Kameir

Companies that still rely on old media reporting tools are unable to react to potential damages to the brand in a timely fashion. This might be most prominently showcased by online consumer reactions to brands which quickly became viral. According to some observers, this damages do not only have a long term negative impact on the brand itself but might also be able to significantly effect a company’s valuation.

You have probably seen it. But by the way of a short summary: Dave Carroll had his Taylor guitar destroyed by the United Airlines’ passenger baggage handlers during a flight in 2009. United repeatedly declined to reimburse the musician for the damage. So he wrote a song decrying their customer service and their brand. After releasing the song on YouTube the video promptly went viral before the airline could react. By the time of this writing the ‘United Breaks Guitars’ video has been aired by most mayor TV stations and was watched more than 9.6 Million times on YouTube alone.

The damage to United’s brand was undeniable. According to some columnist the mishap actually cost United $180 million, or 10 percent of its market cap (The Times, July 22nd 2009): “..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.”

“A fool thinks himself to be wise, but a wise man knows himself to be a fool.”
— William Shakespeare (As You Like It)