Social Brand Value and the Value enhancing Role of Social Media Relationships for Brands Johann Fueller Hyve AG johann.fueller@hyve.de Roland Schroll University of Innsbruck roland.schroll@uibk.ac.at Severin Dennhardt University of Innsbruck sdennhardt@gmail.com Katja Hutter University of Innsbruck katja.hutter@uibk.ac.at Abstract Due to the social media revolution and the emergence of communities, social networks, and user generated content portals, prevalent branding concepts need to catch up with this reality. Given the importance of social ties, social interactions and social identity in the new media environment, there is a need to account for a relationship measure in marketing and branding. Based on the concept of social capital we introduce the concept of social brand value, defined as the perceived value derived by exchange and interactions with other users of the brand within a community. Within a qualitative study marketing experts were interviewed and highlighted the importance towards social media activities, but also indicated that they do not have a clear picture on how strategies should look like and how their success can be measured. A second quantitative study was conducted which demonstrates the influence the social brand value construct has for consumers brand evangelism and willingness to pay a price premium and hence the value contribution of the social brand value for consumers. 1. Introduction Firms are facing a new communication reality that has been created by the rise of social media applications. The widespread penetration of web 2.0 applications, in combination with faster and greater mobile computing power and advances in bandwidth, has enabled this revolution. Applications like Facebook, YouTube and many others have seen enormous growth in the past decade and have created a revolutionary trend, influencing communication habits. Traditional one-way communication in marketing, for example, has been transformed into a multi- dimensional two-way peer-to-peer communication reality [1]. With consumers (or users) spending more and more time on these platforms, an increasing share of current social interactions occurs within these new social network environments – also influencing social relations. As consumers are becoming more familiar with advanced communication and media technologies, they now have to be recognized as active creators, instead of passive, consuming participants [2]. Users adopt and customize online tools available to them to transform the digital space into a profoundly social eco-system they can create, control and own by themselves [3]. Bernoff and Li [4] refer to this increasing influence of the user as “the growing groundswell of customer power” (p. 37) and a “cultural shift in a customer- centric direction” (p. 40). The social eco-system of users consists of various forms of online communities. The social ties between the members of these communities entail high levels of mutual trust through friendships and alliances. These social ties in online environments thereby exhibit value to users in the same way real life relationships do [5] and demonstrate the social function of online communities. Although highly relevant to companies, theory on Word-of-Mouth Marketing (WOMM) or Social Media Marketing (SMM) has yet to account for these developments. The power of the eco-system of users through social media presents opportunities and challenges for companies and their brands [6]. The interactive nature of the Internet has empowered individuals to directly engage with brands and other users, and has upset the power balance between the firm and the individual by shifting some of the control over brands from producers directly to consumers [7]. The handling of social media marketing in the challenging social media environment is therefore one of the most relevant topics for executives today [8]. Companies accept the relevance of social media for consumers and, thus, try to create and maintain a presence in social networks – the place where the consumer is: To this end, they create fan-pages on Facebook, establish Twitter accounts, support blogs or enter into virtual worlds. But the question that remains with executives is if the investments made really pay off and if they actually increase the value of the brand. Although researchers have tried to show that activity in social media does pay off financially [9], overall, little is known about how marketing and branding can or should be conducted in the modern interactive 2012 45th Hawaii International Conference on System Sciences 978-0-7695-4525-7/12 $26.00 © 2012 IEEE DOI 10.1109/HICSS.2012.533 3218