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Management Research Review

Are social media replacing traditional media in terms of brand equity creation?
Manfred Bruhn, Verena Schoenmueller, Daniela B. Schäfer,
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MRR
35,9 Are social media replacing
traditional media in terms of
brand equity creation?
770
Manfred Bruhn, Verena Schoenmueller and Daniela B. Schäfer
Department of Marketing and Management, University of Basel,
Basel, Switzerland

Abstract
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Purpose – The purpose of this paper is to investigate the relative impact of brand communication on
brand equity through social media as compared to traditional media. In a juxtaposition of different
industries it aims at: investigating whether both communication instruments have an impact on
consumer-based brand equity; comparing the effect sizes of these two communication instruments;
and separating the effects of firm-created and user-generated social media communication.
Design/methodology/approach – A total of 393 data sets from three different industries, namely
tourism, telecommunications, and pharmaceuticals, were generated using a standardized online-survey.
Structural equation modeling was used in the analysis of the data obtained to investigate the interplay of
social media and traditional media in general, as well as in an examination of industry-specific
differences.
Findings – The results of the empirical study show that both traditional communications and social
media communications have a significant impact on brand equity. While traditional media has a
stronger impact on brand awareness, social media communications strongly influence brand image.
Firm-created social media communication is shown to have an important impact on functional brand
image, while user-generated social media communication exerts a major influence on hedonic brand
image. Furthermore, the present study highlights significant differences between the industries under
investigation.
Originality/value – The research described in this paper is pioneering in that it juxtaposes the
impacts of social media and traditional media on brand equity – a topic of increasing interest to firms
in the era of Facebook and Twitter but so far largely uninvestigated. Moreover, the differentiation
between firm-created and user-generated social media communication, which is gaining increasingly
in importance, as companies see their brand marketing power devolve to the consumer through social
media platforms, offers valuable insights to marketing practitioners and academics.
Keywords Brand management, Brand equity, Marketing communications, Social media,
Traditional media, Word of mouth
Paper type Research paper

1. Introduction
The media landscape has undergone an immense transformation over the past decade
(Mangold and Faulds, 2009). Social media, i.e. social networks or microblogs, are
increasingly replacing traditional media, and the buzz about these new marketing
opportunities seems unlimited: millions of fans declare their love to Coca-Cola on
Facebook, the roller babies of the Danone’s water brand Evian have become the most
Management Research Review frequently viewed video on YouTube, and thousands of Starbucks consumers work
Vol. 35 No. 9, 2012
pp. 770-790 together on the platform Mystarbucksidea.com to create new ideas for the popular coffee
q Emerald Group Publishing Limited house brand – for free. This trend of consumers becoming fans of brands on social media
2040-8269
DOI 10.1108/01409171211255948 platforms and using social media as an increasing source of information about brands
leads to the assumption that social media in addition to traditional marketing Brand
communication instruments exerts an important impact on a brand’s success. In 2008, equity
companies invested more than 1.54 billion dollars for the implementation and support of
social media communications. This growth in social media seems unlimited so far creation
(Trusov et al., 2009), as the investments in social media are expected to increase to more
than three billion dollars per year by 2013 (Kozinets et al., 2010). Social media has
established itself as a mass phenomenon with a wide demographic distribution: 771
75 percent of the US internet users use social media (Miller, 2009). The viral diffusion of
information through social media has a far greater capacity to reach the public than
“short tail” – media such as TV, radio, and print advertisements (Keller, 2009).
However, the rapid growth of social media platforms over the last few years have
raised the question of whether this development has diminished the marketer’s control of
brand management (Berthon et al., 2007). Since social media offers an opportunity
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for consumers to talk to hundreds or even thousands of other consumers around the
world, companies are no longer the sole source of brand communication. Additionally,
consumers are turning away from traditional media such as TV, radio, or magazines and
are increasingly using social media to search for information (Mangold and Faulds, 2009).
They regard social media as a more trustworthy source of information than the traditional
instruments of marketing communications used by companies (Foux, 2006). According to
a study conducted by Nielsen (2009a), 70 percent of internet users trust the evaluations of
consumers on social media platforms. Consequently, marketers can expect that brand
communication will cease to be generated solely by the company, but increasingly by
the consumers themselves through so-called user-generated social media communication.
Therefore, it is crucial to differentiate between firm-created and user-generated social
media communication and examine the impact of these two forms of social media
communication separately. This is highly important, as firm-created social media
communication is under the control of the company and the brand manager, whereas
user-generated social media communication is independent of the company’s control.
We follow calls for research to analyze the interplay between social media and
traditional marketing communication instruments in more depth (Libai et al., 2010).
Additionally, the analysis of their effects on brand metrics sets the focus on a marketing
outcome that has been neglected in research so far. Moreover, we aim at juxtaposing the
effects of firm-created and user-generated social media communication, as these two
instruments of social media differ significantly in terms of company control. This leads
to three research objectives which are highly relevant for companies, and brand
management in particular, in a changing communication environment (Dellarocas, 2003;
Godes et al., 2005; Hennig-Thurau et al., 2004; Kozinets et al., 2010):
(1) Investigation of the influence of brand-based social media communication on
metrics of brand equity compared to traditional instruments of marketing
communications.
(2) Determination of whether firm-created and user-generated social media
communication have different effects on the metrics of brand equity.
(3) Juxtaposition concerning the effects of social media and traditional media on
brand equity in different industries.

We organize the remainder of this article as follows. We begin by summarizing previous


research to help to put our contributions into perspective. We then describe our
MRR conceptual framework and develop our research hypotheses. In the following, we present
35,9 our data sources and the empirical model as well as the estimation. Next, we outline our
quantitative empirical analysis to verify our model. In order to identify potential
industry-specific differences, we differentiate between the tourism, telecommunications,
and pharmaceuticals industries. After summarizing and discussing the results, we
conclude with an outline of the managerial implications thus derived and suggest
772 avenues for further research.

2. Research background
The stated research questions require a deeper understanding regarding the
relationship between brand communication and brand equity as well as the impact of
brand-based communication vehicles on social media platforms. Therefore, this paper
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relates to two streams in the existing literature; namely, studies focusing on the impact of
consumer-to-consumer communication (i.e. research on (electronic) word of mouth)
on consumer behavior and research regarding the impact of marketing communications
on marketing outcomes.
Regarding the first literature stream, there is an established consensus that
communication between consumers is an influential source of information
transmission (Dellarocas, 2003). The emergence of social media platforms
facilitates consumer-to-consumer communication and accelerates communication
especially between unknown consumers (Duan et al., 2008). In this context, Godes
and Mayzlin (2004) demonstrate that social media platforms are a cost-effective and
simple alternative to accessing and gathering consumer-to-consumer communication.
Additionally, work on consumer-to-consumer conversations demonstrates that these
conversations drive important outcomes for companies. Chevalier and Mayzlin
(2006) find that an improvement in a book’s reviews leads to an increase in relative
sales. Liu (2006) confirms the impact of consumer-to-consumer communication on
company revenue, in particular box office revenue. Dellarocas et al. (2007) add online
movie ratings to their revenue-forecasting model and show that this significantly
improves the model’s predictive power. In this context, De Bruyn and Lilien (2008)
analyze the impact of consumer-to-consumer communication during the different
stages of a viral marketing recipients’ decision-making process.
The second related literature stream concerns the influence of marketing
communications on marketing outcomes. In a study that aims to develop a
measurement model of brand equity, Simon and Sullivan (1993) identify marketing
communications as one of the sources driving brand equity. Yoo et al. (2000) show in their
study that marketing communications exert a positive influence on perceived brand
quality as well as on brand loyalty, brand associations, and brand awareness. However,
previous research concerning the relationship of marketing communications and brand
equity only focus on traditional instruments of marketing communications (Aaker, 1991;
Keller and Lehmann, 2003; Yoo et al., 2000). The study of Trusov et al. (2009) is one of the
first that aims to achieve an understanding of the relationship between word of mouth and
traditional media. The authors analyze the relative influence of referrals compared to the
traditional instruments of marketing communications on the membership growth of a
social media platform. The results show that word of mouth referrals positively influence
membership growth and have a substantially longer carryover effect than traditional
marketing activities. In this context, Stephen and Galak (2009) investigate how social
media (e.g. online discussion forums and blogs) and traditional media (e.g. print media Brand
articles and TV coverage) affect sales, identified by the number of loans and the size of equity
loans allocated to new and existing members of a micro-financing website. They
demonstrate that both social and traditional media have strong effects on marketing creation
performance. However, the authors reveal that the effect of traditional media is stronger
than the effect of social media.
In sum, the literature review demonstrates that consumer-to-consumer 773
communication affects marketing outcomes. Nevertheless, hardly any study
compares the effects of consumer-to-consumer communication with those of
traditional marketing communication. Research still needs to compare the relative sizes
of consumer-to-consumer communication – or, more specifically, user-generated social
media communication – and traditional media communication on key marketing
outcomes (Stephen and Galak, 2009). Therefore, it is not surprising that there is a growing
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interest in research that investigates the differentiated impact of social media and
traditional media on marketing outcomes (Libai et al., 2010). However, only two studies,
namely Stephen and Galak (2009) and Trusov et al. (2009), deal with this research topic so
far. But these studies are not situated in the branding context. They use social network
membership growth as well as number and size of loans, respectively, as dependent
variables. Thus, the impact of social versus traditional media on target variables of brand
management remains unclear. Our study builds on this research gap by investigating
the individual impacts of social media and traditional media on brand equity. Moreover,
in order to gain a deeper insight into the effect of social media communications,
we differentiate between firm-created and user-generated social media communication –
a topic of growing importance (Godes and Mayzlin, 2009). Additionally and in contrast to
previous research, we compare the effects between three industries which differ regarding
their social media engagement and thereby gain valuable insights into existing industry
differences. To sum up, this paper follows recent calls for research regarding a more
comprehensive and multi-faceted analysis on consumer-to-consumer communication
(Libai et al., 2010) and research aiming at a broader understanding of the roles and
mechanisms of traditional and social media communication (Stephen and Galak, 2009).

3. Conceptual framework and hypotheses development


We build on Keller and Lehmann’s (2003) brand value chain as a conceptual framework in
order to develop our model. The brand value chain takes account of different levels of
effect caused by marketing mix efforts. However, the traditional brand value chain only
focuses on company-controlled marketing communication (Aaker, 1991; Keller and
Lehmann, 2003). It therefore does not consider the impact of the worldwide exchange of
consumer information on social media platforms. A recognition of this gap has
consequences for the analysis of the brand value chain, which we therefore modified to
accommodate both company and consumer communication activities. The basic
structure of this modified brand value chain consists of four levels: first, the sender of
brand-based communication content (no longer solely the company as communicator via
traditional and social media, but now also the consumer as content creator, e.g. brand
weblogs and brand communities on online social networks); second, the consumers’
mindset consisting of brand awareness and brand image; third, consumer behavior as
reflected by word of mouth or purchase intention; fourth, company financial performance
in terms of turnover and market share, for example. Level two and three constitute the
MRR consumer-based brand equity which is also termed brand strength (Keller, 2008). The
35,9 focus of the present study is on the investigation of the relative impacts of
company-controlled and user-generated brand communication on consumer-based brand
equity and therefore relates to the first three levels of the brand value chain (Figure 1).
The input factors of the modified brand value chain are constituted by the companies’
marketing communications, comprising traditional media as well as firm-created social
774 media, and the communication between consumers, i.e. user-generated social media
communication. Thus, the modified brand value chain differentiates between firm-created
and user-generated social media communication in order to take account of the fact that
companies as well as consumers are senders of brand-based information. Based on the
modified brand value chain, our study divides communication into the traditional
instruments of brand communication, represented by advertising (e.g. on TV or in print
media), firm-created, and user-generated social media communication. We assume that
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the different instruments of marketing communications as well as the information sender


have a different impact on the consumer mindset (Hirschman and Holbrook, 1982; Zajonc
and Markus, 1982). According to Keller (1993), the consumer mindset is divided in two
dimensions, namely brand awareness and brand image. Brand awareness signifies the
presence of a brand in a consumer’s memory and therefore indicates how well a consumer
will recall or recognize that brand (Rossiter and Percy, 1987). Brand image signifies the
consumer’s associations linked to a brand (Keller, 1993). We further differentiate brand
image into functional and hedonic brand image, following the differentiation made by
Park and Srinivasan (1994) between brand associations related to a product’s attributes
and brand associations unrelated to its specific attributes. The overall brand evaluation is
reflected by brand attitude. Since the consumer mindset influences actual consumer
behavior as a result of an unobservable decision-making process, we integrated a brand’s
purchase intention in our model as a behavioral outcome variable. Thus, consumer-based
brand equity is the result of both consumer reactions to a company’s brand-based
activities and the consumer response to the brand-based communication of other
consumers on social media platforms compared to the consumer reactions that an
equivalent non-branded product receives. Reaction differences can be ascribed to the
consumers’ mindset (Keller, 1993). Figure 1 shows our conceptual framework.

Communication Source Consumer-Based Brand Equity

Traditional Instruments Consumer Mindset Consumer Behavior


of Marketing
Communication

Advertising H1a Brand Awareness

H1c H1b
H4a
Social Media
Communication
H2a
Functional H4b Brand Attitude H5 Purchase Intention
H2b Brand Image
Firm-Created
H2c H3b
H4c
H3a

Figure 1. User-Generated H3c Hedonic


Brand Image
Conceptual framework
A theoretical foundation of the relationship between communication and Brand
consumer-based brand equity is offered by Schema Theory (Eysenck, 1984) illustrating equity
that consumers compare communication stimuli with their stored knowledge of
comparable communication activities. The degree of fit influences subsequent processing creation
of the stimulation as well as the attitude formation of the recipient (Goodstein, 1993).
Communication stimuli therefore trigger a positive effect in the consumer as recipient, so
that his or her perception of the communication positively influences his or her awareness 775
and image of a brand. Thus, brand communication is positively associated with brand
equity as long as the communication leads to a favorable consumer reaction to the product
in question, compared to the equivalent non-branded product (Yoo et al., 2000). In sum,
brand-based communication realizes the transmission of brand knowledge in terms of
brand awareness and brand image regardless of the communication sender. Social and
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traditional media communications therefore both play an important part in improving the
brand equity by increasing the probability that a brand will be incorporated in the
consumer’s consideration set, simplifying the consumer’s brand choice and turning that
choice into a habit (Yoo et al., 2000).
As marketers always aim at presenting their brand in a positive light, communication
through traditional media and firm-created social media communication – both fully
controlled by the marketer – will always transport positive brand-based communication
content. Thus, it is assumed that a positive evaluation of the traditional instruments of
marketing communications and firm-created communication will positively influence
brand awareness, functional, and hedonic brand image:
H1. A positive evaluation of brand-based traditional media communication
positively influences (H1a) brand awareness (H1b) functional brand image,
and (H1c) hedonic brand image.

H2. A positive evaluation of brand-based firm-created social media


communication positively influences (H2a) brand awareness (H2b)
functional brand image, and (H2c) hedonic brand image.
Regarding the effect of user-generated social media communication on awareness,
functional, and hedonic brand image, it has to be acknowledged that user-generated
social media communication is not generally amenable to marketing intervention, nor to
company control. Therefore, user-generated social media communication cannot be
expected to be unequivocally positive, but can be either positive or negative. Both forms
of positive and negative content convey information about a brand that can be
particularly useful for consumers in terms of purchase decisions, for example, and thus
increase the brand’s awareness. Hence, positive as well as negative brand-related
user-generated content on social media platforms can lead to a high level of satisfaction
with this form of brand-based communication and therefore are expected to increase the
awareness of a brand – regardless of whether the content reflects the brand positively or
negatively. We hypothesize:
H3a. A positive evaluation of brand-based user-generated social media
communication positively influences brand awareness.
Accordingly, the effect of user-generated communication on functional and hedonic
benefits can be both positive and negative. In the case of functional benefit, the impact
MRR of user-generated communication relates to content dealing mainly with quality aspects
35,9 of the brand that can be judged positively or negatively by users, thus influencing
functional brand image either favorably or unfavorably. The same reasoning applies to
the impact on a brand’s hedonic benefit. The effect of user-generated communication can
again be expected to be either positive or negative depending on the written content, as
users can comment either positively or negatively on a brand’s attractiveness and
776 desirability on social media platforms. To sum up, it is reasonable to expect a positive as
well as a negative effect of user-generated social media communication on functional
and hedonic brand image. Because the possible explanations are ambiguous and permit
two equally plausible lines of reasoning, we submit two competing sets of hypotheses for
empirical exploration. We hypothesize the following alternative hypotheses:
H3b1; c1. A positive evaluation of brand-based user-generated social media
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communication positively influences (H3b1) functional brand image and


(H3c1) hedonic brand image.

H3b2; c2. A positive evaluation of brand-based user-generated social media


communication negatively influences (H3b2) functional brand image and
(H3c2) hedonic brand image.
The overall evaluation of the brand is represented by brand attitude. According to the
theory of reasoned action (Fishbein and Ajzen, 1975), attitude constitutes
a multiplicative combination of brand-based associations of attributes and benefits
assuming that brand attitude is influenced by brand awareness and brand image.
Regarding the effect of brand awareness on brand attitude, the ambiguity of the effect of
user-generated social media communication on brand awareness has to be taken into
account. Since positive and negative user-generated social media communication both
increase brand awareness, we assume two possible indirect effects on brand attitude:
consumers’ brand awareness which is increased due to negative user-generated content
should have a negative indirect effect through brand awareness on brand attitude and
that due to positive user-generated content should have a positive indirect effect
on brand attitude. Despite this ambiguous effect of user-generated social media
communication on brand awareness, the overall effect of brand awareness on brand
attitude can be assumed to be positive. This reasoning is based on the assumption that
the impact originating from traditional media and firm-generated social media
communication on brand awareness can be expected to be unequivocally positive.
Taking into account the results of previous research demonstrating that word of mouth,
i.e. user-generated communication, and communication originating from the company
have a significant effect on brand awareness (Godes and Mayzlin, 2009; Jansen et al.,
2009; Yoo et al., 2000), we assume this overall positive effect on brand attitude when
weighting the impact of the three forms identically. However, the strength of this
relationship should be influenced by the valence (positive or negative) of user-generated
social media communication. These considerations result in the following hypotheses:
H4. (H4a) Brand awareness (H4b) functional brand image, and (H4c) hedonic
brand image positively influence brand attitude.
We further expect the path via brand attitude to have a strong influence on
purchase intention, as brand attitude is considered to be a good indicator for behavioral
intention (Wang, 2009). The behavioral intention to purchase is a psychological Brand
variable, which is identified as an intervening variable between attitude and actual equity
behavior (Miniard et al., 1983). According to the attitude-behavior hypothesis, attitudes
have a positive effect on purchase intention (Eagly and Chaiken, 1993). Thus, the creation
following hypothesis is put forward:
H5. Brand attitude positively influences brand purchase intention.
777
4. Methodology
Data collection procedure
Data collection was effectuated through a standardized online-survey. A total of
393 participants fully completed the questionnaires. Three different industries were
selected in order to reflect reality more precisely. The industry selection was based on
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considerations regarding relevance and variance criteria. We integrated industries that


differed in their social media engagement indicated by their estimated expenses on
social media communications. The telecommunications industry shows by far the
highest expenses on social media, while the tourism as well as the pharmaceuticals
industries show a lower level of expenditures on social media communications.
However, the tourism industry demonstrates a far stronger growth compared to the
pharmaceuticals industry (Nielsen, 2009b).
The participants were evenly split between the three industries – tourism,
telecommunications, and pharmaceuticals – randomly. For each industry, the
participants indicated all the brands, from a selection of the 20 best-selling brands in
German-speaking countries that they had recognized lately on social media platforms –
regardless of whether the brand was presented positively or negatively. This
procedure is based on the assumption that consumers of all ages have been exposed to
each of the best-selling brands via traditional media, as these brands invest heavily in
traditional media marketing. This assumption, however, does not hold for social media
communication for the two following reasons:
(1) At present not all age groups are represented on social media platforms.
(2) Social media platforms are visited very selectively by users, as every platform
has its own focus.

Therefore, we needed to ensure that the participants had actually perceived a specific
brand on social media platforms in order to be eligible to participate in the survey. From
each participant’s selection of brands, one brand was randomly assigned to that
participant. By limiting the choice of brands to those perceived on social media
platforms as well as randomizing the actual brand that the participants evaluated in the
survey, we avoided the possible bias that participants might chose a brand on the basis
of a personal positive evaluation. Table I gives an overview of the sample demographics.

Measurement procedure
We exclusively used reflective measurements, where changes in a construct’s
measures indicate changes in the latent construct (Edwards and Bagozzi, 2000).
We drew on established scales used in the literature and adapted them to our research
context. Measure reliability and validity of the reflective measurements were assessed
using Cronbach’s a and confirmatory factor analysis (CFA). All constructs show a high
MRR
Sample demographics (n ¼ 393) %
35,9
Gender
Male 46.56
Female 53.44
Education
778 PhD 9.41
University degree 34.10
High school diploma 21.88
Secondary school leaving certificate 20.10
Elementary school certificate 3.05
No indication 11.45
Age
, 18 1.02
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18-22 5.09
23-34 25.19
35-54 55.22
. 54 13.49
Job
Apprentice 9.67
Worker 10.69
Employee 41.73
Executive employee 10.69
Table I. Self-employed 10.43
Sample demographics No indication 16.79

Cronbach’s a, ranging from 0.88 to 0.98. In using CFA, we assessed the composite
reliability and the average variance extracted (AVE) of all the constructs. All constructs
show a value higher than 0.60 for composite reliability, which is recommended as
the threshold value in the literature (Bagozzi and Yi, 1988). The analysis shows values
greater than 0.65 for AVE exceeding the acceptable value of 0.50 (Fornell and Larcker,
1981). Our scale properties and the corresponding reliability and validity values are
provided in Table AI. Moreover, we tested for discriminant validity on the basis of the
criteria that Fornell and Larcker (1981) suggest. The results show that discriminant
validity is given (Table AII).
We included all independent and dependent latent variables in one multifactorial
CFA model. This model shows a satisfactory fit to the data (x 2/df ¼ 2.73; root mean
square error of approximation (RMSEA) ¼ 0.07; standardized root mean square
residual (SRMR) ¼ 0.03; comparative fit index (CFI) ¼ 0.97; Tucker-Lewis Index
(TLI) ¼ 0.96). We used structural equation modelling (AMOS 17.0) to test the
hypotheses. The overall model leads to a good fit (x 2/df ¼ 3.12; RMSEA ¼ 0.07;
SRMR ¼ 0.06; CFI ¼ 0.96; TLI ¼ 0.95).

5. Results and implications


Main effects
The standardized structural coefficients are displayed in Table II. Traditional media
exerts a significant positive influence on brand awareness and on the two dimensions
of brand image. Therefore, H1a-H1c are supported. Firm-created social media
communication also shows a positive influence on brand awareness and on functional
p Brand
Standardized structural Acceptance ( )
Hypotheses coefficients or rejection ( –) of equity
Traditional media ! brand awareness 0.42 * * *
p creation
p
Traditional media ! functional brand image 0.25 * * * p
Traditional media ! hedonic brand image 0.26 * * * p
Firm-created social media ! brand awareness 0.27 * 779
Firm-created social media ! functional brand p
image 0.45 * * *
Firm-created social media ! hedonic brand
image 0.09 –
User-generated social media ! brand awareness 0.00 –
User-generated social media ! functional brand
image 0.14 –
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User-generated social media ! hedonic brand p


image 0.42 * * * p
Brand awareness ! brand attitude 0.14 * * * p
Functional brand image ! brand attitude 0.67 * * * p
Hedonic brand image ! brand attitude 0.26 * * * p
Brand attitude ! purchase intention 0.87 * * * Table II.
Standardized structural
Notes: *t $ 1.282, p # 0.10; * *t $ 1.645, p # 0.05; * * *t $ 2.326, p # 0.01 coefficients

brand image, which leads to the acceptance of H2a and H2b. However, no significant
effect is detected for hedonic brand image, rejecting H2c. Regarding user-generated
social media communication, a significant impact is found for hedonic brand image,
while a positive relationship with functional brand image and brand awareness is not
confirmed. Therefore, H3c1 is supported, while H3a, H3b1, H3b2 and H3c2 are rejected.
Consistent with H4a-H4c, brand awareness, functional, and hedonic brand image
positively impact brand attitude. Finally, the positive relationship between brand
attitude and purchase intention is confirmed leading to the acceptance of H5.
Further insights regarding the effect of traditional instruments of marketing
communications and social media communications on brand attitude as well as on
purchase intention are drawn from an investigation of the indirect effects (Homburg
and Jensen, 2007; Preacher and Kelley, 2011). Firm-created social media
communication demonstrates the greatest indirect effect size (brand attitude: 0.36;
purchase intention: 0.32) compared to user-generated social media communication
(brand attitude: 0.20; purchase intention: 0.18) and traditional media (brand attitude:
0.30; purchase intention: 0.26).

Results of the industry comparison


We also tested for possible industry differences using multigroup analysis. To test for
significant differences between the industries, we employed the x 2-difference test.
A simultaneous analysis of all constructs within a single structural equation model
demands a ratio between the number of observations and the number of parameters (N:t)
of 5:1 (Baumgartner and Homburg, 1996; Bentler and Chou, 1987; Homburg and Jensen,
2007). This ratio is achieved for our data. Referring to the cross-industry research of
Banerjee et al. (2003), we also tested for invariance between the three industries.
Regarding the assessment of invariance, we based our analysis on the proposed
MRR procedure recommended by Steenkamp and Baumgartner (1998). Thus, we estimated
35,9 the configural and metric invariance model. For this purpose, we used CFA (Steenkamp
and Baumgartner, 1998). The results of all configural invariance models show a good fit.
Additionally, all factor loadings are highly significant, and all (within-group
standardized) factor loadings exceed the 0.70 level as Nunally (1978) suggests.
Configural invariance is supported by the fact that the factor correlations are assessed as
780 significantly below unity ( p , 0.001), confirming discriminant validity between the
constructs (Steenkamp and Baumgartner, 1998). In order to test metric invariance,
the matrix of factor loadings was constrained. The comparisons of all models show
that equality of the factor loadings is confirmed. Only the x 2/df-values decrease, but
insubstantially, and the models still show a very good fit. These results strongly support
the requirement that across the three industries invariance of the measures is achieved.
As metric invariance is confirmed, the structural relations between the constructs and
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the hypotheses are validly investigated (Steenkamp and Baumgartner, 1998). The
results of the unconstrained and the constrained models are shown in Table III.
The x 2-difference test shows that significant differences between the three
industries are detected (Table IV). Regarding the comparison between the tourism and
the telecommunications industries, the unconstrained model reveals a x 2-value of
1,219.6. Firm-created social media communication exerts a greater influence on
functional brand image for telecommunication brands compared to tourism brands,
while user-generated social media communication has a significantly stronger
influence on both brand awareness and functional brand image for tourism brands.
For the comparison of the tourism and the pharmaceuticals industries, a x 2-value of
1,228.7 is determined. The impact of firm-created social media communication on
functional brand image is significantly stronger for the pharmaceutical industry. The
differences between the two industries become even clearer when considering the
differences regarding user-generated social media communication. For the tourism
industry, user-generated social media communication has a greater impact on brand
awareness as well as on both dimensions of brand image.
The comparison of the telecommunications and pharmaceuticals industries reveals
significant differences, too. The unconstrained model shows a x 2-value of 1,164.3.
User-generated social media communication has a significantly greater impact on
functional brand image for telecommunication brands compared to pharmaceutical
brands.

x2 df x 2-difference p RMSEA SRMR CFI TLI

Tourism – telecommunications
Model 1 1,219.63 566 21.73 0.24 0.07 0.06 0.93 0.92
Model 2 1,241.37 584 0.07 0.06 0.93 0.93
Tourism – pharmaceuticals
Model 1 1,228.69 566 12.74 0.81 0.07 0.07 0.94 0.93
Model 2 1,241.43 584 0.07 0.07 0.94 0.93
Telecommunications – pharmaceuticals
Model 1 1,164.34 566 17.58 0.48 0.06 0.07 0.95 0.94
Model 2 1,181.92 584 0.06 0.07 0.95 0.94
Table III.
Invariance test Notes: Model 1 ¼ unconstrained; Model 2 ¼ constrained
Brand
Tourism – Tourism – Pharmaceuticals –
telecommunications pharmaceuticals telecommunications equity
x 2-difference x 2-difference x 2-difference creation
test with 1 df p test with 1 df p test with 1 df p

Traditional media – brand


awareness 2.05 – 1.10 – 0.37 – 781
Traditional media – functional
brand image 0.67 – 1.96 – 0.19 –
Traditional media – hedonic
brand image 0.16 – 1.19 – 0.38 –
Firm-created social media –
brand awareness 0.66 – 1.94 – 0.54 –
Firm-created social media –
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functional brand image 7.70 ,0.01 12.32 ,0.01 0.79 –


Firm-created social media –
hedonic brand image 1.00 – 1.74 – 0.19 –
User-generated social media –
brand awareness 4.52 ,0.05 8.96 ,0.01 1.26 –
User-generated social media –
functional brand image 11.47 ,0.01 21.00 ,0.01 3.13 , 0.10
User-generated social media –
hedonic brand image 2.04 – 10.13 ,0.01 1.57 –
Brand awareness – brand
attitude 2.28 – 2.50 – 0.06 –
Functional brand image –
brand attitude 1.15 – 3.75 ,0.10 10.66 , 0.01
Hedonic brand image – brand
attitude 5.83 ,0.05 0.25 – 4.94 , 0.05 Table IV.
Brand attitude – purchase x 2-difference test
intention 3.48 ,0.05 0.24 – 2.68 – between industries

6. Discussion
The advent of social media has introduced new channels of brand communication,
evidenced currently by the application of online brand engagement on social media
platforms: Starbucks’ asking consumers for advice on improving their market offerings;
Coca-Cola’s and Danone’s activity on social media platforms such as Facebook and Twitter.
Our study’s investigation of the increasing utilization of brand engagement through social
media communications offers valuable insights on the relative influence of this media on
brand equity compared to traditional instruments of marketing communications and leads
to important implications for companies’ brand communication activities.
The investigation of the effect sizes of traditional media and social media
communications on the different dimensions of brand equity demonstrates that
traditional media exert a stronger impact on brand awareness compared to social media
communications, whereas social media communications have a stronger positive influence
on brand image. Consequently, our comparative appraisal of these communications media
shows that traditional media such as TV and print campaigns are best suited to increasing
brand awareness, while corporate weblogs or brand profiles on social networking sites are
best suited to improving brand image. Thus, the joint implementation of these different
communication instruments offers opportunities for further increasing brand equity.
MRR A more detailed analysis of social media communications, achieved by
35,9 differentiating firm-created social media communication and user-generated social
media communication, reveals the importance of source credibility. The different effects
of firm-created compared to user-generated social media communication on the brand
image dimensions demonstrate that consumers consciously differentiate between the
sources of information. A deeper consideration of these results reveals that firm-created
782 social media communication specifically increases functional brand image, whereas
user-generated social media communication positively affects hedonic brand image.
The strong impact of user-generated social media communication on the hedonic
brand image becomes obvious by looking at the content of positive brand-based
statements on social media platforms. On these platforms, consumers often refer to the
overall attractiveness or desirability of the brand. As an example, one can point out the
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numerous consumers who confess their love of brands like Starbucks on its Facebook
profile (e.g. “Starbucks is awesome” or “I love Starbucks”). This phenomenon can
be explained in terms of the degree of consumer involvement. To begin with, it is
likely that consumers with high brand involvement are prepared to spend their free
time writing general comments on their preferred brands’ attractiveness or desirability
on social media platforms. This argument is supported by the empirical results of
studies investigating consumer motivations for articulating positive (electronic) word
of mouth. The results demonstrate that especially high levels of involvement with a
brand can stimulate positive word of mouth (Dichter, 1966). According to Dichter
(1966), product-, self-, other-, and message-involvement motivate consumers to
articulate positive word of mouth about a product. Hence, it can be expected that
consumers who are highly involved with a specific brand are more likely than others
to engage in positive user-generated communication. Additionally, as highly involved
consumers often simply wish to express positive feelings in general about a brand,
their comments are more likely to be formulated as abstract statements, which often do
not refer to specific product characteristics but rather to the brand’s desirability and
attractiveness – thus, to the brand’s hedonic image. Moreover, as the user-generated
communication is thought to be neutral and not independent of company influence for a
major part, other users accept these evaluations as credible and authentic, and
as “external validations” of the brand’s attractiveness or desirability. The fact that
the communication about a brand takes place on a public platform also increases
the visibility of the communication and confirms the attractiveness of a brand as it
becomes the object of discussion. Consumers’ comments on social media platforms
expressing their love for a brand can be seen as a public commitment and a
confirmation of the brand’s attractiveness and desirability.
Marketers should be strongly aware of the fact that they will not be able to use
firm-created social media communication to improve hedonic brand image. However,
they do have a certain ability to influence consumer-to-consumer communications
(Mangold and Faulds, 2009). For example, firm-created social media communication can
be used to stimulate user-generated content: marketers can set up a framework or create
a platform so that consumers can express their opinions, experiences, and information
about a brand. Godes and Mayzlin (2009) demonstrate that companies can create word of
mouth. They also prove that this so-called firm-created word of mouth eventually drives
sales. Companies can actively initiate consumer word of mouth about their brand by
leaving indelible impressions on consumers’ minds (Mangold and Faulds, 2009).
Examples of concrete instruments for stimulating online user participation are regular Brand
updates of company websites, forums integrated in the company website weblogs, and equity
brand profiles on online social networks that create unforgettable brand experiences.
Marketers may even use traditional media to stimulate user-generated social media creation
communication by connecting traditional media campaigns with social media activities.
This might be achieved by announcing a competition on Facebook via traditional media
or by connecting an offline campaign with an online sequel, such as the following 783
Starbucks example: the company launched a poster campaign in 2009 in major cities
which enticed the public at large to enter an internet contest, challenging them to be
the first to find the posters and tweet pictures (on the social media platform Twitter)
of the discovered posters. A joint implementation of traditional media and social media
communications is particularly effective and provides the optimal marketing mix
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to influence brand equity positively. Alternatively, companies may reinforce word


of mouth even more directly by inviting consumers to promote their brand. For this,
companies send product packages to consumers and ask them personally to talk
about the brand to their friends and acquaintances (Godes and Mayzlin, 2009). However,
companies have to be aware that “buying” word of mouth risks raising consumer
skepticism (Mayzlin, 2006). Thus, companies have to carefully develop successful
strategies for influencing consumer-to-consumer social media communication. Without
necessarily needing to influence consumer discussions, companies can also benefit from
simply monitoring user-generated social media communication and, in the process,
gather useful information about a brand’s advantages or disadvantages, which they can
then employ in future brand strategies (Mayzlin, 2006).
Finally, it has to be acknowledged that user-generated social media communication
does not impact consumers’ brand perception regarding reliability, credibility, and
trustworthiness. The insignificant effect of user-generated communication on functional
benefit is in line with empirical results in the field of (electronic) word of mouth.
Studies state that product dissatisfaction (Day et al., 1981) and the retailers’ failure to
provide appropriate complaint handling mechanisms, inadequate responses to customer
complaints, and inefficiency regarding product repair (Richins, 1983) are often the cause
of negative word of mouth. These reasons relate to the functional brand aspects,
implying that consumers who are dissatisfied with a functional aspect of a brand will
be sufficiently motivated to communicate their irritation on the internet to other
consumers. In this context, previous research identified consumers’ concern for other
consumers (Hennig-Thurau et al., 2004) or consumer vengeance (Sundaram et al., 1998)
as motivations for expressing oneself online. However, they also use social media
platforms to value positive experiences or praise functional brand aspects as a quote
from BMW’s Facebook profile shows: “We love the customer service ethic at BMW [. . .]
and the cars are great too”. The insignificant effect of user-generated social media on
functional benefit might be precisely due to the coexistence of positive and negative
comments. In this context, marketers have to be aware that firm-created social
media in contrast to user-generated social media exerts a strong impact on functional
brand image. Thus, companies can influence consumers here and should use this
communications channel as well as traditional media to manage brand awareness and
functional brand image.
Furthermore, our results demonstrate that brand awareness has the weakest impact on
brand attitude compared to functional and hedonic brand image. At first, this weak
MRR relationship seems to be in accordance with our reasoning regarding the hypothesized
35,9 effect of user-generated, firm-created, and traditional media communication on brand
awareness. Firm-created and traditional media communication transport only
positive information which leads to increased consumer brand awareness, which in turn
enhances brand attitude positively – a presumed marketing objective. However,
user-generated communication does not necessarily need to be positive in order to raise
784 awareness, implying that negative user-generated social media communication can
increase the brand awareness, but need not necessarily increase brand attitude positively.
Nevertheless, our results demonstrate that user-generated social media communication
does not have a significant impact on brand awareness in the overall data set which covers
the three industries. A further analysis of the separate industries however indicates that
for the tourism industry there is a significant impact on brand awareness, highlighting that
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the significance of the effect on brand awareness seems to be industry-specific. We


conclude that the effect of user-generated social media communication on brand awareness
seems rather complex – regarding its possible ambiguous effect on awareness and its
dependency on industry – and therefore further research should be carried out in this
context. Additionally, our results imply that it is not sufficient for marketing managers to
simply measure consumer awareness of their brand’s presence on social media platforms.
Marketing managers should rather discover the underlying causes eliciting this
awareness, as it is awareness that ultimately impacts brand attitude and the nature of this
relationship is equivocal, depending on the kind of information communicated – positive
or negative. Therefore, it seems crucial for a company to identify (1) the source of the
increased awareness (firm-created or user-generated communication) and (2) the valence of
the user-generated content on social media platforms leading to an increased awareness.
Discussing the industry comparison in more detail, our study reveals that there are
significant differences in the effect sizes. This indicates that decisions about the
implementation of social media should be driven by industry characteristics. The results
demonstrate that consumers of pharmaceutical brands rely more heavily on highly
qualified specialists and dismiss the opinions and evaluations of other consumers.
This explains the strong impact of firm-created social media communication and the
negligible importance of user-generated communication on social media platforms. In the
tourism industry, on the other hand, consumers highly appreciate consumer-to-consumer
communication and consult user-generated social media communication for information
when making brand decisions. Here, firm-created social media communication lacks
credibility in the eyes of the consumer. Finally, for the telecommunications industry, both
firm-created and user-generated social media communication strongly influence
functional and hedonic brand image, respectively, highlighting the importance of
implementing a comprehensive social media communications strategy in this industry.
To sum up, companies should recognize the need to engage in social media and to
carefully define a clear strategy for their engagement. Social media offer companies
numerous opportunities to listen to their consumers, to engage with them, and to even
influence their conversations. Companies providing social network platforms bring
like-minded consumers together and give them the opportunity to talk about
brand-based topics. Therefore, companies should view social media as an essential
component of their marketing communication mix, and integrate them in their
marketing communications in order to increase brand equity. The rising trend of
the consumer use of social media will increasingly impact brand equity in future.
The strategic implementation of social media offers marketers an added advantage in Brand
being relatively low in investment costs compared to traditional marketing equity
communication instruments such as TV. Companies are challenged to respond to
these changes and to successfully integrate social media communications in their creation
marketing mix in order to enhance their consumer-based brand equity. Moreover, they
should integrate the industry-specific findings of this paper into their brand’s social
media policy. 785
The following limitations of our study need to be acknowledged. Since our study uses
advertising as a proxy for the traditional instruments of marketing communications,
future researchers are encouraged to investigate other communication instruments,
such as sponsoring, and to analyze the interplay of these instruments with social media
communications. Moreover, a broader spectrum of industries should be investigated, as
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this would yield a clearer indication of the various mechanisms operating with brands of
different industries. Future research should also try to relate company social media
communications to company financial performance indicators, such as shareholder
value, to gain a deeper insight into the benefits of social media communications on
corporate financial success.

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About the authors


Manfred Bruhn is Full Professor of Marketing and Management at the University of Basel and
Honorary Professor at the Munich University of Technology.
Verena Schoenmuller is a Doctoral Student at the Department of Marketing and Management.
University of Basel, Basel, Switzerland. Verena Schoenmuller is the corresponding author and can
be contacted at: verena.schoenmueller@unibas.ch
Daniela B. Schäfer is a Doctoral Student at the Department of Marketing and Management.
University of Basel, Basel, Switzerland.

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Appendix Brand
equity
creation
Items Ca CR AVE Based on

Firm-created social media communication


I am satisfied with the company’s social media Magi (2003), Tsiros et al. 789
communications for [brand] (2004)
The level of the company’s social media 0.97 0.97 0.90
communications for [brand] meets my expectations
Compared with the very good social media
communications of other companies, this
company’s social media communication for [brand]
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performs well
User-generated social media communication
I am satisfied with the social media Magi (2003), Tsiros et al.
communications expressed by other users about (2004)
[brand]
The level of the social media communications 0.97 0.97 0.90
expressed by other users about [brand] meets my
expectations
Compared with the very good social media
communications of other users about other brands,
the social media communications of users about
[brand] performs well
Traditional media
I am satisfied with the traditional media campaigns Magi (2003), Tsiros et al.
of [brand], i.e. radio, TV, print advertisements (2004)
The level of the traditional media campaigns of 0.96 0.96 0.89
[brand], i.e. radio, TV, print advertisements) meets
my expectations
Compared with the very good traditional media
campaigns (i.e. radio, TV, print advertisements) of
other brands, the traditional media campaigns of
[brand] perform well
Brand awareness
I easily recognize [brand] Yoo et al. (2000)
Several characteristics of [brand] instantly come to 0.88 0.88 0.65
my mind
I easily memorize the symbol/logo of [brand]
I have a very clear picture of [brand]
Functional brand image
[Brand] is reliable Scott and English (1989),
[Brand] is credible 0.98 0.98 0.94 Verhoef et al. (2004)
I trust [brand]
Hedonic brand image
[Brand] is attractive Scott and English (1989),
[Brand] is desirable 0.95 0.95 0.83 Verhoef et al. (2004)
[Brand] is strong in character Table AI.
[Brand] is strong in personality Scale items for construct
(continued) measures
MRR
Items Ca CR AVE Based on
35,9
Brand attitude
I have a pleasant idea of brand [brand] Low and Lamb (2000),
Villarejo-Ramos and
Sánchez-Franco (2005)
790 [Brand] has a good reputation 0.97 0.97 0.91
I associate positive characteristics with [brand]
Purchase intention
It is possible that I will buy [brand] in the future Grewal et al. (1998)
I will seriously consider purchasing [brand] 0.98 0.98 0.93
It is highly likely that I will buy [brand]
Notes: Cronbach’s a – Ca; composite reliability – CR; average variance extracted – AVE;
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terminological explanation for questionnaire participants – social media communications means all
internet platforms which are suitable for exchanging information, opinions or experiences;
e.g. Facebook, MySpace, YouTube; both companies and users on social media platforms can promote
Table AI. the brand via these media

(1) Firm- (2) User- (5) (6)


created social generated (3) Functional Hedonic (7) (8)
media social media Traditional (4) Brand brand brand Brand Purchase
communication communication media awareness image image attitude intention

1 0.90
2 0.85 0.90
3 0.73 0.65 0.89
4 0.39 0.35 0.42 0.65
5 0.60 0.54 0.53 0.47 0.94
6 0.46 0.49 0.44 0.29 0.56 0.83
7 0.62 0.57 0.57 0.49 0.84 0.63 0.91
8 0.54 0.47 0.48 0.40 0.67 0.54 0.76 0.93
Table AII.
Test of discriminant Notes: The average variance extracted (AVE) values are marked in italics; the squared construct
validity correlations are beneath the diagonal
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