Monthly Archives: October 2010

United Airlines: Broken Guitar Triggers Stock Rally

A few days ago some of the bright lights in the social media domain were all lathered up about a group of academics who were able to ‘prove’ that Twitter ‘predicted the outcome of stock market’. As it turns out, it was a worthy attempt by some academics who looked at historical data and found a parallel relationship between public sentiment and stock market movement (go to the link here). They were the first to admit that they did not find any causality between Twitter and movement in the stock market. The paper was unpublished and had not been through an academic peer review. Nary a peep from those same lathered up socialmedialists since (I think they might have been avatars anyway, not real people).

This got me thinking about the United Airlines incident whereby some poor unfortunate troubadour had his guitar allegedly mishandled and damaged by United Airlines. He was so incensed that he wrote a song about the incident and posted it on YouTube. The digerati swooned as it was ideal fodder for these Internet imperialists to take down yet another brand. So United was vilified as have many airlines since the rise of social media platforms. As they are fond of saying, Mr./Mrs. CMO – you no longer control the brand.

Well, here we are a year since the United Broke My Guitar incident. It’s earnings week in the US airline industry. So far, AMR, Southwest and Delta have fared quite well and most airlines are expected to post strong Q3 results.

Which brings me back to United Airlines. Since July 2009, United stock has been steadily on the rise. In fact, it would appear that the rally coincided almost to the day of the Broken Guitar incident and the stock has risen 10-fold since. Maybe there really is something to this social media analysis stuff.

Broken Guitar Triggers Rally

 

– Ted Morris, 4ScreensMedia.

Mind The Gap

“At Gap brand, our customers have always come first. We’ve been listening to and watching all of the comments this past week. We heard them say over and over again they are passionate about our blue box logo, and they want it back. So we’ve made the decision to do just that – we will bring it back across all channels.” This is from a recent press release from Gap Inc. regarding a change in its corporate logo. The full text can be found here: link.

So the socialmedialists feel that they won the day. The people (crowd) has spoken. While some have speculated that this was a PR stunt, The Gap Inc. nonetheless appears have capitulated and reverted to its original logo. Amen.

My speculation is that this event was symptomatic of something else: a brand that is indeed struggling amidst a retail industry vertical that is recovering fairly well since the 2008 economic downturn. The stock price peaked near $26 around April 23, 2010 and has fallen 30% to around $18 today. Historically, the stock hasn’t done much in the past 5 years, remaining under $20.

From a marketing perspective, the outcome of the social media/crowdsourced and subsequent response by Gap Inc. suggests a brand that has lost control. There is little sense that the outcry actually came from Gap customers or whether the research that GAP conducted was segmented with respect to brand loyalists, frequent shoppers, Gap customers at large versus non-customers and people who generally make a habit of railing against brands for sport. To take this further, there was little evidence that Gap distinguished between social media in the broadest context or WOM – Word of Mouth otherwise known as earned media, a key metric of contextual online brand conversation. I would also surmise that the Gap’s logo wasn’t top of mind with its various customer segments as opposed to merchandise selection & availability, customer service and the on-line shopping experience.

At the end of the day, whether or not a company chooses to change its logo,  the value proposition has to be clear, strong and reflective of customer wants and needs. If the value is not there, perceived or otherwise and if the product/service delivery does not meet or exceed expectations and create conditions for repeat purchasing, logo changing will do nothing to affect corporate performance. This goes for any company in a fiercely competitive market.

– Ted Morris, 4ScreensMedia