NEW YORK: The number of social media crises that exert a tangible effect on corporate performance and strategies are increasing, demanding an urgent response from brand owners, a study has argued.
The Altimeter Group, the consultancy, assessed the amount of crises arising from or amplified by social media, either resulting in negative coverage by traditional channels like TV and newspapers, a shift in business policies or financial loss.
It reported six such cases have already occurred in 2011, and predicted this figure would rise to ten by the close of the year, matching the total from 2010, and double that from 2007.
Of the 50 major crises from 2001 to 2011, 22% started on YouTube, the same as begun through online communities, while blogs fuelled 20% of what were described as "punkings", Twitter recorded 18% and Facebook logged 14%.
More specifically, 15 cases followed a disappointing experience with the firm in question, 14 involved poor influencer relations, 12 concerned ethical failures, eight were due to "rogue employees" and seven were tied to "inappropriate content".
"Interestingly, we found that 76% of these crises could have been prevented or diminished had the brand been prepared and had proper training, staff, and processes to respond," Jeremiah Owyang, an analyst at Altimeter Group, said.
Earlier this year, Mattel was attacked by videos from Greenpeace, featuring its own Barbie and Ken dolls, regarding its "Barbaric" record on deforestation, with web users asked to show their discontent on Facebook.
In responding, Mattel temporarily closed down the comment function on its Facebook page, before later posting a direct reply, and announcing a change in its supply chain, an approach applauded by the Altimeter Group.
In contrast, a "tweet" made by Bob Parsons, CEO of GoDaddy, on Twitter about killing an elephant on a hunting trip encouraged censure from rivals and charities like Peta, and meant many customers switched to other domain registrars.
Kenneth Cole, the retailer, caused greater controversy still after a tweet used the hashtag "Cairo" during the recent Egyptian protests when promoting its spring collection.
A poll of 144 firms found 83% had in-house policies covering social media, but 74% had no procedures to reinforce this and 54% lacked formal crisis response escalation plans.
In all, 82% of firms run consumer-facing social media efforts through their marketing departments, reaching 75% for corporate communications and PR units, 30% for customer support, and only 4% for R&D divisions.
Elsewhere, 73% of firms with dedicated social media teams stated they had clear leadership in this area and 53% thought a highly coordinated approach was currently in place, falling to 31% and 21% if no such team existed.
Data sourced from The Altimeter Group; additional content by Warc staff