Bad PR Viral Video: Pre in Beer Mug

As a brand you never want to see something like this, which has become viral: Palm Pre in a beer mug:

I own a Pre and like it in some respects but have grown more frustrated and impatient with the device over time, rather than less. I’m considering getting rid of it and buying an HTC Android Hero.

Regardless of what I do, someone else’s frustration turned into the video above, which is now making the rounds. The best way to avoid this is to make a better device and/or address the problems that people are experiencing promptly.

One cannot overestimate the damage that something like this can do on an unconscious level to people in the market for a handset in an increasingly competitive smartphone environment.

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Twitter Can’t Stem the Fallout This Time

Whole Foods was built on the back of left-leaning consumers who not only liked the experience of shopping at the over-priced (but very posh) stores but also their community mindedness and seemingly progressive policies.

Whole Foods’ brand took a bit of a hit last year when CEO John Mackey was “outed” in early 2008 for more than 1,000 anonymous postings on Yahoo! Finance message boards that promoted Whole Foods and Mackey himself and “trashed” competitors or those who criticized his company. (See this post for more background on that scandal.)

But the brand is now really under pressure in the wake of a WSJ editorial that opposed the Obama health care initiative. Among other things in the piece, Mackey said:

While we clearly need health-care reform, the last thing our country needs is a massive new health-care entitlement that will create hundreds of billions of dollars of new unfunded deficits and move us much closer to a government takeover of our health-care system.

In response to these positions, which emerged as a shock to many Whole Foods shoppers, a Facebook boycott has formed and the Whole Foods brand had taken a fairly substantial hit this time.  Now Whole Foods investors are calling for Mackey’s removal:

The CtW Investment Group called on the Whole Foods Market board to remove CEO John Mackey as Chairman and to begin the process of naming a new CEO in a letter to Whole Foods’ lead independent director, Dr. John Elstrott, yesterday afternoon. Citing the risk to Whole Foods’ brand reputation caused by Mr. Mackey’s editorial opposing President Obama’s proposed healthcare reform, CtW urged the board to take immediate action to prevent continued damage in the face of a quickly-growing boycott by Whole Foods’ progressive customer base . . .

Events of the past week establish yet again that John Mackey’s lack of personal discipline makes him a liability for Whole Foods Market, Inc. Despite past indications that the board needed to exercise independent oversight of Mr. Mackey and supervise his external communications closely – most notably his postings on the Yahoo! Finance bulletin board, which led to an SEC inquiry – you and your fellow directors failed to take meaningful action to prevent Mr. Mackey’s uncompensated brand and reputational risk to our Company.

Certainly Mackey is entitled to his political opinion but given his controversial history and the clientele Whole Foods caters to, the fallout now happening was somewhat predictable. It’s either arrogance, naivete or pure stupidity on Mackey’s part to have not had some foresight bout this. Now his company is paying in diminished brand equity and potential lost sales.

How Much Damage to United?

Recall that I posted about Dave Carroll and the mishap with his guitar and United’s baggage handlers. His video on YouTube about his experience saw millions of streams.

Now the UK’s Times Online claims that the episode and subsequent damage to the brand caused by the widespread viewing of the YouTube video resulted in a drop in the market cap of United, essentially costing the airline $180 million:

Meanwhile, within four days of the song going online, the gathering thunderclouds of bad PR caused United Airlines’ stock price to suffer a mid-flight stall, and it plunged by 10 per cent, costing shareholders $180 million. Which, incidentally, would have bought Carroll more than 51,000 replacement guitars.

The airline’s belated decision to donate $3,000 to the Thelonious Monk Institute of Jazz as a gesture of goodwill (Carroll said he was beyond the point of accepting money) did nothing to contain the damage.

It’s unlikely that the Carroll-related bad PR single-handedly caused this. But let’s assume that it may have contributed to some set of factors that together caused investors to sell United shares. It’s an illustration of how costly bad customer service can turn out to be in the age of social media.

As I said before, an ounce of prevention . . .

Twitter’s $48 Million in Free Media

I thought this was very interesting from AdAge:

Twitter’s been the toast of TV news programs, daytime talk shows, magazine editors and newspaper reporters. But what’s all that chatter worth?

According to news-monitoring service VMS, a cool $48 million over the past 30 days. (That’s half of what Microsoft plans to spend marketing its biggest product launch of the year, Bing.)

Twitter received almost 3 billion impressions — 2.73 billion, to be exact — in the past month, a time period that doesn’t even include the frenzied weeks in April in which Oprah and Ellen weighed in on the micro-blogging service.

Most startups rely on PR and media coverage instead of marketing for obvious reasons (cost). But there’s no way really to generate something like this without the help of external events such as the Iranian elections and their aftermath.

And here’s the ironic tale of another startup PR launch that largely failed, only to see success after the fact based on an unintended article discussing the strategy behind the launch.

Canada’s YPG First on Twitter

Sebastien P. was the first to discover this but I also stumbled upon it this morning: Canada’s Yellow Pages Group becomes the first North American publisher on Twitter. 

Other publishers and YPA take note.

Eric Schmidt from High Atop the Search Perch

Because the interview with Eric Schmidt ran long there wasn’t much time to ask questions (especially about local or SMEs). A few things struck me however about the discussion. Here are some thoughts and random observations:

Schmidt made a very sincere and believable “appearance” (as they say in the legal profession). I buy that he means what he says.

He spoke at some length about the danger of “unscrupulous governments” (whether the US or foreign) trying to access search logs (questions prompted by the AOL fiasco). Assumed but never entirely justified in all his comments (about privacy and security) was that Google was inherently more trustworthy than those who might want the data. Danny Sullivan pressed Schmidt on this point but the Google CEO didn’t outline any specific processes or procedures to safeguard the data. He merely stated that what happened at AOL wouldn’t happen with Google (though he qualified with “never say never.”)

Schmidt broadly alluded to a huge vision for Google, which he has done before: that of bringing Google’s “targeting capability” to all media. Schmidt said, “One of the outcomes, if we do this right, is fewer ads that are more relevant to you.”

Another interesting remark was about the litigation that Google has confronted on multiple fronts. He said that he felt that at least some of the litigation was “a business negotiation being conducted in the courts.”

Schmidt also sneaked in unsolicited references to Google Checkout, which I thought was quite interesting. He also joked about not using Google as a verb for trademark reasons. 

Finally he made the often-heard statement that “consumers are just a click away from our competitors.” I don’t believe this. As I’ve argued before I think there’s a lot of habitual behavior now in search. There have been relevance studies that basically argue the quality of search results has reached parity across a number of engines (there are people now arguing in fact that MSN/Windows Live is better).

Let’s assume that the relevancy gap has closed among engines. Google’s share has continued to grow. Why? It’s the power of the Google brand, users’ general satisfaction with Google and their habitual behavior – Google is familiar.

All of that means, at least for the foreseeable future, Google will likely remain atop its search perch.

Google Checkout, Click Fraud and PR

This is a precarious time for Google. Sure, it seems to be opening up an even bigger lead in search. But it has also started to suffer something of a backlash among “insiders.” The public is largely unaware of all the drama: “Google is too powerful,” “Google is the Microsoft of the Internet,” “Run for your lives!”

Putting aside the competitive animus of certain rivals and would-be rivals, the concerns about Google surround questions of privacy, security and general consumer trust.

When company representatives say things like they won’t use consumer data collected from products like Google Checkout to affect search results or sponsored results — or otherwise use it mproperly — the question is: Do consumers (we) believe them?

This has reared its head recently with Google’s joint WiFi initiative with Earthlink. Google was asked to respond to privacy concerns raised by EPIC, EFF and the ACLU. While these organizations might have generically raised privacy if some other vendor was working on the project, the fact that one of the partners is Google raises a higher level of concern among some people.

I typically encounter skepticism bordering on outright sarcasm from Internet “insiders” when I report what Google has told me on this or that occasion during a briefing regarding their safeguarding of consumer privacy. There’s a danger that over time these skeptical attitudes will seep out into the popular mind and come back to “bite Google on the ass” (as some would say).

Microsoft’s former “e-wallet” initiative, similar to Google Checkout, under the aegis of Passport, was doomed by privacy and security fears. (Passport is now one of the sources of demographic information for adCenter.)

When I talk to Google media relations folks I often say, “You’re aware of the concern about privacy and some of the skepticism because of Google’s market position . . .?” The answer, to the extent we go down this path is “yes.” But I’m not sure there’s a complete understanding of the implications.

Google has been lax (so has Yahoo!) in communicating about click fraud and has gotten sued and criticized by advertisers and the press about not being “transparent” about its efforts to combat the problem and specifics related to its click fraud enforcement or refund policies. I have argued for a very long time (or what feels that way now) that Google, Yahoo!, MSN, et al needed to get out in front of the question of click fraud, be very open and mount a PR campaign that reassures advertisers.

Now comes a widely covered Outsell report that says: 1) it’s a huge ($800 mm) problem, 2) it’s widespread and 3) advertisers are reducing their paid search spending. Even more striking, 75% of advertisers said they were victims of click fraud.

Perception is reality in this case.

There are potential reasons to doubt some of the findings and conclusions of the report, or at the very least to scrutinize its methodology. To the extent Outsell was asking marketers largely about their perceptions and intentions (which it appears from the coverage they were) the reported findings could be very different from the underlying reality. However, the Outsell report does indicate an average click fraud rate of 14.6%, which seems to be higher but generally consistent with Click Forensics’ Click Fraud Index (13.7% on average).

I don’t believe the reality of click fraud is as stark as some of the findings of the Outsell document or some of the recent inflammatory coverage on the issue. My point is that there’s a perception problem now that might not have existed if Google, Yahoo! and others had been more proactive on the PR front. There’s now a sense among some people that these companies may be hiding something.

Back to Google Checkout.

My belief is that Google must assure the public that using Checkout is completely secure and that any information will not be exploited by the company. This could and should be part of a marketing effort to promote the product. However, if Google takes its usual “if the spaghetti sticks” approach (survival of the fittest products) Checkout may not get the reception it needs – and bad PR or inflated privacy concerns that take hold in consumers minds and could potentially fatally impact the product.

I’m not trying to be alarmist, I’m just pointing out that one must have a clear perception of the way the world sees you and respond or react accordingly. Google must be mindful of the wariness and growing concern surrounding its increasing dominance of search and not take its partners’ or users’ good will for granted.

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Related: Google’s CEO’s apparent attitude toward click fraud as a self-correcting problem. That may be a sophisticated economics theory way to regard the problem, but advertisers don’t share that same “sophistication.”

NSA Spying, AT&T and PR Death

Taking off my political hat and putting my analyst hat back on, it's interesting to contemplate the potential corporate PR fallout from the NSA scandal. Communications companies won't say whether they were/are involved, and for good reason — consumer backlash. AT&T, likely one of the big participants, is stonewalling and hoping to make disappear an Electronic Frontier Foundation lawsuit that would make lots of messy details public.

Meanwhile AT&T has been spending millions on its multi-media branding campaign the theme of which is "your world delivered."

Here's the EFF's "rebranding" of that branding campaign in light of the NSA Spying revelations:

This is an example of what my friend/colleague Pete Blackshaw discusses as empowerment of the consumer in an age when the Internet is making available unprecedented amounts of information. I won't call it "transparency" because none of these revelations came out voluntarily — they're being painfully extracted by investigative reporting.

What should be fairly obvious is that companies don't have the same control over their brands they once did. And the potential fallout for those companies that turn out to be implicated directly is significant, ranging from the engaged left to the mainstream.

This scandal, especially the darkly humorous "appropriation" of the AT&T campaign by EFF above (note the subtle reference to the Star Wars "Death Star" in the logo) could not only undermine the millions spent in rebranding, but also taint the brand going forward. (The "viral potential" of this logo/campaign joke is really huge.) Some of that bad PR might also rub off on AT&T's broadband partner Yahoo!, which has had a raft of its own PR problems connected with China of late.

It remains to be seen how the scandal plays out and how much wrongdoing by AT&T and others comes out (if any). The fallout could be minimal or it could wind up costing the company millions in PR damage control. The company might have to also spend money to reassure customers that by signing up with Cingular/AT&T wireless or AT&T landline service they're not setting themselves up to be monitored.

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More immediate and potentially more damaging than the PR fallout, cooperating phone companies now face billions of dollars in conceivable liability in the wake of the revelations. From the NY Times (reg. req'd):

Legal experts said the companies faced the prospect of lawsuits seeking billions of dollars in damages over cooperation in the program, citing communications privacy legislation stretching back to the 1930's. A federal lawsuit was filed in Manhattan yesterday seeking as much as $50 billion in civil damages against Verizon on behalf of its subscribers.