Facebook & Brand Equity : Firm-created advertising and its effects on the consumer mindset

Abstract: This research addresses an urgent contemporary problem within advertising and brand management in the new era of social networks - how do companies act on social networking platforms and how is this perceived by consumers? Being successful on Facebook is, seemingly, not as straight forward as many might think, and the misuse deriving from misperceptions can create negative brand impacts. This research aims to shed light on the yet under researched topic of firm-created Social Media advertising and its effects on the consumer mindset. This has lead to three overarching research questions, which provides a strong theoretical and practical contribution to the status quo:   RQ1:          What is the influence of the gap between motivational factors to “Like” a brand’s Facebook page and the subsequent firm-created Facebook advertising on perceived advertising value?   RQ2:          What is the influence of perceived advertising value on consumer brand-related activities?   RQ3:                      What is the influence of (1) perceived advertising value and (2) consumer brand-related activities on brand equity?   A quantitative research approach was adopted using a self-administered survey among 101 European Facebook users between 18 and 35. The framework of this research comes from four elements of theory; Uses and Gratifications (U&G) theory to identify the underlying motivational factors to engage with a brand on Facebook, advertising value by Ducoffe (1995), to measure how the brand’s advertising is perceived, consumer brand-related activities (COBRA) by Muntinga, et al. (2011) to classify the level of consumer involvement with the brand on Facebook, and the brand value chain by Keller & Lehmann (2003), which is closely related to consumer-based brand equity as developed by Aaker (1991) and Keller (1993).   The main conclusions of this research include that the gap between initial motivations to start a brand-relationship on Facebook and the subsequent activities performed by the firm is smaller for those in a currently active brand-relationship while it is considerable larger for those who have decided to exit the relationship. Moreover, while not statistically confirmed a clear tendency was identified that the perceived advertising value of a brand on Facebook is attributable to the extent of this gap. In the same vein, the decision to continue or exit a brand-relationship on Facebook is attributable by the level of perceived advertising value. The type and level of interaction with a brand is influenced by the perceived advertising value, however, can be influenced by targeting specific motivations to interact. Both the perceived advertising value and the level/type of interaction with a brand were found to influence the consumer mindset. Especially the form (entertaining, enjoyable) in which advertising is dispersed on Facebook proves to be important.