Social media does not respond to news: it creates it. Its persona has evolved in recent years from that of incidental commentator to hugely influential protagonist. So, while social media can assist in the creation and maintenance of corporate profiles across the world, it can also cost a great deal in terms of money and reputation if mistakes are made. For businesses there are important lessons to be learned from 2012, when we have seen examples of social media being instrumental in affecting the reputations and consequently the actions and bottom lines of powerful companies.
When it was revealed that Starbucks had paid no British tax over the last three years, protestors used Facebook and Twitter and other social platforms to pile on pressure to do what was ethical rather than simply what was technically legal. Starbucks was subjected to a vociferous online campaign, which included people in Britain protesting outside its stores and the company was sufficiently concerned for its credibility that it hired a well-known PR agency to help. On the recommendation of P R Rudd, the American coffee company issued a statement in which it said it had “listened to our customers” and would pay £20 million in corporation tax.
When nurse, Jacintha Saldanha’s funeral took place in her Indian home town of Mangalore, it was worth noting the wider world’s involvement with the story and the significant financial impact social media had had on Southern Cross, the Australian organisation that owns the radio station widely condemned for its conduct in the telephone hoax affair.
Already subject to two five year endorsements on its license from the Australian media regulator for breaching broadcasting rules and with a reputation for ‘nastiness’, Southern Cross was skating on thin ice prior to the infamous prank. In the days following the disc jockeys’ call to the Edward VII hospital, pretending to be the Queen and Prince Philip, outpourings in Australia and around the world on Twitter and Facebook led to the almost immediate suspension of advertising contracts on its shows and many shareholders rushing to offload stock, resulting in a $46 million wipeout. The financial implication of underestimating the social media response cost them dearly, although the very public apology of the show’s presenters went some way to restoring share value.
Companies with a strong consumer interface and brand need to be alert to the impact of social media and have a specific system in place to monitor platforms and respond with immediate and appropriate effect. Neither Starbucks nor Southern Cross is a shining example of this, illustrating the fact that token apologies from representatives are not always enough for the world’s online community which now wields so much power.