This dissertation is comprised of two essays that incorporate social networks into the analyses of marketing strategies and phenomena to develop a deeper and more nuanced understanding of the marketing environment, and to enhance manager’s ability to forecast a firm or brand’s performance in the digital domain. The first essay explores the impact of marketing alliance announcements on firm equity risk given a network of previous strategic alliances for both a focal firm and its partner. Results confirm a widely held belief in the literature that marketing alliances have risk-reducing benefits, but only for those alliances involving a new partner. Furthermore, at high levels, the interconnectedness of partners or density of a firm’s network can cause idiosyncratic risk to increase, while the density of a partner’s network can also result in increases in systematic risk of a firm after alliance formation. The second essay proposes a novel method for using social media monitoring in a forward-looking manner to forecast brands’ future online WOM valence. The method infers associative relations between brands from social media monitoring data by observing which brands are mentioned at the same time in the same social media sources. This is used to construct time-varying brand “networks” from which forecasting variables are extracted. The method is empirically validated on social media monitoring data for 77 major consumer electronics brands over 16 months, and provides reasonably accurate forecasts for positive and, in particular, negative WOM valence.
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