American showman P.T. Barnum once said that “there’s no such thing as bad publicity”.
In this line of thought, it’s better to have everybody talk about you even if your actions have been heinous than to have no one to talk about you.
This statement was made in the 19th century when PR specialists couldn’t take advantage of the digital wonders provided by the Internet, such as social media platforms, to make a huge profit.
So, it’s only obvious that one would think this statement is even more true now that everyone could potentially become the next big thing at any given moment.
Well, I don’t necessarily agree with this statement.
There are some very real risks that come with poor Public Relations, and consequences you may not expect nor may be prepared to fight against.
Let us not sugarcoat it: your entire business could go bust as a result of bad PR.
For example, the life of the two businessmen behind a popular Australian pizza chain was basically ruined after condemning “high wages” as the reason behind their bankruptcy – the two were put to shame and forced to apologise. Not a chance they’ll be baking another pizza any time soon.
But not every PR bust is necessarily your fault – it may be just a miscalculation or an embarrassing mistake.
The popular American chain Red Lobster wasn’t expecting customers to sit at their restaurant for six hours a day to take advantage of their newly added buffet options – but it turns out that those crab legs were delicious enough to turn the promotion into an expensive mistake.
The company was ridiculed when the buffet option was recalled, and Red Lobster lost a whopping $400 million in stock prices and $3.3 million in profits.
The risk of bad PR campaigns for your business
Bad PR campaigns can damage your entire business long-term, but it could go as far as affecting your personal life as well!
You have to make sure that what you do as both an individual and as a business always reflects the image you want to portray.
It’s all too common to see powerful CEOs of huge companies resign over costly mistakes – and worst of all, the company and its shareholders often suffer as a result of this too.
Bad publicity can cause any of these things to happen:
A) Loss of trust: Did you lie to your customer? Did you not live up to their expectation? Then your customer won’t be trusting you, and you’ll have to work twice as hard to reach your sales target.
After all, you don’t want to be known as that business whose products explode, break after one use or barely work.
B) A slump in sales: Often, PR tragedies lead to review bombs, lower accessibility to products, recalls and more difficult circumstances that lead to painfully expensive recoveries.
The vast majority of businesses do recover from bad PR eventually, but not before taking a severe hit on their sales that set them back months or even years.
C) Damaged brand recognition: Do you want people to look at your brand and immediately associate you with human rights scandals, as is the case with nestle? It has negative long-term effects on your brand image and online reputation.
Also, you risk having customers that are too embarrassed to partner with you.
How to avoid being harmed by a nasty PR campaign
Recovering from a PR disaster
What if that PR disaster is inevitable?
Everyone makes mistakes, some more than others. So it may feel like you are doomed to deliver a terrible massage, sometimes, even if accidentally.
What to do in that case?
1. Apologise: Issue a public apology on social media or any other relevant medium of mass communication. Ideally, those responsible for the screw-up should be the ones to speak up first.
Depending on the gravity of the situation, the CEO of the company or the chief executive should also issue a statement.
It’s extremely important that you admit to your company’s mistake and promise not to do it again.
2. Offer amends: Recall the bad product, offer payments to those affected by the mistake, or launch a small campaign to make up for your mistake. For example, if your actions accidentally damaged the environment, you could pledge money to a sustainable cause.
3. Advertise your changes: Here’s where PR professionals come in. By advertising your new actions such as your pledge or your campaigns to support a cause, you can actually spin the PR disaster into a huge win.
4. Rebrand (optionally): What if the PR disaster is so tragic that not even an amend could fix it?
In that case, people start resigning. Your CEO will likely leave your company. It’s time to rebrand your business.
3 examples of PR disasters that nearly sunk the companies
Volkswagen’s 2015 scandal
The biggest scandal the car industry has ever faced came in 2015 after Volkswagen admitted to deploying cheat software to give false readings on exhaust emissions. 11 million vehicles were affected.
As a result of this scandal, chief executive Martin Winterkorn resigned, and the stock price plummeted more than 40%.
However, this wasn’t enough of a punishment.
Volkswagen paid $4.3 billion in civil and criminal penalties, but the scandal cost the company a further $17bn over the next few years.
Competitors within the industry such as Mercedes-Benz and Porsche greatly benefited from this scandal, increasing their sales to a record 10.3 million pieces and trading at a stock price of $140 against Volkswagen’s $100.
United Airlines beating their customers
What is worse than making a terrible decision?
Making a terrible decision while someone is recording it.
Back in 2017, a viral video emerged of a Vietnamese-American customer being violently dragged off a United Airline vehicle. Witnesses can confirm that the paying customer was hit and dragged off the plane after refusing to give up his seat.
The video trended on social media and incited users to boycott United Airlines – some even called out United Airlines’ decision as “racist”.
The incident badly injured United Airlines. In a sample of 2,000 prospective fliers interviewed, 79% stated that they wouldn’t be using a United Airlines flight if possible – 44% went even further and said that they would even pick a slightly more expensive and slower the route just to avoid dealing with the company that was now branded as rowdy and violent.
United Airlines’ stock prices didn’t change much, closing at only $3 less the following day.
Low competition has been attributed to the reason why United Airlines didn’t suffer as much as it could have done over this mistake. Although they definitely used the scandal to create reactive campaigns like the one below from Southwest.
Johnson & Johnson’s cyanide-laced Tylenol pills
Not every PR tragedy is necessarily your fault. In 1982, seven people died after taking Tylenol.
Pharmaceutical giant Johnson & Johnson dipped nearly 20% in the stock market and the product was immediately recalled. It’s worth noting that Tylenol was JNJ’s best-selling product at the time.
Turns out, someone laced the pills with cyanide for unspecified reasons.
This story has a good ending, however.
Despite experts predicting that the company would have never recovered from this incident, Johnson & Johnson managed to turn this disaster into a win by recalling all of their products (31 million bottles at the time) and offering a replacement completely free of charge.
Furthermore, two months after this incident, Tylenol was launched in brand-new, tamper-proof packaging that was heavily advertised as completely safe.
However, this entire move cost the company approximately $100 million.
Is all publicity good publicity?
The digital era has made it so that companies that committed huge mistakes are accounted for their actions much more than ever before.
Of course, some still get away with it (looking at you, Nestle!), but there’s such a thing as “bad publicity” in this day and age.
Those who have to deal with the aftermath of a PR disaster, or simply businesses who want to get started with a solid digital PR strategy to help shed a positive light on their business can get the help of performance marketing agencies such as topflight.
Why performance marketing instead of digital marketing?
Because as the name suggests, we focus on high-performing strategies only that are grounded in reality and based on your budget and time restraints.
Therefore, if you want to recover from a bad PR stunt, there’s nothing better than a high-performing strategy to get you there faster than other digital marketing agencies could do.