.

• Unforeseeable incidents can affect brand awareness and brand image instantly (e.g. BP). Image loss or image gain can be scanned on a monthly basis. Studies conducted on a yearly interval can only capture brand equity at an aggregated yearly level without being able to identify incidents for a change in brand equity.

• The evaluation on a monthly basis offers more comparing possibilities to reveal trends and allow more precise measurements of marketing activities.

The research conducted a brand equity evaluation during a single month due to time limitations. The evaluation on an annual basis with twelve assessment points would have exceeded the scope of this paper.

4.3. Quantitative Content Analysis Quantitative content has seen multiple definitions throughout academic literature (Stempel 2003; Weber 1990; Krippendorf 1980; Holsti 1969). Kerlinger’s (1973) definition points out, that the content is connected with a manifestation of the author’s position and therefore is not only a mere sum of phrases. “Content analysis is a method of studying and analyzing communications in a systematic, objective, and quantitative

Research Design 40

manner to measure variables […] as a method of observing people’s behavior” (Kerlinger 1973, p. 525).

A qualitative approach that seeks to understand an observable correlation between two parameters (Golafshani 2003, p. 600) cannot convert the vast amount of data aggregated in social media into a measurement method. In contrast a quantitative approach can give an inference on brand awareness and image with the available data since a quantitative approach “leads us to regard the world as made up of observable, measurable facts” (Glesne/Peshkin 1992, p. 6).

This paper does not seek to discover the sources of brand equity. Instead it focuses on evaluating the most popular brands in social media and measures how a brand is perceived within the social web.

The research design is divided into two parts. The first part was designed to measure brand awareness by the quantity of user manifestations. This was done using a percentile aggregation of user behavior in reaction to marketing efforts by brands on a certain social media channels.

The second part was designed to measure brand image. It is assumed that assessing general sentiment on a specific platform correlates with the perception of the brands image.

4.4. Defining Social Brand Value The terms „Social Brand Value“ or „Social Brand Equity“ have not yet been defined in academic literature. To understand the term “Social Brand Value” or “Social Brand Equity” this paper proposes a definition which is adapted from Christodoulides and De Chernatony’s (2009, p. 57) transcription of “Brand Equity”:

“Social Brand Value” or “Social Brand Equity” is a key marketing asset, accrued by marketing effects or outcomes in social media channels, which can engender a unique relationship between the firm and its stakeholders.

4.5. Segmentation of Brands Aaker (2004, p. 23) believes that brands are composed in different ways. Moreover, he claims that brand portfolio management can take several forms. Even in similar customer segments, brand management can vary between competitors.

To capture the value of specific brand architecture efforts, we categorized the different brand portfolio management systems into two different groups. This step seems

Research Design 41

indispensable, for it helps to analyze brand equity calculations more precisely and target-oriented.

The first group was assembled by companies/products which follow Aaker’s (2004) definition of a branded house (such as Disney) and house of brands (such as Pampers). These brands clearly follow a strategy to enhance the stand-alone value of the brand.

The second group was composed of companies/products, which followed a strategy of endorsed brands (such as Polo by Ralph Lauren) and sub brands (such as Virgin Cola). This strategy does not create an independent brand. These two groups were measured independently. The main focus of the research was centered on the house of brands/branded house.

This categorization has to be made to clearly separate brands from their products. For example, with the launching of the iPhone 4 and the iPad, Apple experienced a strong presence in social media. A combination of the products and integration of the brand awareness of these two products would have falsified the effective awareness level of the brand Apple.

According to Aaker’s (2004) definition of a brand, media channels and organizations can be categorized as brands as well. We assumed that both organizations and media channels trigger different user behavior in the Internet than consumer brands. Since social media platforms, such as Twitter, are often simply used as news source, the customer’s intention to accept opt-in messages from media channels are different than those of consumer brands. Therefore this paper does not compare media channels to consumer brands.

What is more, organizations offer a service and are distinguished by a picture or symbol. Once again organizations cannot be compared to consumer brands since we believe that they have better acceptance in social media channels. Organizations were categorized as a separate group and not compared to consumer brands.

The main focus of our brand equity evaluation lies within the two groups of consumer brands. For our study we evaluated these two categories and did not proceed further in measuring the social brand value of media channels or organizations.

4.6. Identifying the Main Variables Based on Keller’s brand equity theory (1991) the following paper identifies brand knowledge as the main measurement variable. Brand knowledge is divided into brand awareness and brand image, which are the drivers for brand equity.

Data Collection and Results 59

5. Data Collection and Results The data collection was conducted during the month of June 2010. The brands were selected according to Aaker’s (1991) definition of a brand and categorized into the two main groups identified in chapter 4.5. For our study of brand image we evaluated the sentiment of the 20 brands ranking highest in the brand awareness score of the group house of brands / branded house.

5.1. Brand Awareness The brand awareness was composed of the social reach, social buzz, and video buzz. To evaluate the awareness of a brand we scanned the top 1’000 Facebook pages according to their number of opt-in selections; the top 1’000 Twitter pages according to their number of opt-in selections; the top 4’000 blog and news entries according to their number of recommendations and the top 40 branded YouTube clips according to the number of views a clip received. To calculate the entire brand awareness, the social reach was integrated for every brand appearing in one section (E.g. If Nivea received a point score in the video buzz calculation, the social reach on Twitter as well as Facebook was included, even if the brand was not present within the top 1’000 pages). The evaluation on brand awareness for the house of brands/branded house can be found in appendix A. The evaluation on brand awareness on sub brands and endorsed brands can be found in appendix B. The total number of user actions integrated in the evaluation during the month of June was 331’980’255. Table 9 shows the aggregated number of user actions for every service accounting for the awareness of the brands integrated in the study.

Table 9: Total Number of User Actions Integrated in the Study

Number Definitions

249’429’960 Total number of user opt-ins on Facebook

19’473’339 Total number of user opt-ins on Twitter

464’956 Total number of recommendations on Digg

56’920’000 Total number of YouTube views

331’980’255 Total number of user actions integrated in the study

Own Source


5.1.1. Social Buzz on Blog and New Sites

The data collection of the top news and blog sites was performed on a weekly basis during the month of June 2010. The top 1’000 blog and news posts were analyzed and scanned for mentioning of a brand at an interval of seven days. This analysis was done four times on the same day to eliminate overlapping of the same blog posts. This accounted for a total of 4’000 blog post analyzed during the month of June.

During the evaluation period 15% (or 601 articles) of the analyzed blog posts mentioned a brand or branded product. The evaluation of the social buzz for every week and every brand can be found in appendix C. These 601 articles saw a total of 464’956 recommendations.

The most mentioned brand was British Petroleum (BP), which faced a severe oil spill in the Gulf of Mexico and therefore was the most discussed and prominent brand during the evaluation period. The aggregated sum of recommendations of BP was nearly double the size of the following brand.

What can be observed in the social web is that topics concerning technological companies are very prominent. This could be due to the nature of the consumer group active on the social web, which might be more interested in technological issues. Google, Apple, the iPhone, and the iPad, which was released during the evaluation period, were among the top discussed topics (excluding BP).

5.1.2. Social Reach on Facebook

To evaluate the social reach of a brand on Facebook we scanned the top 1’000 Facebook pages according to the number of people accepting opt-in messages. The social reach factor was then calculated according to the algorithm proposed in chapter 4.6.1.1.

The evaluation took place during the first and 30th of June 2010. 30% of the top 1’000 Facebook pages (or 301 pages) contained an officially maintained branded Facebook page. The total number of consumers accepting opt-in messages on Facebook for all brands integrated in the evaluation was 242 million.

The evaluation of the social reach factor is a snapshot of the moment the point score was calculated. Since the number of people accepting opt-in messages changes continuously, the actual social reach factor is an evolving number and therefore not able to capture accurately. The social reach factor should be seen only as an approximation.

The top branded Facebook page was the one of Starbucks with 7.4 million people accepting opt-in messages at the time of the evaluation. The 301st page belonged to retail store “Bass Pro Shop” with 227’665 Facebook Fans.


The difference between the top 301 brands of 3’145% between the first and the 301st brand showed a long tail allocation of user preferences. While large brands can capture vast number of fans, the further down we go along the y-axis the flatter the curve gets.

5.1.3. Social Reach on Twitter

To evaluate the social reach of a brand on Twitter we scanned the top 1’000 Twitter profiles and selected the official branded Twitter accounts. The social reach factor was then calculated according to the algorithm proposed in chapter 4.6.1.1. The calculation for every brand in the group of branded house/house of brands can be found in appendix A. The calculation for the sub-brands and endorsed brands can be found in appendix B.

The evaluation took place during the first and 30th of June 2010. 13% of the scanned Twitter profiles (or 132) could be categorized as an officially branded Twitter account. The total number of all people accepting opt-in messages of all brands integrated in the calculation on Twitter summed up to 19 million user actions.

The evaluation of the social reach factor is a snapshot of the moment the point score was calculated. Since the number of people accepting opt-in messages changes continuously, the actual social reach factor is an evolving number and therefore can not be captured accurately. The social reach factor can be seen only as an approximation.

The evaluation of the top 1’000 Twitter pages showed 132 branded Twitter accounts. The top branded account on Twitter was Google with 2.3 million people accepting opt-in messages at the time of the evaluation.

Compared to Facebook, Twitter does not have a similar strong penetration of brands present within the top 1’000 accounts. Additionally the brand landscape is different than the one on Facebook. While branded Facebook pages are mainly dominated by consumer brands, branded accounts appear rarely within the top 1’000 Twitter profiles. On the other hand, several brands maintain an official Twitter account and so this channel may be increasingly important for brands.

This difference in usage patterns shows that the two platforms serve very different consumer needs. Twitter seems to be a tool for quick information and staying up to date while Facebook can serve several consumer needs such as product information and/or interactive content.

5.1.4. Video Buzz

To evaluate the social reach of a brand on YouTube, we scanned the top 10 branded video clips of each week during the month of June 2010. Subsequently the study integrated the top 40 most viewed branded video clips on YouTube. This summed up to


57 million views during the evaluation period of four weeks. The calculation of the video buzz factor was conducted as proposed in chapter 4.6.1.3. The top video was a video clip by NIVEA, which was viewed 3.8 million times during one week. Conclusively this clip reached 9% of the YouTube visitors during that week.

An interesting fact that could be observed concerning clips on YouTube was that popular clips stayed popular. Four clips (Nike, Pepsi, Evian and Toyota) appeared in all four top 10 rankings during the evaluation period.

5.1.5. Calculation of Brand Awareness

After the evaluation of all the selected branded Facebook pages, Twitter accounts, blog entries, news posts, and YouTube clips during the month of June, we calculated the brand awareness score for each brand. The results for every brand in the group branded house / house of brands can be found in appendix A. The results for every brand in the group sub brands and endorsed brands can be found in appendix B.

Our main evaluation focused on the house of brands/branded house. Table 8 shows the 20 brands ranking highest in the brand awareness scoring.

Table 10: The Top 20 Brands Scoring Highest on Brand Awareness, June 2010

Rank Brand Score

1 British Petroleum 1092

2 Google 539

3 Apple 361

4 Starbucks 249

5 Whole Foods Market 180

6 Dell 172

7 jetBlue Airways 161

8 AT&T 153

9 Coca – Cola 134

10 Southwest Airlines 118

11 Disney 104

12 Skittles 97

13 Oreo 95

14 Red Bull 89

15 Nintendo 85

16 Mc Donald’s 78


17 Victoria’s Secret 75

18 Microsoft 73

19 Pringles 68

20 Verizon Wireless 59

Own Source

The point score can be interpreted as percentile reach of a brand during the evaluation period. In other words, with a point score of 1092, a digital message concerning BP has reached every person active on Facebook, Twitter, YouTube and Digg 10.9 times during the month of June 2010.

The two groups integrated 354 brands or branded products. The most popular brand in social media during the evaluation period was by far BP. The oil crisis spurred discussion on social media sites. BP has comparatively small brand awareness in social reach or video buzz but accounts for several appearances in the social buzz.

The second most popular brand during the evaluation phase was Google. Google used several social media channels and strongly integrated these in their communication. Their social reach is very high and Google can account for video and social buzz, receiving points in all channels.

The third most popular brand was Apple. The technology company does not maintain an official branded Facebook account or Twitter page but is one of the most discussed brands. The product launch of the iPad and the iPhone accounted for multiple appearances in social media. Additionally well-placed advertising clips on YouTube boosted the brands awareness during the month of June 2010.

5.2. Brand Image The brand image evaluation was conducted on the 20 top brands from the house of brands/branded house group. The brand image calculation included 464’956 recommendations and 11’105 Facebook comments.

Table 11: Total Number of User Manifestations Expressing a Sentiment

Number Definitions

11’105 Total number of comments evaluated

464’956 Total number recommendations evaluated

476’061 Total number of user manifestations integrated in the study

Own Source


5.2.1. Sentiment Analysis of Blog and News Articles

Trusted blog and news articles are influential drivers of brand image (Chu/Kamal 2008, p. 18).

Parallel to the brand awareness analysis of blog and news articles, we analyzed the sentiment of the articles mentioning a brand. We performed our analysis backed by the coding scheme developed in chapter 4.2.6.1.

In total, all brand awareness recommendations on blog and news articles summed up to 476’061 reactions. We only included brands in our sentiment analysis if a brand received more than 100 points in the brand awareness evaluation.

Four brands were included in this calculation. These were BP, Google, Apple and AT&T. The brand image evaluation for these brands can be found in appendix D. Our algorithm developed in chapter 4.6.2.2 calculated the brand image.

BP was once again the brand scoring the most impressive points on our scale. Since the social web is free from gatekeeper effects and every person active on the Internet has the possibility to reach all other users active on the Internet, blog posts saw a wide reach. Compared to official news sites, blog entries freely express their feelings. This affected BP strongly and the image of BP can be placed between “bad” and “wretched”.

Blog posts with negative sentiments were subjectively more popular than blog posts expressing a positive sentiment. This could have an affect on the perceived image of a brand. Further evaluation was not conducted on this, but could serve as topic for further research.

5.2.2. Sentiment Analysis on Facebook

With 500 million active users, Facebook is the largest social media platform up to now.

We analyzed the top 20 brands ranking highest on brand awareness and conducted a linguistic analysis on the comments posted by Facebook users on the official Facebook wall of a brand.

Eighteen brands had an active Facebook wall where people could post comments. BP does not have its Facebook page open for conversation and Apple has not set up a branded Facebook page. Therefore the sentiment analysis for these two brands was conducted solely on blog and news sites.

For every brand we scanned the comments of one week and categorized them according to Jansen et al.’s (2009) coding scheme. We divided the comments into direct comments, which are comments directly posted on the wall of the brand, and indirect


comments, which are replies to a post the brand made on the Facebook wall. We excluded replies by the official brand representative of the Facebook page as well as comments clearly visible as spam. For our calculation we only included the direct comments.

With 1’608 comments during one week, Starbucks had the most active users. jetBlue only saw 106 comments during the same evaluation period. We collected 11’105 comments for all brands. Table 12 shows the image for the selected brands. The complete brand image analysis for every brand can be found in appendix D.

Table 12: Brand Image Evaluation of the Top 20 Brands

Rank Brand Facebook Blog Total

1 Oreo 0.8 0.8

2 Starbucks 0.76 0.76

3 Pringles 0.66 0.66

4 Victoria’s Secret 0.66 0.66

5 Disney 0.54 0.54

6 Whole Foods Market 0.54 0.54

7 Coca – Cola 0.53 0.53

8 Skittles 0.5 0.5

9 Google 0.63 0.17 0.4

10 Apple 0.35 0.35

11 jetBlue Airways 0.3 0.3

12 Nintendo 0.29 0.29

13 Mc Donald’s 0.27 0.27

14 Southwest Airlines 0.25 0.25

15 Red Bull 0.21 0.21

16 Microsoft 0.18 0.18

17 Verizon Wireless 0.01 0.01

18 Dell - 0.13 - 0.13


19 AT&T - 0.06 -0.87 - 0.47

20 British Petroleum -1.35 - 1.35

Own Source

We weighted the sentiments between “wretched” (-2) and “swell” (2). The results as shown in table 12 can be interpreted as an overall image towards a brand. E.g Starbucks received an image score of 0.76 This score falls in our classification between “So-So” and “Swell” but is closer to “Swell”.

Since we conducted our research on brand image on a convenience sample, the results we’ve received on brand image have to be considered with caution. The image analysis can only be applied to the specific channel the evaluation was made on.

Additionally, brands were not classified into different market segments. Service companies, such as AT&T or Airline companies, cannot foster the same brand image as product companies can. A direct comparison between the different brands should therefore also be considered with caution.

Nevertheless this image ranking can show the image trend a company has established. Additional studies on a longitudinal axis could show changes in image preferences and the effectiveness of marketing programs. Moreover a comparison between direct competitors, such as AT&T and Verizon Wireless, can show image preferences towards a certain brand.

5.3. Calculation of the Social Brand Value Composed by the two factors brand awareness and brand image we calculated the total social brand value of a brand. The brand awareness factor was multiplied by the brand image factor.

Table 13: The Top 20 Social Brands in Social Media – June 2010

Rank Brand Awareness Image Total

1 Google 539 0.4 215.6

2

Starbucks 249 0.76 189.24

3 Apple 361 0.35 126.35

4 Whole Foods Market 180 0.54 97.2

5

Oreo 95 0.8 76

6 Coca – Cola 134 0.53 71.02


7 Disney 104 0.54 56.16

8

Victoria’s Secret 75 0.66 49.5

9 Skittles 97 0.5 48.5

10 jetBlue Airways 161 0.3 48.3

11

Pringles 68 0.66 44.88

12 Southwest Airlines 118 0.25 29.5

13

Nintendo 85 0.2 24.65

14

Mc Donald’s 78 0.27 21.06

15 Red Bull 89 0.21 18.69

16

Microsoft 73 0.18 13.14

17

Verizon Wireless 59 0.01 0.59

18

Dell 172 -0.13 -22.36

19

AT&T 153 -0.47 -71.91

20

British Petroleum 1092 -1.35 -1474.2

Own Source

The results are a combination between a brand’s awareness and a brand’s image. As Keller (1991, p. 2) states, brand equity can only be created if people are aware of a brand. We see brand awareness as a crucial component to brand equity. It is of little worth if a brand has a great image but nobody knows it. On the other hand brand image is a crucial component to harvest brand equity building efforts. As we’ve seen with BP, a high brand awareness component does not implement high brand equity.

The ranking we propose in this study, can be seen as a classification on how marketing programs or actions (digital and non-digital) were perceived in the social media landscape.

The top social brand during the month of June was Google. Brand awareness and brand image were both at a high level. Google used multiple channels to communicate and was present strongly in all of the evaluated social media channels.

Ranking second was Starbucks. The brand was not top on brand awareness but scored high within the image ranking. People were devoted fans of the brand and liked to communicate this. They acted as evangelists for the brand, which is one of the most important factors in the social media environment. Starbucks has clearly recognized the


trend of social media communication and can be seen as one of the leading consumer brands with their social media brand building efforts.

Placing third is the technology company Apple. The brand did not exhilarate in brand image (this was also an effect of the manufacturing problems of the iPhone 4) but brand awareness was at a high level. Apple was able to spur discussion on blog and news posts which accounted for a large portion of Apple’s brand awareness. Additionally Apple has built strong awareness among their sub brands which rank high in the sub brands/endorsed brands section.

The most interesting brand was BP. BP faced a severe oil catastrophe in the Gulf of Mexico during the evaluation period. Several news stations declared this incident as one of the largest catastrophes produced by a company. This incident spurred a large echo on social media channels. The oil leak and the effects on mankind and nature were in constant discussion. Positive or neutral articles appeared seldom, while negative articles were strung out on a daily basis.

This has been the first time a company had to face unprecedented facts in a medium that has circumvented gatekeepers. BP’s public relation tactics were exposed immediately within the social web, harming the wounded brand image of the company even more. Not only could it be said that this is one of the largest natural catastrophes a company had to face, but we expect this to be the largest image loss a company has ever experienced.

BP had to face nearly twice the exposure solely on blog or news articles, than the next ranking brand received within all social media channels combined.


Figure 15: The Brand Awareness – Brand Image Relationship Spectrum

Own Source

Figure 15 shows the relationship between brand image on the y-axis and a brand’s awareness on the x-axis. The image of a brand is classified between “wretched” (-2) and “great” (2). The number of points a brand has received in the social brand value ranking composes the size of a brand’s sphere. For simplification reasons we excluded BP from the figure, since the integration of the oil company would have skewed the comprehensibility of the graphic.

5.4. Discussion and Managerial Implication The rise of the Web 2.0 offers band managers several new advertisement and customer relationship possibilities. Blog and news articles, social networking services, microblogging, and video messages are influential new communication methods that are all affecting a brand’s equity (Jansen et al. 2009, p. 2184; Chu/Kamal 2008, p. 18; Spalding/Cole/Fayer 2009, p.290).

Digital advertising budgets are constantly increasing and will continuously be more important with the ongoing digital communication within our lives. Online brand building efforts will be seen more often in social media channels. Brand managers will have to justify digital brand-building promotions and the measurement of the effectiveness of digital advertising campaigns is an important indicator.


This study offers a possible measurement method of digital advertisement campaigns and can classify the most popular brands on social media. A quantitative approach can measure brand knowledge based on factual evidence. This can reflect brand equity very precisely. In the past researchers did not have access to personal preferences and therefore never had the possibility of measuring brand equity on a quantitative basis. Social media has changed this circumstance and this research shows great promises in further investigation on brand equity measurement on a quantitative foundation.

The top three brands in this ranking were Google, Starbucks and Apple. These three brands have understood the importance of building a relationship between customers and a brand. These companies successfully use social media as communication and advertisement platform. The usage of several services and active interaction with the customers on social media platforms, has spurred these brand’s awareness and image. Brand managers should actively participate in the communication with their customers and use all services available to reap the potential synergies of these channels. A YouTube clip can spark conversation on blog sites, which can enhance people actively discussing the brand on social networking services. A well maintained Facebook and/or Twitter account gives the customer the feeling of being a part of the community around the brand. Friendly, active and well-maintained communities enhance a brand’s equity within these channels.

On the other side the paper analyzed brand awareness during the oil crisis in the Gulf of Mexico caused by BP. The oil company had to cope with a severe loss in brand image during the evaluation period. The circumvention of gatekeepers and the possibility for private influencers, to freely distribute their content to an entire Internet population, has come with a certain loss of control over how a brand is perceived. It’s all the more important that brand managers understand the functionality of the social web. Social media crisis management, customer relationship teams, and social media guidelines can help to keep negative discussion under control and enable a company to react immediately to customers needs.

As research from Jansen et al. (2009) showed, the majority of comments on social media sites are without any sentiment. Our study could confirm that evaluation. In 52% of the 11’105 comments we analyzed, “no sentiment” or a “so-so” comment was found. This backs the indication that social networking platforms are a place for seeking information, asking questions, and communication between like-minded fans. Social networking services can be successfully used to monitor brand community discussion, help customers find information and cultivate and shape strong connections around a brand.


5.5. Problems and Further Research The calculation of brand equity on social media channels taps into two different research fields. The first is the investigation of media messages conducted by a quantitative content analysis on social media channels. A quantitative content analysis requires the possibility of reverting to a simple random sample to ensure the reliability of the sample unit. This study could not use a simple random sample but had to use a convenience sample due to the vast number of different services on the Internet. The services we chose to conduct our analysis on were Facebook, Twitter, YouTube and Digg. Therefore our ranking can only be applied to these services. Further research could clarify if the actions/preferences of users on these services can be transferred to the entire population. Additionally a measurement method to capture a reliable sample unit of the Internet population could be an aim for further research. The same problem we face when evaluating brand image. The sample unit chosen was a convenience sample both for blog and news sites, as well as for the brand image calculation on Facebook. Therefore our research results can only be applied to the specific customer group active within this service and segment. Further research could clarify if the brand image calculated for this customer segment can be applied for the entire Internet-population.

The second field of research is the calculation of brand equity. The brand awareness calculation is based on quantitative data provided by the digital services and therefore can be seen as very accurate in terms of quantity and reliability. This study whatsoever can not grasp the different levels of brand awareness between the selected services. Further research could clarify how influential every service is on the perception of a brand’s awareness.

While brand awareness is a relatively easy measurement unit, brand image is composed by several different factors all affecting a customer’s purchase decision in a different way. The calculation of brand image proposed in this study cannot capture the entirety of brand image but can be rather seen as a trend. Further research could clarify the reasons for brand equity and identify parameters for measuring brand image via a quantitative approach in social media.

Since several researchers and practitioners propose own measurement methods of brand equity and offer rankings mainly based on qualitative evaluation mechanisms, we see great potential in the combination between a quantitative brand awareness approach combined with a qualitative brand image evaluation. This could capture the reach and quality of digital advertisement methods but also clarify the influence these advertisement methods have on the perception of a brand’s image.

Conclusion 72

6. Conclusion In this research we identified the parameters influencing brand equity on social media channels. We developed an algorithm to measure a brand’s equity on social media sites, defined as social brand value, that was based on a quantitative measurement method. The quantitative tool is the first attempt in scientific literature to measure social brand value.

We then conducted a calculation for the top brands in social media according the methods proposed to measure the social brand value. The calculations integrated 332 million user actions and over 11’000 comments, which we analyzed according to their sentiment towards a brand. The assessment included 288 brands categorized as house of brands/branded house and 60 brands categorized as endorsed brands/sub brands. The calculation took place during the month of June and can be seen as brand ranking for this specific month.

The evaluation of the top brands on social media channels showed interesting results, with Google, Starbucks and Apple placing highest in the social brand value ranking. The oil company BP saw great exposure during the evaluation period but had to face severe image damage.

The ranking and calculation of a brand’s equity on social media channels is the first of its kind. It can help brand manager’s measure their brand building efforts on digital and non-digital channels, help them justify advertisement expenditures, and effectively compare between a brand and its competitors.

The brand ranking can shed light on best practices of successful brands. This can further help brand managers adapt their marketing methods and chose the most successful ones.

The information era has created a new consumer with a digital identity. The brands, which have recognized this and utilized the new possibilities of the Web 2.0, will be the most successful brands.

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master thesis - daniel baur - social brand value

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