Blogs and social media: The new word of mouth and its impact on the reputation of banks and on their profitability

Abstract

In the banking sector and especially the Greek banking sector, in the midst of an unthinkable economic crisis that the country is going through, what is "said" and "written" freely, and is considered to be the "contemporary" word of mouth (wom), is expressed through blogs and social media. On these grounds, and taking into consideration the fact that the blogs and social media have become one of the most influential communication tools, it is rather interesting to investigate and measure the influence those "means" exercise on how people perceive and evaluate an organisation. Additionally, in terms of the current economic situation, it becomes even more interesting to orientate this investigation to the financial sector. This chapter, is offering an overview of the relevant literature, that leads in creating a methodological tool, capable of measuring and answering to the hypothesis as to what extend wom, as created be blogs and social media, can influence a bank’s reputation and consequently its profitability In this context, firstly a review was made on the literature on reputation, wom and the influence of the latter on the former. A research model was created with the intention to rate all the publications in blogs and social media related to three major Greek Banking Institutions, for 1 year time and followed an evaluation of how their reputation is actually affected by these publications, using the seven dimensional RepTrak model.