The development of reputational capital – How social media influencers differ from traditional celebrities

Abstract Social media influencers (SMI) have grown in importance as a promotional channel. However, little is known about how they build reputational capital and thus endorsement effectiveness, particularly compared to traditional celebrity endorsers. From a consumers' perspective, this research investigates both types of endorsers in different stages of the Celebrity Capital Life Cycle (CCLC). Across three studies, we find that parasocial relationships and interactions with consumers are paramount for SMIs reputational capital and endorsement effectiveness, yet not critical for traditional celebrities. Further, a consumer's perceived weak parasocial relationship/interaction with SMIs can be detrimental to their effectiveness yet has little impact on traditional celebrities' influence. We find that the positive effect of a SMI with high parasocial relationship/interaction with consumers on Word of Mouth (i.e., endorsers effectiveness) is mediated by expectation fulfillment and brand endorsers' credibility (i.e., reputation capital). This research discovers how important parasocial relationships with consumers are for SMIs in comparison to traditional celebrities; importantly this is the first research that empirically identifies how SMIs can gain and maintain reputation capital and subsequently be more effective as brand endorsers. Our findings have important implications for marketing professionals who are managing SMIs.