Social media and customer-based brand equity: An empirical investigation in retail industry

Abstract

As customer-brand engagement progressively shifts to digital domains, understanding social media effects in branding has become a vital issue. Social media effectiveness is especially important for the US retail sector due to intense competition among retailers for consumer attention and engagement on digital channels. Yet, the research on the effectiveness of social media in the retail industry remains sparse. Thus, the purpose of this paper is to investigate how social media affects US retailers’ customer-based brand equity (CBBE) which is an important indicator of brand success. Using a dataset of 15,717 retailer-day observations, the authors empirically test the dynamics between owned and earned social media and CBBE using panel vector autoregression (PVAR). The authors find strong impacts of owned and earned social media on CBBE across the board. However, they find that owned social media harms CBBE of retailers dealing in hedonic and high involvement products. Whereas owned social media helps general retailers in building CBBE, it reduces CBBE of specialty retailers.