Decentralized branding: eWOM, market dynamics and brand value in Web3
Elissar Toufaily, Efstathios Polyzos, Mieszko MazurPurpose
This paper aims to investigate how brands emerge and acquire value in decentralized digital ecosystems and examines the role of electronic word-of-mouth (eWOM) on social media in shaping their market interest and valuation.
Design/methodology/approach
The research design considers two studies: one exploratory, based on interviews with Web3 experts and the other on econometric analysis of data from X (13 million tweets relating to 7 Web3-native brands) and OpenSea (315 million nonfungible token [NFT] transactions).
Findings
The findings show that brand value formation in decentralized environments rests on three layers: an asset-based value layer, a network-based value layer and a marketplace-based value layer. The research demonstrates that both the volume and valence of eWOM independently influence consumer awareness, desirability and the value or price of NFT-based brands in the marketplace. However, their interaction, or an excessively positive eWOM, can have a counterproductive effect, signaling hype and reducing perceived credibility in speculative digital markets.
Research limitations/implications
The research contributes to the emerging Web3 literature by proposing an empirical framework for decentralized brand value formation in digital ecosystems. The framework captures how brand value is generated and how eWOM and marketplace trading and activities influence this value in decentralized environments. However, the analysis is based on seven Web3 native brands and on data gathered in the context of a bull market.
Practical implications
The study offers brand managers empirical insights into branding in decentralized ecosystems. It provides operational strategies for decision-makers who are seeking to develop effective branding strategies in emerging decentralized marketplaces.
Social implications
The study shows that decentralized branding empowers users and online communities to shape Web3 brand value.
Originality/value
The study contributes to the growing understanding of decentralized branding by showing how brand value and eWOM dynamics shape brand creation in decentralized and speculative markets. It shows that digital discourse can simultaneously function as a mechanism of brand amplification and as a potential signal of speculative overvaluation. To the best of the authors’ knowledge, it is the first study that proposes an empirical investigation of the value of decentralized branding and its relation to eWOM.