We’ve all heard the old adage; “there’s no such thing as bad PR.” This statement is built on the belief that any PR, even if it’s bad PR, provides exposure that is ultimately useful. Despite the ubiquity of this statement, experts have long debated whether it holds true.
Marketing and PR scholars have published studies assessing the impact of negative publicity. In particular, Jonah Berger of the Wharton School of the University of Pennsylvania and Alan T. Sorensen and Scott J. Rasmussen of Stanford University published a study in 2010 that examined the effects of negative publicity on established brands as opposed to generally unknown brands. Their study uncovered interesting findings regarding the impact of bad publicity.
Berger, Sorensen, and Rasmussen’s article hypothesized that negative publicity differently affects brands, products, and people depending on their popularity. In the introduction, the authors acknowledge examples of bad publicity that had a positive influence, specifically the film Borat. Following the release of the movie, which consistently mocks the country Kazakhstan, Hotels.com identified a 300 percent increase in searches and inquiries of the country.
Considering the potential for positive outcomes of negative publicity, the authors designed studies to test the effects of publicity on products with various degrees of popularity. The first study measured the sales following the reviews of more than 200 books from authors of different renown. The study found that positive reviews improved sales of books, regardless of whether the book was written by a well-known or emerging author.
Negative reviews impacted books by popular and unknown authors differently. When The New York Times reviewed an established author’s book negatively, the sales fell by 15 percent. However, books by unknown authors that received negative reviews saw sales increase by 45 percent. The authors of the study concluded that pre-existing product awareness by consumers influenced the impact of negative publicity. The authors state that consumers have certain expectations for well-known brands and professionals, so negative publicity of well-known brands and people can indeed cause harm.
SeaWorld and Blackfish
The findings from this study can be applied to actual brands that experienced bouts of negative publicity in the last several years. In particular, SeaWorld and Chipotle epitomize two brands with measurable outcomes as a result of negative publicity.
In 2013, Blackfish premiered at the Sundance Film Festival. This documentary reports on Tilikum, an orca that inhabits the tanks at SeaWorld, and the practice of whale captivity at theme parks. Since his capture by SeaWorld in 1983, Tilikum has killed three people, including the highly publicized death of SeaWorld trainer and performer Dawn Brancheau. The film, which includes interviews with former SeaWorld trainers, provoked strong reactions from viewers and animal advocacy groups.
SeaWorld’s PR department has attempted to combat the issues raised by the documentary. In early 2015, SeaWorld invited users to tweet questions to them via the hashtag AskSeaWorld. Rather than receiving legitimate inquiries and concerns, the tweets largely mocked and harassed SeaWorld for their treatment of captive animals. Twitter users still use the hashtag on occasion, and a perusal through the tweets illustrates the primarily negative sentiments towards SeaWorld.
Additionally, in December 2013, the Orlando Business Journal shared a nonscientific poll on its website to gauge if Blackfish changed the public’s opinion of SeaWorld. At the outset of the poll, the results indicated positive news for SeaWorld; 99 percent of respondents replied that Blackfish did not skew their outlook on SeaWorld. Upon reviewing the results, however, analysts discovered that approximately 54 percent of the poll’s respondents came from the same IP address – which belonged to SeaWorld. A spokesperson for the company stated that the responses came from some of SeaWorld’s proud employees who were asserting their trust in their company. It remains unknown if this poll response was a matter of coincidence or a PR attempt at improving public opinion, but the incident sparked greater public distrust in the company.
In the wake of this film’s release and the company’s problematic PR response, SeaWorld has experienced decrease in park attendance, revenue, stock prices, and corporate sponsorships. In 2015, Mattel did not renew its contract with SeaWorld to sell Barbie dolls featuring SeaWorld branding. Additionally, Southwest Airlines recently ended their 26-year partnership with the company. In the months prior to the film’s release, SeaWorld’s stock tended to average approximately $35. As of press time, it was just $12.21. An earnings release from earlier this year documents revenue from the second quarter of this year in comparison to last year. The report showed a $20.5 million decrease in revenue this year from the same period of time in 2015.
With the release of Blackfish, as well as SeaWorld’s PR mishaps that followed, public perception of the company and its ethical practices shifted. As suggested by the evidence from the above study, the negative publicity of this well-known company had a direct impact on the finances and reputation of the company.
Chipotle: A Tale of Food Poisoning and Wage Theft
2015 was a challenging year for Chipotle. Within a five-month period at the end of last year, the chain of casual fast food restaurants confirmed reports of norovirus, salmonella, and E. coli in various restaurants throughout the country. Hundreds of customers fell ill during these outbreaks. According to Chipotle’s website, the company had never previously experienced a major outbreak in its 20-year history. Despite its clean history prior to these incidences, the host of outbreaks created problems for the company.
Numbers from the first quarter of this year illustrate the impact of the outbreaks; revenue decreased 23.4 percent. Stock prices fell approximately 25 percent within a two-month period following the outbreak. In the months since then, the stock prices have fallen to approximately half of their worth before the food poisoning epidemic.
In addition to their food poisoning woes, Chipotle is facing more PR struggles after accusations of wage theft resurfaced within the last month. Leah Turner, a former employee, initially sued Chipotle for unpaid hours in 2013. The case has since turned into a class action lawsuit after 10,000 current and former Chipotle employees joined her to sue the company for allegedly requiring them to work extra hours without pay. The suit, entitled Turner vs. Chipotle, alleges that Chipotle forces employees to clock out and continue working. Chipotle claims this practice is the result of a few managers behaving incorrectly, but the representative lawyer of the workers believes that the number of workers to have joined the suit indicates a more structural issue within the company.
Similar to the SeaWorld incident, Chipotle experienced measurable effects due to negative publicity. Previously, Chipotle had high degrees of brand loyalty and interest, but the negative PR after the food poisoning outbreaks caused financial and reputation problems for the company. The compounded negative PR from the lawsuit during this pivotal moment in the company’s history may further complicate the public’s opinion of Chipotle.
Power of PR
Although SeaWorld and Chipotle are only two examples, they provide important insight to the power of PR. A misstep or controversy involving a major brand evidently contributes to crippling negative PR. Despite the old saying about the usefulness of any PR, the provided examples, as well as the findings from the above study, exhibit the measurable downsides of negative PR, especially for large and well-known companies.