Social currency, a concept coined by marketing executive Erich Joachimsthaler in 2009, refers to the level of influence an individual or business has in convincing customers to identify themselves with a particular brand. This association results in the display and discussion of that specific brand becoming an important part of how people interact with each other as they go about their day. When a brand effectively cultivates social currency, consumers actively engage with and promote the brand as a way to enhance their social status or self-image. Therefore, a brand’s social currency is a good measure of its potential for success.
To better understand social currency, it is essential to learn about social capital, a concept introduced by the French cultural philosopher Pierre Bourdieu in the 1980s. According to Bourdieu, social capital was a form of status that relied on the resources made available to individuals through their networks of family, friends and other associations. Social capital aimed to explain personal success in social situations where money was not the sole determining factor. An example of social capital is when someone receives a job referral from a member of their community, resulting in an employment opportunity. Similar to economic capital, which comprises money and tangible assets, social capital can be earned, spent, and passed on as a form of inheritance. Bourdieu argued that, social capital is only constrained by the number of resources available within an individual’s network and their capacity to effectively utilize those resources for their gain.
Another concept put forth by Bourdieu that grounds social currency is known as cultural capital. Bourdieu defined cultural capital as a form of status currency that is created and exchanged when individuals seek out specific products as a means of displaying social status that is not directly tied to their social networks. Cultural capital can help explain why, for instance, people wait in line to buy a new iPhone models or sneakers labelled with the names of basketball players.
Joachimsthaler’s 2009 definition of social currency expanded upon Bourdieu’s concepts incorporating the influence of the internet’s invention. By applying Bourdieu’s ideas in a manner relevant to the evolving landscape, social currency became valuable framework for business and marketing professionals. The advent of smartphones and social media in the 21 Century has granted corporate brands unprecedented capabilities to accurately target their desired audience, further enhancing their reach and impact.
In the past, traditional advertising through print and television was largely constrained by the ability of advertisers to identify their target audience accurately. They had limited knowledge about who read certain magazines and watched particular shows, as well as the frequency with which their advertisements reached potential consumers. Nowadays, however, with the rise of social media platforms like Facebook, Twitter, and Instagram, brands have the ability to interact with and advertise to consumers online. Today’s digital landscape also enabled companies to consistently and reputedly reach consumers on a daily basis. This represents a new way of engaging with potential customers who might be convinced not only to make a purchase but also to share information about the product with their friends, family, and sometimes other social media users. To comprehend these social interactions, a new model is necessary, and social currency provides that model.
As with cash and other commodities, the economics of social currency are shaped by a disparity between the number of people who want to access to a particular resource and the resource’s capacity to fulfill that want. This means that social currency characterized by what economists call scarcity. In this context, scarcity impacts producers and consumers alike. To accumulate social currency, producers need to compete for consumers’ attention on platforms that have dozens, or even hundreds, of other companies seeking that same resource. An effective measure of a brand’s success in accumulating social currency is evaluating the size of their online community, determined by the number of likes, comments, views, and followers they have amassed on social media platforms.
Brands employ various strategies to leverage their online presence in order to grow their follower counts and, hopefully, their social currency. One approach to fostering the necessary user communities for social currency is to emphasize the exclusivity, and therefore the scarcity, of the products in question. This tactic holds particular importance for luxury brands, which use the high cost and low supply of their products to stimulate demand. Owning a luxury product enhances a consumer’s cultural capital, but only if they conspicuously showcase that product. Consequently, such consumers are inclined to share information about these products as a means of expanding their cultural capital, either by engaging in discussions about their products with others who do not. In this way, these brands effortlessly build social currency and, therefore, increase desirability.
Luxury and exclusivity are not the sole means of cultivating social currency. Forward-thinking brands sometimes strive to create advertisements they want to “go viral,” so that they are shared not only within their existing brand communities but also by individuals who are outside of those circles. What makes people share “viral” content is not an exact science, but is closely linked to social currency. Just as people enjoy talking about being part of exclusive communities, they also take pleasure in sharing content that reflects well on them. If businesses can produce advertisements or other kinds of content that users are eager to share not only with each other but also with their wider networks to appear smart, cool, or hip (among other things), brands can expand their communities and, ideally, the number of people willing to purchase their products.
