The Risk of Brand Equity Erosion in the Social Media: The Efficacy and Limitations of Legal Instruments

Abstract

The growth of the social media offers companies new ways of understanding better how brand equity is created and of contributing to its development. But the social media may also lead to the erosion of brand equity if they convey negative opinions and comments on the part of consumers. The law provides a number of instruments - variously legislative (or regulatory), judicial and contractual - that can protect brand equity. However, although these instruments have been clearly identified by the academic literature and legal practitioners, their real effectiveness for preserving brand equity in the social media has yet to be observed and measured. On the basis of three empirical studies, namely analysis of contractual clauses (in this case pertaining to the Terms of Use of a sample of ten social media) and of paralegal and legal actions taken by companies owning trademarks, we show that recourse to these legal instruments must be undertaken with the greatest discernment so as to avoid the possible intensification of negative word-of-mouth regarding the brand and consequently further erosion of its brand equity. Our findings provide initial empirical evidence as to the limited effectiveness of legal methods for avoiding damage to brand equity in the social media, and suggest that criteria need to be established for determining how to choose between legal instruments and marketing instruments. We also argue that the use of these two kinds of instrument should be conceived within a logic of complementarity.