Do social media tempests in teapots matter?

Do social media and PR crises matter, ultimately, to how a company’s brand performs and the financial impact? Let’s look back and see what the impact of a few crises were from 2012.

Pepsi’s Mountain Dew PR crisis, when they said last year that there are no dead mice in Mountain Dew because the soda’s acidity would liquefy a mouse. 253,000 search results. What was the impact? Pepsi 1, mouse 0, matching the growth of nearest competitor Coca-Cola:

NYSE:PEP: 72.81 0.04 (0.05%) - PepsiCo, Inc.

Progressive Insurance’s PR crisis, when blogger Matt Fisher made the claim that the company paid to defend his sister’s killer in court. 4,200,000 search results. What was the impact? Progressive posted 17% growth in their stock since then.

NYSE:PGR: 23.20 0.04 (0.17%) - The Progressive Corporation

American Apparel’s PR crisis, when they attempt a 36 hour sale to take advantage of Hurricane Sandy. 2,460,000 search results. What was the impact? Almost 32% growth in their stock since then.

NYSEAMEX:APP: 1.49 0.04 (3.11%) - American Apparel Inc.

Why, if these PR crises generate so much attention, so much negative word of mouth, so much unwanted press, does it not harm their long term financial health? Why do investors, known for being fickle at best, not flee these brands at the first sign of a major misstep?

The answer is that the health of a brand is related to the strength of a brand. Think about it in terms of friendships. Your actual friends (not social media friends) can do some bone-headed things sometimes, but they’re still your friends. The strength of the sum of experiences you have with them overrides the occasional injury or insult. Now think about casual social media friends, those tenuous connections only online. How many people did you (or others you know) mute or unfriend on Facebook during the election season because they posted or said just a handful of very objectionable comments? The strength of their friendship with you was not enough to override the negative impression they made on you.

This is true of any kind of strength. A bridge made of concrete will endure much more punishment than a bridge made of paper. A bad meal at a beloved restaurant gets excused more often than not; a bad meal the first time you try a new place results in you not coming back ever again.

The lesson is that in order to provide protection against bad press, an unfortunate turn of events, or even possibly something self-inflicted, you need to constantly be reinforcing and building your brand, strengthening it with positive experiences, newsworthy positive exposure, and repeated word of mouth endorsement.

Christopher S. Penn
Vice President, Marketing Technology


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