Accounting for social media

Social media's impact on the business world has been less obvious than on politics

Social media has transformed political communication — ask Narendra Modi and Donald Trump — but the impact on the business world has been less obvious. Three events involving some of America’s largest corporations over the past fortnight unwittingly set out the disparate strategic and public relations challenges as global consumers embrace the brave new world of insta-media.
 
Taking top honours in the list of how not to handle a PR disaster is United Airlines, whose stock lost $570 million in market capitalisation in one week after a clip went viral showing Chicago airport security toughs dragging an elderly Asian man, blood streaming down his face, off an United Airlines flight. The victim was Dr Dao, a 69-year-old Vietnamese-origin physician, who was among four “randomly selected” passengers asked to disembark to make way for United crew members.

 
Dr Dao initially accepted the $1,000 offer to disembark but then declined when he was told that the next connection home was not available till the next day. He had patients to see the next morning, he explained, so he had to get back that day. That was when airport security was called in to remove him. Dr Dao suffered concussion and a broken nose and teeth as a result but was eventually allowed back on board.
 

The outraged comment on social media – including from as far as China and Vietnam – focused in equal measure on the standard airline practice of overbooking (wrong in this case; the flights was fully booked, and if the United crew hadn’t needed to be accommodated the problem would not have arisen) and outright racism (would the bouncers have behaved similarly with white passengers, many asked). You would have thought that United PR’s machinery would have swung into action.

 
It did, but not in the way most expected. Chief Executive Officer Oscar Munoz, who ironically was recently named PRWeek’s “Communicator of the Year” (Malala Yousafzai shared this award), issued a terse statement apologising for re-accommodating customers — no apology for siccing the police on one of them. In the evening, Mr Munoz sent an email to employees declaring he would “emphatically” stand by them.

How United’s employees reacted to this unwarranted expression of solidarity is unrecorded, but the airline’s stock went into free-fall. No doubt this stock-slide and the prospect of being sued prompted the CEO, who had won his PRWeek accolade for apparently rehabilitating the image of the airline with customers and employees, to retract and issue an abject apology, saying he had misjudged the situation.

 
In the long run, the lure of cheap fares will ensure that the airline will suffer operationally but the reputational damage will be hard to discount for many years to come.
 
The surprising thing perhaps is that Mr Munoz, of Mexican provenance, proved so unaware of the prejudice embedded in the incident. Does corporate life make executives so insensitive? But then, Pepsi, which is run by a CEO of Indian origin, demonstrated a similar collective ignorance of racial sensitivities with a commercial starring the reality TV star Kendall Jenner.
 
The clip shows Ms Jenner, who happens to be part of a street-side modelling session, spontaneously join a “protest” — subject unspecified, though the peace sign and slogans like “Join the Conversation” carried by a crowd of beautiful young people were presumably meant to offer clues. As this crowd comes up against a barrier of riot cops, Ms Jenner steps forward and offers one of them a can of Pepsi, which he duly downs to all-round cheers.

 
Forget the innate silliness of the ad, the allusion to the recent black anti-police-violence protests across the United States was in such poor taste as to leave social media appalled. The ad almost seemed to mock a burning and divisive social issue — Ms Jenner’s Pepsi offering a parody of a chilling photo of an unarmed young African-American girl offering her hands for handcuffing to a line of burly police protected by riot armour.
 
To Pepsi’s credit, and unlike United Airlines, it got the message fast. As Coretta Scott King, daughter of civil rights leader Martin Luther King, described the ad as “tone deaf” and the talk show hosts tore into Pepsi, the multinational pulled the ad and apologised (strangely, the stock plunged after this). Ms Jenner is observing a maun vrat on the issue but you do wonder which gormless marketing exec approved the commercial. Pepsi’s values are all about cool street cred, yet it seems to have been out of synch with popular culture.

 
Facebook’s Mark Zuckerberg’s problems earlier this week weren’t in the same category but his response to the uproar over a video of a murder in Cleveland, uploaded by the murderer, was exemplary. Already under fire for being the unchecked purveyor of fake news during the US election campaign, he deserves some credit for stepping up and owning responsibility for his organisation’s tardy reaction. It was two hours before the video was taken down and Mr Zuckerberg recorded a filmed clip apologising for this failure and promising more robust filtering processes.
 
United Airlines, Pepsi and Facebook were subject to a level of scrutiny that was unprecedented even a decade ago. Their lesson: Social media is a new variable in the PR mix that can be as volatile as a stock price.