Erich Joachimsthaler is a sales expert. In 2009, he defined the idea of "social currency." This is the level of connection customers feel to a certain brand. A brand is a company's public image. It is how the company looks to customers. Businesses want to convince customers to buy their products. So they always want to look good. Social currency is the amount of success they have in looking good.

Where the Idea Came from

Pierre Bourdieu was a French thinker. He explored an early idea of social currency. Bourdieu said everyone has a network. It is made up of family, friends, and other groups of people. Who you know affects your ability to get resources like jobs. This is a type of wealth, or capital, but it is not money. So, Bourdieu called it social capital.

Another one of Bourdieu's ideas is called cultural capital. Bourdieu described cultural capital as a person's standing in society. People try to affect it by buying certain products. They buy products that they can show off. This could be why people wait in line to buy new smartphones.

The Internet Changes Advertising

Joachimsthaler updated these ideas. Smartphones and social media changed things, he noted. Brands can now use social media to get many more customers.

Before the internet, advertising was limited. Advertisers had to figure out what kinds of people read certain magazines. They tracked who watched particular shows. But, the numbers were not clear. Now, companies can use sites like Facebook and Instagram. Brands interact with social-media users online every day. The customers might even share the product with friends. Social currency explains why this might happen.

How Social Currency Works

Social currency is not money, but it can still make you successful. Like cash, social currency can be earned. It can be spent. It can be passed on. Not everyone has or can have social currency.

Economists study how businesses work and how people use money. They would say social currency is defined by scarcity. When a resource is scarce, it means it is limited. Usually, that also makes it more valuable.

Companies want to gain social currency. It is easy to measure how much social currency a brand has. Just check how many people follow it on Facebook or Instagram. However, brands have to fight for consumers' attention. Hundreds of other companies also want to get that attention. In other words, attention is scarce.

The Goal of Going Viral

There are many ways that brands try to win social currency. Some talk about how their product is very rare. Many luxury brands do this. Think of a company that makes diamond watches, for example. They would show these watches as expensive and hard to find. Companies hope this makes people want it more.

Smart brands sometimes try to make their ads "go viral." That means the advertisement is not just shared by followers. It is seen by many other people too. People like to talk about being part of exclusive communities. They also like to share other things that make them look smart or cool. This works out for the brand, since it is like sending free ads. All of this helps the business get more customers. It gets to build up its social currency.