How Activists Use Social Media Against Corporations

In a recent blog post we showed how activist groups are taking the lead against corporations in social media channels and we observed that corporations need to catch up. Here’s why and here’s some of the ways activist groups are using social technologies to win their causes. A client just this week said to us “we’ve ignored this issue for too long, it’s going to cost our industry a fortune to catch up.” He is very much right.

The Objective of Activists Using Social Media

Companies and industry associations often think the activists are railing against them specifically. While the content of their attacks is, the real objective is to get directly to the target audience that will take action with the content. Part of what activists want is for users online to then re-shape the content, turning it into a meme that goes even more viral.

How Social Media Activism Translates to the Real World

The result activist groups want from their social media forays is multifaceted, but one easy way to understand what the result can be? Citizens who see a heart tugging video on YouTube either email or pick up the phone and call their Congressional Representative, Legislative member or Member of Parliament.

Forget About Being Rational. It’s About Emotion.

Corporations tend to rationalize. Issues are analyzed and researched to make viable business decisions. Activists are not concerned with being rational – they want to be emotional. A rational response doesn’t always work…that doesn’t mean coming out ranting. It means understanding how to use perception and emotion in the response to the activists message.

But It’s Just Kids Using This Stuff Isn’t It?

That assumption can prove a fatal error. Very quickly or as death by a thousand cuts. Youth segments are involved, but even if a teenager sees the message, they share, and often share with their parents. But when you also consider that the average age of a Twitter user is 35 to 44 and Facebook is edging higher, you can see it’s about a demographic that has voting power.

Activists Use A Complex Web of Tools

Pun aside, activist groups are very savvy with social technologies. They use multiple services to deliver content, understanding that different channels appeal to and are used by different demographics. A simple social media monitoring tool is often not enough to understand the complexity of a communications strategy; more in-depth research is often required. Such research online also provides context by the research firm that is not available through a social media monitoring tool or online reputation management service.

Organizational Impacts Can Be Multifaceted

It’s not just having a large mass of constituents calling their elected representatives that can cause damage. It may also take the form of a boycott, incrementally lower product sales over time, an investigation by federal authorities, a series of negative media stories. Senior management jobs may be the sacrificial lamb or serious issues with the board and governance. It may also be harder to attract top talent to your company. Sometimes suppliers can become collateral damage. Activists understand this well.

Steps to Be Prepared

Undertaking an in-depth review of your company or industry associations presence on the Web and in social media channels is a critical first step. You can then have a clear insight into the landscape of Cyburbia, identify any threats or existing issues and gain insight into how activists might be using these tools through a mapping exercise.

Understand That Activists Do Not Use Traditional Media Very Often

PETA creates ads that the Superbowl will not air. They place the ads on video sharing sites such as YouTube or Break.com and then everyone goes to see them. Activist groups do not always need to get the attention of mainstream media anymore and often don’t even bother. While you may monitor traditional channels, assuming the Web doesn’t matter, your sales are dropping and an organized lobby may be instrumenting a legislative change that will cut profits or restrict your business operations. And you won’t even realize until it is too late.

Conclusion

Social technologies such as Facebook, Twitter or Ning enable groups both formal and informal to very quickly come together, create and distribute content at essentially no cost. In 2010 Canadians, Americans and Brits spend more time online than watching television. Add in tablet devices like the iPad and smartphones and you have a heady mix of tools anyone can use at anytime. Does your organization have a process in place to understand the potential impacts or at least monitor Cyburbia?

Social Media Monitoring for Public Companies

It is important, but not just for brand monitoring. It’s important for a number of reasons beyond basic marketing purposes, perhaps more so for a publicly traded company. For smallcap companies it may be easier and less costly, but is still important. Here’s why;

1. Investor Relations: For those companies on the pink sheets or venture exchanges most chatter takes place in stock bulletin boards – but not all. Your stocks may well be discussed in other forums, on social networks (e.g. LinkedIn or eCademy for business social networks) or via microblogs such as Twitter or Identi.ca. You can gain key insights into investor moods and how they are discussing your business or even competitors.

2. Board Governance: Some insights can serve to keep the board informed of general market trends and assist in governance matters. Including warnings that there may be an emerging issue to address in rough times such as large lay-offs.

3. Liability & IP Protection: You can use these tools to monitor for possible infractions on intellectual property protections such as patents. If unions are involved, monitoring public forums may give warnings of strikes. You may face leaked information that can affect stock prices (such as United Airlines suffered when a blogger posted they were bankrupt; several years after the fact and the stock price tanked.)

4. Adults Too: Chatter across social media channels is not just for kids; thinking that way can be a costly mistake for a public company today. The average age of a Facebook user is 43 and for Twitter it’s 38. There are a number of social media channels that are of no interest to kids, such as for golf or sailing.

5. Management Monitoring: Senior executives of public companies often come under scrutiny not just by news media, but by shareholders and sometimes the general public. Monitoring and researching social media channels can help keep an eye on the reputation of senior executives and help avert any potential crises.

These are perhaps the primary reasons to research social media channels to begin and then monitor those channels on an ongoing basis. There’s so much information moving onto the Web every day that no industry sector is isolated. Before you monitor however, it’s best to retain your PR firm or a research house to conduct the initial scan of your ecosystem to help understand what to monitor, how frequently and to what degree.

The Board, Governance & Social Media

Is it really that important for a board of directors to understand Social Media? It is today. They don’t need to understand how to use Twitter or the tiny details of Facebook. But what they do need to understand is a) how people use Social Media and b) how it can affect a large, mid-cap or small-cap public company or even privately held company.

Why?

Here’s a look at how activity can impact a public company, board governance and strategic direction (which is what a board is responsible for.)

1. Directors Liability: A crisis, such as JetBlue or the oil disaster in the Gulf of Mexico currently underway, can lead to huge public discussion online. Citizens can use Social Media tools to organize protests and gather information which can be used in litigation and puts members of the board in a liability suit situation. During and after a crisis, monitoring Social Media channels can help counsel better assess risk and potential outcomes.

2. Union Organizing: Unions are making very good use of Social Media tools. A board not paying attention to Social Media channel chatter may be blindsided by a rallying attempt at their company. One that they could have been aware of and prepared for.

3. Whistleblower Crises: It may be that a whistleblower starts placing information in select channels, such as a blog, that could lead to threats of congressional hearings or legislative changes. A whistleblower can quickly build community.

4. Legislative Impact: Groups opposed to a company’s activity (i.e. oil sector) can use Social Media tools to build potentially damaging evidence against a company. This can result in citizen connecting with their legislative or elected officials with the result of legislation that stops the company in its tracks on a proposed project.

5. Stock Price Volatility, Insider Trading Claims Etc.: An employee may post in a blog (intentionally or accidentally) information that could lead to a sell-off or drive a sudden hike in price and buy activity resulting in an SEC investigation. It may lead to board changes or the need for board members to actively engage in reputation management and public statements. It may also lead to insider trading charges and more.

There are more than these five, but they are key issues that a board may need to understand in terms of governance and strategic direction. Social Media has already impacted the board of JetBlue with their crisis a few years ago and there are likely other examples.

The challenge is that in over 90% of these companies with such board structure, it is likely the board is of the upper end of the boomer generation and may not grasp the effects of these technologies in many cases and suspect they’re only used by “youth” who couldn’t rally to impact a company. This can be a deadly mistake.

(Author: G. Crouch, MD)

Marketing Is Not the Big Issue of Social Media for Businesses

For businesses the issue with Social Media isn’t really marketing. I’d argue the bigger issue for businesses is actually transparency. There’s an old saying about eating at a restaurant, “what you don’t know won’t hurt you.” Social Media has opened up a whole new set of cost burdens for businesses; PR people need to learn new skills and understand the impact of new communications technologies, marketers the same. Then senior management needs to understand the strategic impacts of social media to the business.

The result is an increased level of transparency. Across all aspects of a business (marketing, HR, production etc.). This not only presents a PR and marketing challenge, it also impacts governance, investor relations, product management, government relations and regulation/legislation. Such a broad set of issues from the newest communications revolution leaves a lot for businesses to suddenly contend with.

Now, we are starting to see business fight back, seeking to claim their rights; do they see this as a bid to manage transparency? Restaurants in New York are pleading the city not to force them to display health department ratings in their front windows; for fear it will drive customers away (to me, if you’re up to health standards you shouldn’t be worried, so naturally, citizens are asking what they’re hiding.) Social Media played a part because citizens took the issue into the blogosphere, Twitter and Facebook. Then they called their councillors and put pressure on them. So the citizens are demanding more transparency and restaurants want less.

Because of the consumers ability to create and repurpose digital content in Social Media, it has created a conundrum for businesses; how much to reveal, and when it’s revealed what might be the consequences? Add to the mix the Enron, Conrad Black and financial crisis of 2008, citizens are demanding to know more. To have access to more. Obama’s government is opening more and more data to citizens everyday, England is doing the same. Canada is shutting down more doors than it’s opening.

Already, businesses (especially public ones) must contend with increased regulatory requirements for disclosure. Because consumers / citizens are creating the content and politicians react to citizen sentiment, businesses feel the tension of this already tense relationship grow increasingly tough.

The real cost impact to businesses then, is not the PR/Marketing aspect, but that of exposing their business practices overall. Public companies expose a lot of info through filing rules, private businesses not so much. European private businesses have for many years been more financially transparent by government regulation, but not American or Canadian. This could all change. What is the risk of confidential business practices being exposed? Methodologies, processes and strategies are corporate secrets and are vital to healthy competitive markets in a capitalist society. And lets face a truth here; capitalism has done more good for humanity globally than any other previous form of commerce.

This all means an added cost burden to business; more PR/IR people, more governance / legal costs, more people and a deeper understanding of consumer activities in the Social Web. Add all this into marketing and PR costs – the consumer will be the one to bear the subsequent price increases to offset the costs.

What do you think? Is increased transparency good or bad? And if so, for whom?

Social Media & The Impact on Corporate Governance

In 2001, market regulators in Canada, Europe and the U.S. required public companies to simultaneously issue press releases to the Web and the newswire. In addition, any public meetings were to be broadcast to the Web via video feeds. All this before the rise of Social Media in a significant way. The bulletin boards (newsgroups) for discussion on public companies have been rampant for years, Stockhouse being among the pioneers.

My days running communications for a public company at the turn of the century saw us monitoring those newsgroups every day. Some days it was hard to not tap a condemning response to the idiocy of some of the comments and speculations made there. But other issues became apparent, among them was the damage that could happen when an employee spoke of something to a friend who then posted to the BullBoard on that company – this could wreak havoc on a stockprice; and nearly ended up in a line employee being fired once.

This was several years ago. It’s not about to get better. Public companies will face even greater challenges with Social Media in the years to come. Regulators may eventually require public companies to also post information to Social Networks, the same time they issue a press release. Video’s might have to be posted to several video networks and across mobile platforms as well.

Given how the content is both consumed, shared and managed across these channels, public companies are going to face complexities in shaping, distributing and monitoring those messages. What if the company must also issue notices across microblogging platforms like Twitter?

What will public relations and investor relations practitioners have to to consider if such issues arise? Increasingly, companies that thought they didn’t really have to concern themselves with the Web beyond marketing, will soon find out differently.

2010 will, I think, see some interesting changes to governance on communications issues for public companies.

(Author: G. Crouch, Managing Director)