People Power

Perhaps it was only a coincidence that the Susan G. Komen for the Cure/Planned Parenthood Federation of America funding controversy occurred the same week that Facebook filed the paperwork for its initial public offering. However, no matter how fortuitous the timing of these events, Facebook CEO Mark Zuckerberg could not have planned a better example to illustrate Facebook’s mission and his vision of the power of social media.

While the media seemed to focus largely on the issue of how wealthy the IPO might make those with equity in Facebook, almost completely overlooked was a letter to potential investors that Mr. Zuckerberg tucked in the IPO documents. In this letter Mr. Zuckerberg states that Facebook's mission is “to make the world more open and connected,” and he outlines how Facebook approaches this mission so that “everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do.”

Mr. Zuckerberg’s letter is organized around the three goals Facebook strives to achieve; (1) to strengthen how people relate to each other, (2) to improve how people connect to businesses and the economy, and (3) to change how people relate to their governments and social institutions. As to the latter, Mr. Zuckerberg writes that: “By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. Over time, we expect [our institutions] will become more responsive to issues and concerns raised directly by all [the] people rather than through intermediaries controlled by a select few.”

What Mr. Zuckerberg refers to has been called “democratization and disintermediation” - the public's unprecedented access to information coupled with the decline of the traditional intermediaries between businesses, government, and the public. Social media fuels democratization and disintermediation, helping people to gather, share information, and directly affect institutional decisions. Prior to the Komen/Planned Parenthood controversy, the power of social media to lead to changes in institutional decisions was displayed in three other instances during the past eight months, involving Netflix, Bank of America, and Verizon Wireless.

Netflix – In July, 2011, Netflix announced that it would begin charging separately, at $8.00 per month, for its DVD delivery and streaming services. Prior to this pricing change, subscribers who wanted only DVD delivery paid $8.00 per month, while those who wanted DVD delivery and streaming paid $10.00 per month. The pricing change meant that DVD delivery and streaming would now cost $16.00 per month, a 60 % increase. Although Netflix projected that some of its 25 million subscribers would cancel due to the price changes, the cancellation rate exceeded projections, and Netflix informed investors that it expected to lose one million subscribers by September 30th. Many of the departing subscribers left blistering comments on Netflix’s website and Facebook page. Netflix then compounded the problem by announcing on September 17^th that it was going to spin-off its DVD delivery service into a new company called Qwikster. The effect of this decision was that subscribers who wanted both the streaming service and DVD delivery would have to visit two websites, manage two accounts, and pay two monthly bills. Once again, tens of thousands subscribers left comments denouncing the breakup plan on Netflix’s website and Facebook page. Finally, on October 9^th, after losing millions of subscribers and seeing its stock lose almost two-thirds of its value, Netflix surrendered, announcing that it was keeping its new pricing structure but abandoning the Qwikster plan. Netflix e-mailed all of its former subscribers about its decision, and its CEO, Reed Hastings, went on YouTube to apologize to its current and former subscribers.

Bank of America – In October, 2011, Bank of America, announced that beginning in January, 2012, it would charge its account holders a $5.00 per month fee for using a debit card to make purchases. Again the negative reaction was swift, as BofA customers went to the internet to criticize the charge. One BofA customer started an online petition at Change.org that quickly attracted 300,000 signatures of support. By the end October, when it became clear that the other major banks, which had also considered adding a monthly fee for credit card use, were not going forward, BofA dropped its plan.

Verizon Wireless – On December 29^th Verizon Wireless announced that it would begin charging its customers a $2.00 “convenience fee” if they made one-time payments on the company’s website using a debit or credit card. The internet and social media criticism of the planned fee was immediate and massive. Online petitions were circulated, and the uproar caught the attention of the FCC, which announced that it was undertaking an investigation of Verizon Wireless. In less than a day Verizon Wireless announced that it was scrapping the fee, “based on [customers] input.”

Susan G. Komen for the Cure - This brings us to the aforementioned Susan G. Komen for the Cure (“SGK”)/Planned Parenthood funding controversy. On Tuesday, January 31, 2012, SGK announced that it was cutting funding to Planned Parenthood for breast cancer exams and other breast-health programs because of SGK’s new rule that prohibited grants to organizations under government investigation. (In September 2011 the House Oversight and Investigations Subcommittee initiated an investigation into whether Planned Parenthood used federal funds for abortion services in violation of the Hyde Amendment.)

SGK’s decision sparked some praise but even more outrage. By Wednesday, February 1, 2012, fewer than twenty-four hours after the decision was announced, there were more than 3,000 comments to a post on SGK’s Facebook page explaining its decision to cut funding, and opponents far outnumbered supporters. At least two online petitions, one from Credo Action and the other from SignOn.org, were established to pressure SGK to reverse its decision. Planned Parenthood sent out mass emails and placed telephone calls requesting that supporters take action against the decision. In addition, it launched a Breast Health Emergency Fund to ensure continued funding to Planned Parenthood affiliates that would lose their SGK grants, and raised almost three million dollars from more than 10,000 donors. Among the donors was New York Mayor Michael R. Bloomberg, who pledged one dollar for every new one dollar donation made to Planned Parenthood, up to $250,000. Another $250,000 was received from the Amy and Lee Fikes family foundation, which issued a statement encouraging “others to join us in replacing the funds lost, so that no woman’s health is imperiled by Komen’s unfortunate decision.”

The next day, Thursday, February 2, 2012, SGK added to its problems when it offered a different explanation for its funding decision. In a conference call with the media, SGK founder and Chief Executive Nancy G. Brinker said the decision was due to policy changes intended to improve how grantees are selected. Ms. Brinker explained that although women received clinical breast exams at Planned Parenthood clinics, patients are referred to other medical facilities for mammograms, biopsies, and cancer treatment. Ms. Brinker referred to this as “pass-through” services: “We look at the quality of the grants. We don’t like to do pass-through grants anymore.” SGK’s shifting explanation added fuel to the fire of those who claimed that the initial decision was politically motivated to mollify SGK funders who were upset with SGK’s affiliation with Planned Parenthood.

Ms. Brinker’s explanation failed to quell the uproar, and on Friday, February 3, 2012, SGK issued a statement rescinding its decision.

The New Reality - As noted by Mr. Zuckerberg in his letter to investors: “By giving people the power to share, we are starting to see people make their voices heard on a different scale from what has historically been possible. These voices will increase in number and volume. They cannot be ignored.” Businesses must take into account this new reality in their decision-making processes. Currently, most companies might consult their chief legal officer or chief financial officer before making a decision, and afterwards task their communications personnel with disseminating the decision to the press, employees, investors, and other stakeholders. This decision-making model is on its way to obsolescence. The new reality requires a company to not only consider the legal and financial implications, but to also consider the public relations implications of an institutional decision. Democratization and disintermediation requires that companies be transparent in their decision-making, and think strategically about how decisions are communicated. In the new reality, the chief communications officer must be as important as the chief legal and financial officers in the decision-making process.

A Sea Change

As I have frequently written in my blog posts, social media represents a sea change in the way corporations and other business entities communicate with the public, especially in a crisis. Therefore it should be no surprise that according to a recent article in PRWeek, social media was a key channel for Carnival Cruise Lines in its crisis communications response to the fire aboard its Splendor cruise ship earlier this month. In addition to proactively distributing news updates to conventional media, Carnival also communicated updates by posting them on carnival.com, Facebook, Twitter and carnival-news.com. Jennifer de la Cruz, director of public relations for Carnival, told PRWeek that, "Our key messages . . . focused on providing assurances that everyone was safe, the status of the situation on board and any updates to the plan for returning the ship to port and, of paramount importance, communicating our apologies and acknowledging the difficult environment on board."

The day before the Splendor was towed into San Diego, the ship's cruise director, John Heald, made a post about the conditions aboard ship on his popular personal blog. Heald's blog post was picked up by major media outlets such as USA Today, which commented:

The ship's famously saucy cruise director, John Heald, has just posted a lengthy, startlingly candid account of the first few minutes of the crisis on his personal blog, which is widely followed by cruise fans. . . . In an account that mixes both seriousness and Heald's trademark humor, the longtime Carnival staffer goes on to explain both the severity of the situation that he witnessed on the ship's bridge and the crew's heroic response.

My colleague, Chris Gidez, was interviewed by PRWeek about Carnival's crisis communications response and provided the following analysis:

Chris Gidez, head of US crisis/issues management group for Hill & Knowlton, calls the early blog post by Heald "brilliant. The first rule in crisis management is to regain control of the agenda and conversation." [Gidez] says that's especially important in a situation like this, where passengers are now starting to talk to media and no doubt will share their own detailed accounts online. "The cruise community is very engaged and active online. There will probably be video shared too, and it will likely go viral," says Gidez. "While we can expect to hear stories of long lines, no air conditioning, rude crew members, etc., there will be just as many who applaud the performance of the line."

Monitoring Social Media

In an earlier post, "What We've Got Here Is Failure to Communicate," I cited the following social media statistics: there are 200 million blogs; 73% of active online users have read a blog; 44% of those online get news at least a few times a week through posts from social networking sites, automatic updates, and emails; and 26% of Twitter users get their news from tweets. Since social media has overtaken pornography as the number one activity on the internet, these statistics represent just the tip of the social media iceberg.

Also consider the following:

• One out of eight couples married in the United States in 2009 met via social media
• YouTube is the second largest search engine in the world
• More video was uploaded to YouTube in the last two months of 2009 than if ABC, NBC, and CBS had been airing content 24/7/365 since 1948, the first year ABC broadcast television
• Seventy percent of eighteen to thirty-four year olds have watched television on the web
• Facebook tops Google for weekly traffic in the United States
• With 500 million users, if Facebook were a country, it would be the world's largest after China and India, numbers one and two, respectively
• 60 million status updates happen on Facebook daily
• More than 1.5 million pieces of content (web links, news stories, blog posts, notes, photos, etc.) are shared on Facebook daily
• Ashton Kutcher and Britney Spears have more Twitter followers than the combined populations of Sweden, Israel, Switzerland, Ireland, Norway, and Panama
• Eighty percent of Twitter usage is on mobile devices
• Fifty-four percent of bloggers post content or tweet daily
• Thirty-four percent of bloggers post opinions about products and brands

Given this sheer volume of internet traffic, tracking social media for what is being said about you, your client, or your company is a daunting prospect. Nevertheless, a number of companies are trying to track social media, and one of the more ambitious tracking operations is being conducted by Gatorade.

In April, the company established the Gatorade Mission Control Center in its Chicago headquarters, a war room for monitoring the Gatorade brand in real-time across social media. Using software from IBM and Radian6, four staffers monitor social media posts 24 hours a day for mentions of Gatorade. The monitoring is not passive; the four staffers often jump into conversations occurring on Facebook or Twitter. As reported in the Wall Street Journal:

Gatorade staffers monitor social-media posts 24 hours a day in the glitzy hub, hoping what they see and learn will help the company more effectively promote its new G-series of drinks, which launched last spring. Whenever someone uses Twitter to say they're drinking a Gatorade or mentions the brand on Facebook or in other social media, it pops up on a screen in Mission Control. On Saturday, the staff jumped into a Facebook conversation to correct a poster who said Gatorade has high-fructose corn syrup. "It's like we're a person in their social circle now," says Chief Marketing Officer Sarah Robb O'Hagan . . .

The ability to track social media conversations in real time may not sell more Gatorade, but it has tremendous potential for use in crisis communications:

[F]ew [companies] have staff monitoring blog and other posts alongside those tracking online-ad traffic, producing a consolidated picture of the brand's Internet image. Gatorade hopes such coordination will help head off potential crises like a brouhaha last year over PepsiCo's slow response to consumer complaints that an Apple iPhone application for its Amp energy drink was sexist.

You can see pictures of Mission Control in action here.

Social Media Shenanigans?

Last month I blogged about a dispute between Westwood College, Inc., a for-profit college, and some of its former students who contend that the school violated consumer protection laws. The plaintiffs were allegedly recruited through a Facebook page, Warnings About Westwood, and a website, westwoodscammed.me, both of which were started and maintained by a law firm in Tampa, Florida that is representing the students. Westwood has filed a defamation lawsuit against the law firm, alleging that it was smeared by the law firm's use of social media like Facebook and Twitter to spread the word about Westwood.

Westwood is not the only company that has filed suit alleging it is a victim of social media. Corporate Counsel is reporting that on August 2, 2010, Ocean Spray Cranberries, Inc. filed a lawsuit in federal court in Boston against Decas Cranberry Sales, Inc. Ocean Spray alleges that Decas hired InkHouse Media + Marketing to develop a "false and misleading social media campaign." Ocean Spray contends that InkHouse, on behalf of Decas, launched a website called "Scamberry.org," which reported that Ocean Spray was selling a sweetened dried cranberry product made largely from corn syrup and few cranberries. According to Ocean Spray, the scamberry.org site made no mention of Decas; instead it was attributed to "the Scamberry Initiative" and described Scamberry.org as "a consumer education initiative about mislabeling." In addition to the website, Ocean Spray also alleges that Decas used "internet blogs . . . , Facebook accounts, YouTube videos and Twitter postings that . . . led consumers to believe that [Scamberry.org was] an independent non-profit consumer advocacy group" rather than Decas itself. Ocean Spray alleges Decas' actions violated the Agricultural Fair Practices Act, the Lanham Act, and the Massachusetts Unfair and Deceptive Trade Practices Act. The Corporate Counsel article about the Ocean Spray lawsuit can be found here.

Westwood College Employs Litigation Communications To Protect Its Reputation

As I have noted in previous posts, one of the goals of litigation communications is to protect the client’s image during a lawsuit. A litigation communications specialist should understand the law, the legal process, and the media in order to be able to effectively work with the client’s legal counsel and ensure that the client’s positions are presented to the general public and all key stakeholders, such as shareholders, customers, and business partners, in a way that protects the client’s image without compromising its legal positions.

The widespread use of social media has raised the stakes even higher, such that in some instances the actual outcome of a case may be insignificant when compared to the reputational damage inflicted during litigation. As a result, an increasing number of general counsels are deciding to make litigation communications part of the response to lawsuits. For example, Corporate Counsel recently reported on the legal dispute between Westwood College, Inc., a for-profit college, and some of its former students who contend that the school violated consumer protection laws. The plaintiffs were allegedly recruited through a Facebook page, Warnings About Westwood, which was started by a law firm in Tampa, Florida. The use of social media to recruit the students and to spread word of the lawsuit led Westwood College’s general counsel, William Ojile, to decide to use litigation communications to protect Westwood’s reputation. The article, which can be read in full here, offered the following explanation for why Ojile decided to use litigation communications:

“The smear tactic and the use of social media have caused us to challenge traditional norms on how you respond to the portrayal of your company when you’re in litigation,” he said. Typically he doesn’t respond in the press when asked about a suit. But in this case he not only discarded the “no comment” approach, he hired a public relations firm to reach out to reporters. “You have to show your faculty and staff and students that you’re not just out there getting pasted,” he explained. The college created a Web site that responded to the allegations and anticipated students’ questions. “How does Westwood battle this? We battle it with transparency,” Ojile said. “Every school has complaints,” he added. “I don’t care if you’re Westwood or Harvard. We try to deal with complaints as they arise.”