Is Investing in Social Media Really Worth It? How Brand Actions and User Actions Influence Brand Value

Although previous studies have documented a positive link between traditional media and brand performance, how social media is related to brand value has not yet been comprehensively explored. We propose a conceptual model to address this research gap, collecting a unique data set that captures information on user and brand actions on three social media platforms (Facebook, Twitter, and YouTube), word‐of‐mouth, and brand value for 87 brands in 17 industries. We empirically test our model with partial least squares path modeling (PLS‐PM). First, we test the direct effects and find that user actions on YouTube and brand actions on Facebook have a positive influence on brand value. Second, we enrich our model by including word‐of‐mouth as a mediator, finding that the effect of social media goes above and beyond pure word‐of‐mouth spread. We test for alternative models, by first accounting for sample heterogeneity and second by including brand strength as a control variable, finding that the main model results’ are indeed robust. Our study demonstrates that making use of social media positively relates to brand value, as well as validates a set of objective metrics to measure social media actions, thus advancing knowledge on social media marketing for both academics and practitioners.