Impact of Social Media on Consumers and Firms

Today, many firms use social media to not only reach out to consumers, but also to create engagement and strengthen the bond between themselves and their customers. Social media changed the way companies do business, and as such it can threaten existing business models; however, it can also create new opportunities. This dissertation examines the impact of social media on consumers and firms from different perspectives: When considering the consumer perspective, I derive insights into psychological processes. When analyzing social media from the firm perspective, I aim to uncover strategic implications. By combining different data sources and research methods, this dissertation describes the path from consumer motivations for using social media, to activities on social media, and finally to the impact of social media on consumers' minds and firm outcomes. I first investigate consumer motivations to engage in brand-related activities on social media with varying levels of engagement (such as becoming brand fans). Next, I study how firms can increase consumer interactions on their fan page. Finally, firms invest more and more in social media and are interested in the outcomes of their investments. I show that social media marketing, i.e., interactions with firm content on the firm's fan page, leads to higher awareness and consideration. Furthermore, firms can spur and reduce online conversations and interactions with firm content on the firm's fan page by its traditional advertising. Firms may use the findings of this dissertation to evaluate their social media campaigns and determine their effectiveness, thereby increasing marketing accountability.