Brand Value Building Online Social Lending Startups

BRAND VALUE BUILDING IN ONLINE SOCIAL LENDING STARTUPS
Djamchid Assadi et Arvind Ashta
De Boeck Supérieur | « Journal of Innovation Economics & Management »
2012/1 n°9 | pages 139 à 161
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BRAND VALUE BUILDING
IN ONLINE SOCIAL LENDING
STARTUPS
Djamchid ASSADI
Burgundy School of Business, CEREN
Groupe ESC Dijon, Bourgogne, France
Djamchid.Assadi@escdijon.eu
Arvind ASHTA
Burgundy School of Business CEREN
Banque Populaire Chair in Microfinance, France
Arvind.ashta@escdijon.eu

Brands have resisted the emergence of the Internet which was supposed to
be a space of commodities selected by search engines. One basic reason is that
as low barriers to entry on the Internet, at least on the technical ground, led
to an extraordinary growth in the number of Websites to choose from, trans-
action costs increased as the average confused and frustrated Internet user
looked desperately for landmarks. Perplexed customers often turned back to
familiar brands for repeat business (Carpenter, 2000).
Internet startups have little chance of taking off without awareness of
and confidence in their brands: they need to attract not only customers, but
also investors. As a result and in accordance with the insights of Veblen
(1904, Ch. 6) on the importance of intangibles, notably brand equity in the
value of an enterprise, intangible assets turned to be even more important in
the virtual space of the Internet. Many Internet-branded startups have been
acquired at considerably high prices, not only because of their technological
novelties, but also because of their brands’ reputation.
In the information age, value is basically co-created through connectivity
and elaborate networking. Existing literature emphasizes that information-
based value is often co-created by firms who compete by enabling consumers
to interact with the firm and with each other, (Prahalad, Ramaswamy, 2004).
Although there is considerable literature on Internet brands as well as on
Web 2.0, the impact of this technology – that enable connectivity and net-
working - on the making of brand equity has almost been ignored. Yet, the
n° 9 – Journal of Innovation Economics 2012/1 139

Djamchid ASSADI and Arvind ASHTA
Web 2.0 technology has now significantly modified the purchasing behavior
with regards to brands: more than two-thirds (68%) of online Americans say
they visit blogs, communities or social networks (MarketTools, 2008). The
Web 2.0 technology is also used extensively by professionals of marketing:
two-thirds of marketers in the United States of America have used social
media in 2009 and half have used viral videos, making these two formats the
fastest-growing tactics in marketing (ANA, 2009). The United States is not
however the sole country whose buyers and sellers use the Web 2.0 tools.
Nearly one in every two Internet users in France searches the opinion of
other consumers on the Internet, compared to only one in four in 2005.
While the vast majority reads comments posted by other Internet users, 21%
have also written messages or participated in chats on the subject. 30% rec-
ommend sites providing information on products and 21% give their opin-
ions on products or services (Lehuédé, 2009).
Globally, while 70% of consumers trust equally peers’ opinions and
brands’ websites, 90% of them trust recommendations which are issued by

people familiar to them. This is significantly more important than the pro-
portions of consumers who trust editorial content (69%) and sponsorships
(64%) which are created by brands (Nielsen, Global Online Consumer Sur-
vey, 2009).
Today, the web 2.0 technologies seem to be everywhere, but in the liter-
ature on brand equity! This paper aims to address this gap by exploring the
use of the Web 2.0 technologies enabling consumers to communicate and
interact with each other (peer to peer, P2P) to build up the brand equity
within the sector of online lending website.
The reason for choosing this sector of study is multiple: First of all, despite
the high rate of 30% per annum of the microfinance sector over the last few
decades, there is a considerable gap between the existing funding of about $
5 billion and the needs which are estimated around $ 250 billion. To bridge
this gap, a new movement has emerged since 2005 within the industry to
shift financing away from donors to commercial investors and individual pri-
vate investors. The latter segment is being progressively targeted by web-
based online P2P lending. The second reason for which the sector of online
P2P lending is adopted for this research is that it is based on economic and
social interactions between peers which is what the technology of Web 2.0
tools are supposed to promote.
The field of online lending is relatively new and started in 2005. The typ-
ical supply chain for commercial online lending (examples: Zopa, Prosper,
Lending Club) is that of a retail lender sending money to a website operator
who then lends it to a borrower. This model doesn’t work for the microfi-
140 Journal of Innovation Economics 2012/1 – n° 9

Brand value building in online social lending startups
nance sector because the poor borrower in a poor country does not have a
computer. Therefore the supply chain online microcredit has another inter-
mediary, the Microfinance Institution in the poor country who takes the
money from the online operator (examples Kiva, Babyloan, Rang De) and
gives it to the borrower. Essentially, the website aggregator then funds a
Microfinance Institution.
The basic issues addressed in this paper are: (1) Reviewing the literature
on brand equity to identify the conventional elements which are supposed
to build up brand equity; (2) Studying the Web 2.0 tools to find out how
they can contribute to build up brand equity; (3) Analyzing the strategies of
Web 2.0 integration to build up brand equity in the sector of peer-to-peer
(P2P) lending which should, by virtue of its foundation, promote the use of
social media.
Our research inquiry is: what are the paradigms by which the social lend-
ing websites use the Web 2.0 technologies to construct their brands so that
individual lenders and investors readily lend their money to unfamiliar bor-

rowers? Do operators go from informing to dialogue to discussion? The find-
ings of this research can be of practical use to the business websites to
promote interactions between peers and, as shown in Figure 2, extend the
shift from one-way communication (inform) toward a two-way interaction
(dialogue) not only between websites and visitors, but also among visitors
(enable discussion), for building up their brand equities through employing
the P2P Web 2.0.
LITERATURE REVIEW OF CONVENTIONAL

STRATEGIES OF BRAND EQUITY BUILDING
Commodities represent a set of characteristics made available to consumers
and consumers derive utility from these characteristics (Lancaster, 1966a;
1966b). These characteristics need to be differentiated, especially in an
environment of monopolistic competition, because different consumers
have different preferences of the bundle of characteristics, and this differ-
ence needs to be communicated to consumers (Lancaster, 1975). This study
looks at the communication of this information.
Many scholars are of the mind-set that a commodity becomes a product
only with a brand, which is unanimously defined as name, term, sign, sym-
bol, design, or any particular combination of these elements to form a type
of identification and of peculiarity from competitors. However, Doyle
(2000) and Shimp (2007) believe that a brand remains a label without a set
of values to stand comparatively distinctive in the customers’ evaluations.

For consumers, (use) value arises from the satisfaction through consump-
tion. For producers, (exchange) value appears in terms of the money gener-
ated from the sale of their products. In both cases, the value derives from
satisfaction which is always personal, and consequently value is by nature
subjective.
Thus, any particular product takes on both a use and an exchange value,
and therefore, the concept of brand equity can be considered, analyzed and
measured both from the standpoint of the brand-owning organization which
aims to exchange for profit, and from the vantage point of the customer who
uses it to obtain psychological or material benefits. In accordance with the
research inquiry, the focus of this article is on the latter.
For an envisaged value provided by a branded product, consumers accept
to pay over and above a generic commodity. As long as the price is below
that value, consumers continue to purchase the branded good.
In valuing things, consumers attribute significances to them. The fea-
tured significances which are always subjective may be private or public.

The meanings are assigned to an object by the owner in the first case, and by
non-owners of the object (observers) in the second case (Richlins, 1994).
Some of the private meanings may be socially shared, but some of them are
unique to the consumer associated with his/her personal and even intimate
experiences. The public meaning are built and reinforced through socializa-
tion, participation and interchanges.
Two lines of reasoning have been put forward to explain how brands cre-
ate equity (value) for customers. In a first line of reasoning, Kotler (2003)
stresses on a seller’s promise of specific features and benefits. Taking this fur-
ther, de Chernatory and McDonald (2003) postulate that a brand is success-
ful when consumers perceive relevant unique values and benefits in it that
match their needs and wants.
In a second line of reasoning, related to the transactions cost literature,
Doyle (2000) believes that brands create equity (value) for customers by
simplifying and securing (reducing risk) their purchasing, choice and deci-
sion processes. Customers who often lack time and expertise to get
acquainted with and evaluate alternatives in order to choose are signifi-
cantly apprehensive in their purchasing process. The customer’s anxiety is
even more where: (1) the partners are distant in a virtual space; (2) the qual-
ity of service can be evaluated only after transaction; and (3) the wrong
decisions cause significant financial and social costs. The confidence that
consumers gain from a well-known brand is particularly useful when they do
not have enough information to make wise choices or when there are a
plethora of unknown brands (Schwartz, 2004). There are even instances

where double guarantees may be required to reassure the customer and co-
branding may be advantageous, such as “Intel inside” in computers (Ghosh,
John, 2009). Pertinently, brand architecture and organization design are
important in e-commerce (Strebinger, Treiblmaier, 2006).
We believe that these angles of analysis are complementary because
promised benefits materialize only if they can facilitate and accelerate with-
out fail the purchasing process by reducing perceived risk, simplifying the
analyses of alternatives, saving time and costs and, thus, building up equity
for customers (Erdmen, Swait, 2004). Accordingly, Keller (1993) indicates
the importance of knowledge, awareness and image, provided by brands to
enhance customer’s cognitive and affective attitudes within his/her purchas-
ing and decision process. In doing so, a brand can significantly procure cus-
tomer value.
Brand awareness is the basic dimension of brand equity because there is
no equity if the brand does not come to mind when consumers think about
purchasing a particular product. Aaker (1991) recognizes four levels of cog-

nitive knowledge of a brand: unawareness; recognition; recall and, top of the
mind. It is apparent that the marketing imperative is to move brands from a
state of unawareness, to recognition, on to recall, and ultimately to top-of-
mind stage.
Brand image, representing the mental associations between a brand and
various attributes, constitutes the second dimension of the consumer’s
knowledge. The best of these associations forms the customer preference.
The ranking of alternatives is determined by the customer’s expectations of
satisfaction. His/her preferences vary from time to time and as a result rank-
ing of alternative choices may undergo a reshuffling at any given moment.
The scales of values may also be altered by deletions or additions of new
brands.
In order to build up preference for a brand, marketing communication
engages in creating associations between famous cultural elements and the
brands’ features in the consumers’ minds (McCracken, 1986). Keller (1993)
suggests leveraging associations by forming connections with other brands
(alliance, ingredients, company, extensions), places (country of origin, chan-
nels), things (events, causes, third party endorsements) and people (employ-
ees, endorsers).
From the above conceptual analysis, we can hypothesize that the brands
can build brand customer brand value (equity) by facilitating, accelerating
and simplifying the customers free-anxiety purchasing process to obtain a
brand’s promise, as shown in Figure 1.

Figure 1 – Paradigms of communication of a brand online
Brand ability to enhance …
Cognitive customer Affective customer

value value
(knowledge) (emotion)
Customer Brand Value
Trust in brand’s Anxiety-free

promise purchasing process

THE IMPACT OF THE WEB 2.0 TOOLS
ON BRAND EQUITY
With the emergence of Web 2.0 technologies which enable users to jointly
create, share and manipulate content on the Internet, customers rely
increasingly on each other - and much less on brands-owners, who have long
been the only ones to disseminate information about their products - to form
their cognitive and affective attitudes within the purchasing and decision
process. Edelman (2010) believes that consumers now deal with brands in
essentially new ways, often through channels that are beyond manufactur-
ers’ control.
This new model of information seeking is taking place while the big
brands go through a crisis of legitimacy. In 2008, the proportion of consum-
ers claiming to buy a product because they trust the brand had fallen to 53%
from 65% in 1993. For an increasing number of customers, the price differ-
ential between the products of private and major brands is not based on a
clearly perceived advantage. 70% of the interviewed consider the prices of
leading brands as unfair (Lehuédé, 2009). 45% among Internet users and
57% among those who seek the opinions of consumers on the net are aware
of their increasing bargaining power toward brands (Lehuédé, 2009). Con-
sidering this state of affairs, a capital question is: can brands retrieve their
legitimacy online through enabling and encouraging peers to communicate
and interact?

The Web 2.0 media, all categories confounded, are massively used by
peers for sharing publicly insights and opinions on brands. They are consid-
ered as objective, satisfactory and trustworthy information by other custom-
ers. For half of consumers in France who have already sought the advice of
Internet users, the comments on the social networks constitute one of the
two main reliable sources of information - together with comparative press
articles, (Lehuédé, 2009). In the U.S., a survey on 1,200 consumers who
shop online at least four times per year, spending $500 or more annually, dis-
covered the behaviour of social researchers, a specific category of consumers
who always or most of the time seek out and read customer reviews prior to
making a purchase decision: 82% of social researchers (vs. 75% of all online
shoppers) found reading reviews better than researching a product in-store
with a knowledgeable sales associate; 76% of social researchers (vs. 69% of
online shoppers) were more likely to shop on a retailer’s website – vs. its
competitor site – if it offers social navigation; 75% of social researchers (vs.
64% of online shoppers) found it extremely or very helpful to narrow prod-

uct selection based on feedback from people like them (PowerReviews,
2009). These web2.0 tools can take many forms. Table 1 showcases a sum-
mary of the social media that customer and Internet users make use of most.
Our research inquiry is about the interaction impacts of the Web 2.0
tools on building of brand equity. Consequently, we need a pertinent typol-
ogy of the mentioned tools to study the potential of interaction between
peers on the P2P social lending websites.
A typology is suggested by distinguishing between social media’s func-
tions, OneUpWeb (2009): sharing (Flicker, Twitter, YouTube), network-
ing (FaceBook, LinkedIn), news (Digg, Reddit, Technorati), bookmarking
(Delicious, BlinkList), and review (Buzzillions, Epinions, Omgili, View-
points, Yelp). This typology is insightful, but it excludes many Web 2.0 tools
which are covered by the McKinsey’s lists. McKinsey & Company list twelve
tools in 2009: Video sharing, blogs, RSS, social networking, wikis, podcasts,
rating, tagging, P2P, micro-blogging, mash-ups, and prediction markets
(Bughin et al., 2009).
We believe that all these types of social media can be categorized in two
major groups for the purpose on the research on hands: Social sharing media
and networking/interaction media.
1. Social sharing media through which peers tend mainly to share sound,
image and text-based files: Flicker, YouTube, Delicious, ePinions, mush-up,
podcasts, rating, RSS, tagging, wikis, blog and micro-blog.
2. Networking media which provide the potential of correspondence, social-
izing and interaction between peers: Blog, FaceBook, LinkedIn, micro-blog.

Table 1 – The rankings of social media on the Internet
Source Criteria Place Date Ranking of social media
Marshall (2009 quot- Visits (%) USA September Facebook (59%), MySpace
ing Experian Hitwise) 2009 (30%), Tagged, Twitter (2%),
myYearbook (1%)
Marketing charts, Visits (%) USA August Facebook (40%), MySpace
quoting Hitwise 2009 (24%), YouTube (13%),
Tagged (2%), Twitter (1.4%) ,
myYearbook (1%)
Social media Unique visitors USA January Facebook (1.2 billions), MySpace
optimization, 2009, 2009 (54 million), Twitter (53 million),
quoting compete.com Flixer (42 million), LinkedIn
Marshall b, 2009 Visits (%) UK May 2009 Facebook (65%), Bebo (23%),
MySpace (18%), Twitter (7%),
Lindenberg, 2009 Visits (million) France Facebook (300), MySpace (260),
Habbo (117), Friendster (90),
Hi5 (80). Orkut, Twitter, LinkedIn,
Bebo, Flickr, Skyblog, Viadeo

Experian Hitwise, quoted Time spent: USA September MySpace (26), Facebook (23),
in Marshall, 2009 minutes/month 2009 Twitter (16)
The Nielsen online, Time spent: USA June 2009 Facebook (14000),
2009 All users in mil- MySpace (5000), Blogger (600),
lion minutes/ Tagged (328), Twitter (300),
month MyYearbool (270)
The Nielsen online, Video streams USA June 2009 MySpace (121), Facebook (42),
2009 (million/month) Stickam (20), FunniestStuff (10),
Funny or Die (6)
ComScore, 2009 Marketers using Global June 2009 MySpace, Facebook, (80%,
social media (%) jointly), Tagged, MySpace, Hi5,
Bebo, Classmates
ANA et al., 2009 Advertising on USA June 2009 Facebook (74%), YouTube
social media (%) (65%), Twitter (63%), and
Linkedln (60%)
Blogs and micro-blogs can be considered as both sharing and networking

media depending on the way they are used. They are social sharing media,
if the different individuals can add and post sound, image and text. They are
networking media, if the instantaneous feedbacks and interactions are
allowed.
RESEARCH DESIGN AND METHODOLOGY

If, as studies show, peers-to-peer interactions have impact on attitudes and
behaviors toward brands, a crucial question will be: (how) do the P2P-based
websites brands provide online social media so that their visitors, potential

lenders and borrowers, mutually communicate and exchange views and

reviews?
Research methodology of case studies

As our inquiry arises from an emerging field, we believe the method of case
studies which explores the complex aspects of a social issue (Patton, 1990) is
more pertinent than quantitative techniques which verify hypothesis rela-
tive to more familiar issues. The method of case studies provides comprehen-
sion (Stake, 1995) for “how and why” rather than “what” or “how should”
questions (Yin, 1994; Carson et al., 2001), brings in understanding of foun-
dations and relationships (Yen, 1994), offers insights and finally contributes
to theory-building (Easton, 1982; Yin, 1994). Accordingly, this method of
research resides within the interpretive paradigms rather than the positivist
paradigm (Perry et al., 1999).

Sampling of the P2P social lending websites
To answer to “how” or “why” questions, the selection of exemplary and typ-
ical cases is crucial. As a general rule, selected cases should allow research of
the peculiarities of specific social phenomena and/or test the appropriate-
ness of theories. Yin (1994) lists one or more of the three justifications for
selecting a case: critical, extreme or unusual cases. The underlying principle
for cases selection is replication logic and not sampling logic (Yin, 1994);
that is, relevance rather than representativeness (Stake, 1994). In other
words, the selected cases should represent “multiple experiments” and not
“multiple respondents in a survey”. Eisenhardt (1989) also supports the repli-
cation method of case selection and highlight the inappropriateness of ran-
dom sampling. For Patton (1990) “maximum variation” and “purposeful
sampling” rather than “random sampling” should be preferred for selecting
cases. The meaningfulness and insights generated from qualitative inquiry
have more to do with the information-richness of the cases selected than with
sample size.
Our sample cases are all from the online lending sector. They represent
the variety which characterize the sector. They are domestic or international
operators. Some are for-profit and others are NGOs. Some are in developed
countries, others are in developing countries. Some create direct P2P links,
others require an intermediary.
What about the number of cases? Generally, more than one case is most
common in case-based research. It is generally recommended to add to the
number of cases until “the theoretical saturation” (Eisenhard, 1989) or “the

point of redundancy” are reached. More specific numbers for selecting cases
are also suggested: A number between four and ten, (Eisenhardt, 1989), but
also from four to six as a reasonable minimum to twelve (Hedges, 1985) are
suggested for appropriate size of a sample of cases. In brief, the widest accepted
range seems to fall between four, under which it is difficult to generate theory
and to convince (Eisenhardt, 1989), and 12 or 15, more than which, the qual-
itative research becomes unwieldy (Miles, Huberman, 1994). We have
focused on ten online social lending websites which are claiming to be peer to
peer or social lending platforms (Table 2).
Table 2 – Sample’s members: P2P and social micro-lending websites

and launch dates
Date of creation Denmark France India U.K. U.S.A.
2005 Zopa Kiva


2006 MicroPlace
2007 MyC4 Virgin Money
2008 BabyLoan, Rangde, DhanaX

Veecus.com
2009 Wokai
At the time of research, this includes one commercial lending website

(Zopa) to see if it is different from the others, one Social lending website
(Virgin Money), one SME lending website (MyC4), one is a security broker
(MicroPlace) and the others are all within the microfinance lending model,
aiming to lend to poor people. The commercial online lending model typi-
fied by Zopa is the only intermediary between lenders and borrowers. The
social lending website, typified by Virgin Money, USA, provides procedural
and administrative formalities for lenders and borrowers who already know
each other (relatives, friends). All the others require an intermediary insti-
tution in the borrower country to channel the funds to the ultimate borrow-
ers. Some of these are for-profit (Babyloan, Veecus, DhanaX), others are
not-for-profits (Kiva, RangDe, Wokai).
Sampling of the Web 2.0 tools

To verify the research hypotheses (see below), we explore the websites of our
sample to find out not only if they integrate and exploit the Web 2.0 tool,
but also if they encourage interaction between lending and borrowing peers;
and finally if they do so, how? What are the paradigms? In fact, online

brands might have adopted the Web 2.0 technologies without using them
for encouraging P2P communications and interactions. For this research, we
distinguish Facebook, Twitter and LinkedIn in the category of social net-
working media from MySpace and YouTube in that of social sharing media,
we remain vigilant if any social media under our investigation fills functions
out of its affected category.
Hypothesis
Based on our literature review, our research examines the following hypo-
thesis (see Figure 2 for charity):
H1. The P2P social lending websites employ conventional methods of brand
equity building whether through the Web 2.0 tools or the previous generation of
online technologies.
H1A. They diffuse one or two-way communication-from their websites to vis-
itors- to build up awareness toward their brands, without enabling communication

between peers.
H1B. While H1A aims cognitive attitude, H1B consider affective attitude:
The P2P social lending websites leverage popular elements to build up visitors’
preference toward their brands.
H2. The P2P social lending websites employ the Web 2.0 tools to enable visit-
ing lending and borrowing peers to interact and build up brand equity.
RESULTS AND DISCUSSION

Data from case studies are generally qualitative, but may also be quantita-
tive. The tactics used in analysis include matrices of categories, flow charts,
tabulating frequency of events, and, in particular in our research, cross-case
search for patterns. It is customary for case analysis to precede cross-case
analysis (Miles, Huberman, 1994; Patton, 1990). We have considered this
method for data analysis.
To verify the hypothesis H1A, “They diffuse one or two-way communi-
cation-from their websites to visitors- to build up awareness toward their
brands, without enabling communication between peers”, we have checked
the following informative rubrics (categories) on the websites of our sample:
General presentation, Blog and Buzz. Buzz in this section is considered for its
potential of propagating (informing) and not that of interaction (dialogue/
discussion).

Figure 2 – Paradigms of communication of a brand online
150
B. Dialogue C. Forum/discussion
A. Inform
Two-way, one-to-one Two-way, many-to many
One-way, one-to-one
Firm
Firm Firm
Visitor Visitor
Visitor Visitor Visitor Visitor
Visitor
Visitor Visitor
Journal of Innovation Economics 2012/1 – n° 9

The result of the observation (see Table 3) show that all our startups pro-
ceed with conventional strategies to build up the cognitive attitude of targets
toward their brands. Two of our sample members use particularly the public
social media to spread their fame and words: Rang De uses Facebook, Flickr,
LinkedIn, Orkut, Twitter and Vimeo, to buzz its fame and news. Veecus pro-
motes on its home page interaction and buzz through Facebook and Twitter.
Based on our method of observation, the hypothesis H1A, The P2P social
lending websites employ conventional methods, diffusing one-way communication-
from their websites to visitors- to build up awareness toward their brands, is veri-
fied, even if our sample members showcase different performances with
regards to this issue.
The hypothesis H1B is: While H1A aims cognitive attitude, H1B consider
affective attitude: the P2P social lending websites leverage popular elements to build
up visitors’ preference toward their brands. To investigate this hypothesis, we
have considered the three of four types of associations as suggested by Keller
(2003): “Other brands”, “Places”, and “People”. The element “Things” is not

observed in any of the sample cases (the results are tabulated in Table 4).
Kiva has as many as forty corporate partners. Babyloan showcases six
founding partners and also has other types of partners. Rang De has also dif-
ferent types of partners: Strategic, Technology, Corporate and Campaign.
The latter are partners which help Rang De in its fund raising campaigns
and this may be related to their own cause marketing (Smith and Alcorn,
1991) since Rang De has a social NGO connotation associated with micro-
finance and upliftment of the poor. Although cause marketing may not raise
the brand value of either the for-profit firm or the NGO in the eyes of the
consumer (Wymer and Samu, 2009), especially if it is excessively used
(Gourville and Rangan, 2004), firms may be interested in it for building
value with other stakeholders (Gourville and Rangan, 2004) and there is
evidence that low brand equity firms can raise their brand equity by associ-
ating themselves with well know causes (Nowak, Newton et al., 2004).
Wokai separates its supporters into 11 branding corporations and five foun-
dations and major donors. Veccus has also business and NGO partners.
While almost all our social lending websites have shown their partners,
one might wonder if they do so for building up a favourable affective attitude
toward their brands on the marketing, considering that many of those part-
ners seem to be unknown and leave customers indifferent affectively. The
contrary could be true: those partners pay the social lending websites, Kiva
for example, to build up their own brand equity, in line with Nowak et al.
(2004) argument that cause marketing is useful for weak brand equity firms.

Table 3 – The P2P websites’ one-way communication to build up visitors’ awareness
152
Presentation Blog Buzz
Babyloan • C’est quoi, (C’est qui, pourquoi? What is it, • The Blog microcredit • Websites: Veosearch, Solidaires
who is it, why?) • (possibility to post comments) du monde, Voyageons-autrement, Capital
• FAQ • Blog IMF (possibility to post comments) Connect, The Different Magazine ; RSS
• Video
DhanaX • About Us • Dhanax’s Social Investment Blog •
• FAQ • (possibility to post comments)
• The Talk: What others are saying about us
• In the News ; Pics & Vids
Kiva • About Kiva • Kiva Blog (News, no interactivity); Lender page • Kivapedia
• (sending message) • (Lenders-created wiki)
• Lending teams (join or form a team) • Kiva's Invitation System
• Journals (presenting borrowers, possibility of • Kiva Developers (app)
posting comments)
MicroPlace • About MicroPlace • •
• Mearn More
MyC4 • About, video • Forum enables discussions between investors • Press contact; Backgrounders
• MYC4 News Download Centre
• FAQ
Rang De • About Us • Official Blo, (Possibility of posting comments, • Newletter
• FAQ and tagging) • 6 Social media; Refer a friend;
• Media coverage Applications
Veecus • About Veecus • Blog (News, videos, no interactivity) • RSS (billets)
• Facebook and Twitter
VirginMoney • About us; FAQ; Press • • Press inquiries
Wokai • About us (+ video) • News (projects) •
• FAQ; Press
Zopa • About Zopa • Zopa Blog (News, updates, other ramblings, • Zopa in news
• What is Zopa no interactivity) • Money Talk
• Information on securing transactions
Journal of Innovation Economics 2012/1 – n° 9

Table 4 – The P2P websites’ association strategies to build up visitors’ preferences
Other brands Places People
Babyloan • 6 founding partners • MyLittleParis.com • Lenders

• Other types of partner: 10 • Borrowers
• Field partners
DhanaX • • India (Bangalore) • Lenders

• Borrowers
Kiva • 40 Corporate Partners • • Lenders

• 16 Institutional Supporters : • Borrowers
• Field partners
MicroPlace • “An eBay Co.” • • Community: lenders and borrowers, some on video
• A registered broker
• Virgin Secured
• Securities and exchange comm.
• SIPC (Securities Investor Protection Corp.)
MyC4 • • • Local providers
Rangde • Partners: strategic (1), • • Field Partners

• Members: 3 Governing board,
• 7 Advisory board, 8 Team
n° 9 – Journal of Innovation Economics 2012/1

Veecus • 6 business and NGO partners • Cambodia, Cameroon, India • 2 co-founders
Virgin Money • Brand Virgin • • 4 responsible
Wokai • 11 supporting corps • • Field Partners

• 5 Fund donors • Team: 3 Board of directors, 8 staff, 3 Investment
committee, many people in 5 chapters
Zopa • Investors: eBay, Skype, • •

• Prime (50+, self-employment and firm)
• Verisign Secured
• Credit Resource Solutions
153

Do the members of our sample use the web 2.0 tools to enable the peers (lend-
ers) to build robust brands and consequently enhance awareness and image? To
answer this question, two interaction-based orientations, as previously suggested,
are tested: networking and social sharing. The results for networking are based on
examination of Facebook, Twitter and Linkedin and presented in Table 5.
To measure the degree of implication of our P2P websites in networking,
Facebook is scrutinized. Three different modes of networking are distinguished
on this social media: “Friends” belong to a Personal Profile; “Members” fit in
“Group” and “Fans” lie in “Business Page”. Considering the specificity of this
research, we looked at “Members” and “Fans”. Both can have unlimited num-
ber of affiliates. While the “members” of groups can send message to each oth-
ers, "Fans" cannot do so. A “Business Page” can only send one-way notifications
(informing) to its “Fans”. No interaction (dialogue/ discussion) is possible in
this case. As a result, only “Members” showcase the ability and the possibility of
interaction between peers. Often many Facebook Business Pages” (Virgin
Money, Wokai), or “Groups” (Kiva, MicroPlace, MyC4, Veecus, Virgin Money,

Wokai, Zopa) are formed around our sample members. Under such conditions,
we consider the most important clusters members with regards to the number of
fans and members.
From Table 5, we can distinguish three different categories within our
P2P websites with regards to the potential of interaction between peers: (1)
DhanaX, Kiva, Veecus, Virgin Money and Zopa which have more members
than fans showcase the greatest potential of interaction; (2) MicroPlace,
MyC4, and Wokai which have less members than fans constitute the second
category; (3) Babyloan and Rand De, with no “Groups” and members, com-
pose finally the third category.
On the social networking media Twitter, users can send and read text-
based posts of up to 140 characters, called “tweets”, on their profile pages.
Each user-author has “followers” who track his/her tweets, and may be “fol-
lowing” other users’ tweets. In case there is more than one profile, we consider
the one which depends directly on our sample members (i.e., the official cor-
porate profile). For each sample member, we consider primarily the number
of “Followers”, or peers, who might interact and discuss the respective P2P
websites’ brand and performance.
LinkedIn allow users to network by searching for “People”, “Jobs”, “Com-
panies”, “Answers”, “Inbox”, and “Groups”. For the purpose of this research,
we look forward to find out if our sample members are present in this network-
ing media (Companies) and if they are groups (Groups) in relation to our P2P
websites. Babyloan, DhanaX, Rang De, and Veecus are not present on Linke-
dIn as organizations (“Companies”). No group is constituted around Bably-
loan and Veecus. DhanaX gives access to its pages on Facebook and Twitter
through the rubric “Connect with us” and some other pages on its site.

Table 5 – The P2P lending websites’ networking media to build up brand equity (Date of observation: 29 October 2009)
Facebook Twitter LinkedIn
Babyloan • 391 fans • Following: 368 Company: -

• Followers: 290 Groups: -
• Tweets: 180
DhanaX • 3 members • Following: 1 Company: -
• Followers: 46 Group(s): 4 members
• Tweets: 15
Kiva • 5,386 fans • Following: 3,202 Company: Kiva, 9 more links
• 8,153 members • Followers: 111,335 Group(s): 8061 members, and 10 more groups
• Many Kiva groups • Tweets: 543
MicroPlace • 2,035 fans • Following: 627 Company: MicroPlace
• 245 members • Followers: 827 Group(s): 129 members
• 2 more groups • Tweets: 109
MyC4 • 414 fans • Following: 2 Company: MyC4
• 385 members • Followers: 21 Group(s): 75 members, and 1 more group
• 2 more groups • Tweets: 3
Rang De • 378 fans • Following: 0 Company: -
• Followers: 7 Group(s): 242 members
• Tweets: 0
Veecus • 93 fans • Following: 51 Company: -
• 222 members • Followers: 61 Group(s): -
n° 9 – Journal of Innovation Economics 2012/1

• Tweets: 170
Virgin Money • 176 fans • Following: 128 Company: Virgin Money and I more
• 2 more Business pages • Followers: 464 Group(s): -
• 179 members • Tweets: 44
• 1 more group
Wokai • 571 fans • Following: 368 Company: Wokai
• 2 more Business pages • Followers: 444 Groups: 153 members
• 423 members • Tweets: 132
• 2 more groups
155
Zopa • Zopa UK: 12 members • Zopa UK: None Company: Zopa U.K.
• 2 more groups (Zopa Italy: 90 members) • Zopa Italy, Zopa San Francisco Groups: 97 members, and 1 more (Italy)

Table 6 presents the scores of our sample members in the social sharing
media of MySpace and YouTube. On MySpace, all files are classified into
“People”, “MySpace”, “Web”, “Music”, “Video”, “Local”, and “Images”. Pro-
files are created in the category “MySpace”. Each profile has a number of
friends. Considering the sharing scores, three groupings emerge: (1) Kiva,
MyC4 and Wokai which have their own space with respectively 9104, 9650,
and 1 friends at the end of October 2009; (2) MicroPlace, Virgin Money and
Zopa which are somehow visible on MySpace (“People”, “Video”, “Images”)
even if they do not have created specific profiles; and finally Babyloan, Dha-
naX, Rang De and Veecus which are completely undetectable on MySpace.
On YouTube, while we cannot check who, our sample members or oth-
ers, have uploaded films, we can count the number of results for each of our
P2P startup brands. Kiva seems to meet the biggest number of results, even
if it is hard to verify the relevancy of each of them: with the keywords Kiva
microfinance, 1620 results, Kiva org 1650, and Kiva loans 1410. Zopa gets 4
results with the keyword “loan” and 10 (homonymous excluded) with “UK”.

In addition to being present in the public networking social media, some of
our sample members provide proprietary discussion boards for P2P interac-
tions: “Kiva Friends” as a community for lenders by lenders and Zopa Talk
open to chats between peers on many different topics. While MicroPlace
provides a community of videos of investors and borrowers, no interaction is
possible among them. MicroPlace does not announce any participation in
the social networking and networking media
Table 6 – The P2P lending websites’ sharing media to build up brand equity
(Date of observation: 30 October 2009)
MySpace (number of friends) YouTube (number of films)
Babyloan - 14
DhanaX - 5 (homonymous excluded)
Kiva • myspace.com/kivaloans (9104 friends) More than 1400
MicroPlace • myspace.com/microplace_ebay (People) 55

• Many shared videos
MyC4 • Eradicate Poverty in Africa (9650 friends) 16 (homonymous excluded)
Rang De - 1 (homonymous excluded)
Veecus - 10
Virgin Money • Many videos and images 5 (US, excluding speedboat)
Wokai • myspace.com/267463399 (I friend) 1
Zopa • myspace.com/zopa_ltd (People) 10

CONCLUSION
Based on the results of our research method of case studies, we find a variety
of strategies being adopted by online lending sites to build up brand value for
the visitors: informing, dialoguing and enabling discussion.
Firstly, all the websites are using the strategy of informing and awareness
building through online presentations, blogs and (less commonly) buzz. All
in the initial phases of their lifecycle, our sample members race to create a
buzz and get clicks and dollars to pass on to poor people. Blogs are often two-
ways and allow not only information, but also dialogue, but not interaction
(discussion) between peers.
Secondly, most of the operators are using associations, notably with other
brands and people to build up their own websites. However, they do not all
use all the forms of associations indicated in the literature. Only a few asso-
ciate places. The use of co-branding indicated by Strebinger and Treiblmaier
(2006) concerned supply chain partners (Intel inside). We find that the

cobranding in online lending is not only supply chain partners such as inves-
tors (venture capitalists, business angels, banks) and value chain partners
(such as technology partners), but also those who are using these online
websites for their own cause marketing. Thirdly, they are all using network-
ing media (Facebook, Twitter, Linkedin) to increase the brand equity. Thus,
they are all attempting to enable discussion. Finally, many are using some
form of sharing media (My Space, You tube).
Despite the evidence of the popularity of the Web 2.0 tools in the pur-
chasing process and the positive impact of the social affiliation in funding
and loan success, our study shows that the social networking application are
not properly exploited by and/or in our sample.
The simple integration of the existing social media such as Facebook,
Orkut or MySpace may boost the potential of the social interactions in P2P
Lending. Few members of our sample utilize the social networks to promote
forums and discussions between peers even if potential investors/lenders and
borrowers who replicate in a sense the microcredit principle of trust groups
online engage more with each other.
Two suggestions can provide some elements of answer to the question of
poor utilization of the social media in our study: 1) The borrowing or lending
individuals have difficulties to use them, 2) The Websites under our investi-
gation are inclined to promote the massive use of the online social media.
These results, and our observations of the events being created by the
online microfinance operators (online and offline conferences, cycling tours,
visits to remote MFIs) to enable lender participation in multiple forum seems

to suggest agreement not only with the transaction cost economics view that
search costs and risks are being reduced, but also the view of Prahalad &
Ramaswamy (2004, p.213), that it is the co-creation of experiences which is
the value of the brand.
The paper has highlighted the importance of brand value creation for
fundraising and associated it to a sector solving one of the world’s most basic
problems, ie. Poverty, through responsible financing along with other types
of social lending. It has documented the web 2.0 tools being used by the
existing operators to be able to create the buzz necessary to let people know
that they can participate in this movement of trying to make the world a
better place.
FURTHER RESEARCH
Further research could scrutinize the evolution of the web 2.0 tools on the

websites of the sample and analyze whether the use of them differs across
websites due to strategic considerations or due to resource specificities (eg.
the webmaster of the website).
Another stream of research could compare the lexicography used by the
online lenders on their formal one way communications with the lexicogra-
phy used in the informal two way communications in blogs and other com-
munities like Facebook.
The possibility to appropriate the value created by a brand can constitute
an axis of research, as sometimes parties other than the shareholders appro-
priate this value. These may be customers or suppliers with stronger bargain-
ing power or even star employees with special skills or fame important to
leverage value. Game theory can be considered to study the ways in which
interactions among agents produce the preferences (or utilities) – where they
might have been intended by none of the agents.

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BRAND VALUE BUILDING IN ONLINE SOCIAL LENDING STARTUPS

Djamchid Assadi et Arvind Ashta

De Boeck Supérieur | « Journal of Innovation Economics & Management »

2012/1 n°9 | pages 139 à 161

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n° 9 – Journal of Innovation Economics 2012/1 139

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140 Journal of Innovation Economics 2012/1 – n° 9

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LITERATURE REVIEW OF CONVENTIONAL

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142 Journal of Innovation Economics 2012/1 – n° 9

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n° 9 – Journal of Innovation Economics 2012/1 143

Figure 1 – Paradigms of communication of a brand online

Brand ability to enhance …

Cognitive customer Affective customer

Customer Brand Value

Trust in brand’s Anxiety-free

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144 Journal of Innovation Economics 2012/1 – n° 9

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Table 1 – The rankings of social media on the Internet

Source Criteria Place Date Ranking of social media

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Blogs and micro-blogs can be considered as both sharing and networking

RESEARCH DESIGN AND METHODOLOGY

146 Journal of Innovation Economics 2012/1 – n° 9

lenders and borrowers, mutually communicate and exchange views and

Research methodology of case studies

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Table 2 – Sample’s members: P2P and social micro-lending websites

Date of creation Denmark France India U.K. U.S.A.

2005 Zopa Kiva

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2007 MyC4 Virgin Money

2008 BabyLoan, Rangde, DhanaX

At the time of research, this includes one commercial lending website

Sampling of the Web 2.0 tools

148 Journal of Innovation Economics 2012/1 – n° 9

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RESULTS AND DISCUSSION

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Figure 2 – Paradigms of communication of a brand online

Journal of Innovation Economics 2012/1 – n° 9

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Table 3 – The P2P websites’ one-way communication to build up visitors’ awareness

Journal of Innovation Economics 2012/1 – n° 9

Table 4 – The P2P websites’ association strategies to build up visitors’ preferences

Other brands Places People

Babyloan • 6 founding partners • MyLittleParis.com • Lenders

DhanaX • • India (Bangalore) • Lenders

Kiva • 40 Corporate Partners • • Lenders

MyC4 • • • Local providers

Rangde • Partners: strategic (1), • • Field Partners

n° 9 – Journal of Innovation Economics 2012/1

Virgin Money • Brand Virgin • • 4 responsible