United and Pepsi face the withering glare of the internet

Within the space of a week, two public relations disasters struck two different corporations. And while one company peddles soda pop and the other sells airplane rides, it turns out they both have the same Achilles heel — social media.

In the age of social media, consumer rage is just a click away

Two large U.S.-based corporations felt the pain of social media backlash in recent days. (Shutterstock/Vytautas Kielaiti)

This is the week that the "Hold my beer" meme made its way into the mainstream. 

Within the space of a week, two public relations disasters struck at two different companies. And while one peddles soda pop and the other sells airplane rides, it turns out they both have the same Achilles heel — social media.

When Pepsi released its ad featuring Kendall Jenner handing a can of pop to a police officer during a protest, it was "trying to project a global message of unity, peace and understanding."

That is not how the internet saw it.

To say the 2½-minute video landed with a thud would probably be the understatement of the year.

Within hours of its launch, the ad was being lambasted globally on social media for being tone deaf, while at the same time trivializing the very thing it was hoping to glorify — the protest march. The multimillion-dollar ad was pulled a day after its debut. By the weekend, Saturday Night Live had taken a crack at the story.

Yet, Pepsi's share price barely budged during the controversy. In fact, it's trading above where it was before the ad first aired online, because of a takeover rumour and an analyst upgrade. The market moves in mysterious ways, but the real answer will come in sales numbers, which we won't see for months.

Maybe Pepsi was able to shake off the controversy as it asked United to hold its beer, so to speak.

United takes a beating

As we've all seen endlessly, United felt the glare of social media after a video surfaced showing David Dao, a paying passenger, being forcibly removed from his seat, blood dripping from his face, on a plane United had overbooked.

The internet lit up, but it wasn't until Asia got in the game that United started to feel the pain. It's estimated the video was seen by more than 500 million people in China alone, on Weibo, its version of Twitter.

According to Fortune magazine, shares of the company fell as much as 6.3 per cent in pre-market trading, dropping $1.4 billion from the now $21-billion company by market cap. The company has since made some but not all of that back.

The public outcry has yet to subside. Tweets called for a boycott of the airline. Social media also offered up some prime advertising slogans for United's competitors with the #NewUnitedAirlineMottos making headlines of its own. 

It didn't help matters that United CEO Oliver Munoz bungled his apology three times. In his first attempt, in a letter to employees, he blamed the passenger for being "disruptive and belligerent." This only seemed to re-inflame the public anger.  

Beware the internet's rage

So what do these two future in-depth business school case studies have in common? They were internet sensations.

"Rage is literally a click away," says Scott Stratten, the CEO of UnMarketing. Stratten says both of these stories would have made headlines before the advent of the internet, but with less intensity.

Stratten's advice to United is simple: "Stop beating up customers." As for Pepsi, he doesn't think this is going to go away any time soon. "People are still talking about New Coke debacle." That happened in 1985.

As for what Pepsi or United can do to bounce back, Stratten says it's a waiting game. "I love the anger of community, I love the collective voice, but the reality is, the public will move on."

Scott Stratten, CEO of UnMarketing and co-host of the business podcast UnPodcast, says that after the outrage, the public will move on. (Submitted by Scott Stratten)

We just have to wait 10 minutes.

The big question now is whether either of these blunders will change consumers' buying decisions. Stratten believes it all comes down to a personal equation.

What do you care about? Is it convenience plus price? When push comes to shove, would you book a flight on United where Pepsi was served — if it's cheaper? 


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