Negative Word of Mouth Won’t Kill The Corporation… Instantly
And I’m starting to see why corporations approach social media this way. I’m no Kochie but I have looked at the share prices of three brands who appear to have been hit hard by negative word of mouth in the last few months. While understanding that we are on our way out of a recession and there a wide range of factors which go towards influencing share prices, we can see that these events have had minimal impact on the immediate worth of these corporations. Let’s have a look…
1. Domino’s Employees Being Gross
While the video has been removed, the clip featuring two US employees sticking cheese up their noses and farting on sandwiches received coverage in almost every major news outlet and spread very quickly. The Domino’s response alone received over 700,000 views. However, despite all the negative press and the threat of boycott by their customers, it doesn’t appear that the Domino’s share price too a big hit…
2. United Airlines Breaks Guitars
The story of a country singer who fought United Airlines for a year over his broken guitar came to a peak when he wrote this song about the experience. The video attracted over 4.6m views and the Times claimed that it cost their shareholders $180m. This sounds like a large sum of money but have a look at how this figure relates to United’s worth…
3. Kyle and Jackie O Interview with a 14 year old Rape Victim
And the last but most recent stuff up is by Austereo on the Kyle and Jackie O breakfast show. Again, it has been the hot news topic this week and has seen social communities put pressure on the station to pull them off air immediately. This morning it was reported that Austereo would lose millions of dollars in sponsorship revenue. In this case we can see an immediate decrease after the announcement, however, this only pulls the price back to where it was before the interview…
Shock, horror. These corporations did not collapse after their bad social experiences. This isn’t saying that it may not hurt in the long run. We can talk about trust, loyalty and long term sustainability another time. However, next time you walk into that presentation intending to scare the pants off the corporates with the story of How Social Killed The Corporation, keep in mind the figures which they are looking at, these examples and the Beatles lyrics “ob-la-di, ob-la-da, life goes on”.
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well said – and what interesting figures
thanks for taking the time to collate this, thought it excellent.
So if sabotaging food, breaking people’s stuff and abusing a 14 yr old on national radio doesn’t kill the corporation, what on earth actully does?
Share price is a great short term indicator of bad news and a great long term indicator of company management. You’re only looking at a month or so here.
When China’s first Premier Zhou Enlai was asked in the mid-20th century for his opinion on the historical significance of the 1789 French Revolution, his response was: “It’s too soon to tell.”
I think that might ring true here as well Nath
It would be interesting to see how the charts end up if these companies don’t fix the cause of the short term issues.
@Scott If Kyle Sandilands can’t kill you, I don’t know what will
@Matt That’s true but I’d have thought one month was short term? So it should be a great indicator of bad news? Absolutely agree if it goes unchecked these issues will erode away at the brand leading to their fall. But when we’re seeing headlines that companies are losing millions because of social media I think we need to put in perspective. The fact that they are losing trust and loyalty is more important to their survival.
Great post, Nathan. You really cut to the heart of it here.
Interesting that there’s now a bit of a backlash to the social media movement that everyone was pushing this time last year; posts like this really help with evaluating the effects. Cheers.
@Andrew Thanks mate. Hope it doesn’t come across as anti-social media, it’s more anti-sensationalism.
Nice figures – that was a useful exercise. I suppose consumers have short memories, but I wouldn’t underestimate the fear that shivers down the backs of guilty CEOs when their share price takes a knock. Even a brief blip has serious consequences when huge institutional shareholders have been counting on short-term gains. Remember: companies fear their shareholders, not their customers.
Nice report Nathan… Give it a few weeks and we will all have forgotten about the Kyle & Jackie O saga. The media will find/invent something else to “sensationalise”.
Hey Nathan, I really liked this and started replying and then it was too long so I wrote about it on my blog. Go take a look if you’re keen (I’ve been busy lately and haven’t updated much).
@ Vic Good point about the shareholder fear. I’m sure most CEO’s have this in mind when signing off marketing budgets.
@ David I agree, but that will be helped if Kyle is off the radio and TV
@ Johnny Absolutely agree that it is about how well you treat your customers after the event as much as the event itself. Good to see a couple of examples where it had a much greater effect. Johnny’s post is well worth a read and can be found here:
http://attractengageretain.blogspot.com/2009/08/mess-with-your-customer-at-your-peril.html
Do you think share prices are the correct statistic to be looking at to prove, or disprove what you are saying, especially with the world markets how they are at the moment?
I would think customer trends, and sales figures would be more indicative?
@ Bailey Definitely. Marketing is traditionally all about increasing sales and it is analysed to death by both the marketing dept and ad agencies but is a very good indicator. Share price is definitely not THE statistic but one of many which should be considered further. There’s a heap of speculation about how social media can bring a company to its knees but really, it all carries on in the short term.
Are you kidding me!
All this blog post proves is how little people in marketing know about brand value and the stock market.
Share prices are barely affected by marketing, so how they are going to be affected by some silly youtube video…it’s a pretty obvious statement!
@Caire I’d call $180m in lost revenue from a “silly youtube video” fairly significant. I think you’ve missed the point of the post – athough it almost correlates with your response – is to stop thinking SM is the be all and end all of a brand’s prosperity, it is one factor of many.
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Another Advertising Wanker
Nathan Bush
Digital Strategist at DP Dialogue
Brisbane, Australia
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