United Airlines Lose Millions following YouTube Complaint Song!
There was a great story on BBC Breakfast News this morning about how social media can seriously damage a brand. In this case a single YouTube video complaint about a bad experience with United Airlines has contributed towards United Airlines share price dropping by 10% and costing shareholders a reported $180 million!
“Meanwhile, within four days of the song going online, the gathering thunderclouds of bad PR caused United Airlines’ stock price to suffer a mid-flight stall, and it plunged by 10 per cent, costing shareholders $180 million. Which, incidentally, would have bought Carroll more than 51,000 replacement guitars.”
Here’s the video, titled “United Breaks Guitars” by Dave Carroll – so far having an incredible viral effect with over 3.6 millions views:
This really goes to show the power of social media in terms of a reputation management tool and influencing public opinion. Every brand should be aware of their online reputation and trying to control this where possible. Social media has also made customer service more important than ever, now an unhappy customer has the power to share their story with hundreds, thousands or in this case 3.6 million people online!
There’s an interesting write-up on Social Media Today which looks at this and how United are using social media themselves – to less effect it has it be said! SEOmoz also posted some useful ideas about how United could look to repair their online reputation.
United aren’t the only company to be hit by a negative online reputation either, Domino’s Pizza in the US have received a backlash following a shocking video on YouTube. Plus Habitat were heavily criticised for spamming Twitter with irrelevant hashtags when their recent social media campaign was pushed too far.
July 23rd, 2009 at 10:53 am
I have watched Social media finally give a voice & power to “The people.” We are the Davids in Goliath, we are the little guys that couldn’t do anything without getting lawyers, headaches or in some cases going postal. Generation Jones, Generation Y is to thank for this new found voice. We created, this new world with technology & Social Media. I knew eventually we would figure out a way to get our message heard. My hat’s off to you guys, now do you think they can find my camera?
July 23rd, 2009 at 12:21 pm
One word: AWESOME! I read about this just the other day but hadn’t heard about how the video had actually impacted the stock. Gabriella hit the nail on the head. Great to see social media giving a voice to “the people”
July 23rd, 2009 at 1:39 pm
[...] I usually do not post about news related to brands and their social media presence, but this one really got me interested…It’s a classical example of action>reaction scenario. Ah, I [...]
July 23rd, 2009 at 2:40 pm
This article implies that the 10% decrease in the stock price was caused exclusively by the video which is very unlikely. There is cause and effect link that the author is trying to make is not clear. It is reasonable to accept the video has hurt the image of UA but stating that to say that the 180MM market devaluation was caused by that factor is way too much.
July 23rd, 2009 at 2:49 pm
[...] United Airlines Lose $180 Million due to YouTube Video! … SEOptimize [...]
July 23rd, 2009 at 3:10 pm
SuperMan is right, correlation does not mean causation. I’d like to believe one insanely clever song and video could have an astounding negative impact on a company, if purely out of love for creative vigilantism, however such a link can’t actually be proven. The stock market simply involves too many people with too many variables to draw even a realistic conclusion that Dave’s video had any direct impact on something like stock price.
However, Dave did inform and inspire a rather vocal online minority who will probably think twice before booking on United. Sadly, air lines don’t typically focus on bargain flyers, that much has been proven by leaked emails which spell out an airlines view of coach class: flying cattle. Just ask Spirit Air – http://bit.ly/Sa9vP Or look at anything Ryan Air has ever been accused of – from standing room only sections, to pay bathrooms. Sadly, when it comes down to it, customers will scoop up the cheapest ticket available, no matter what the airline is.
July 23rd, 2009 at 6:23 pm
Customer Service is the most Critical part of Social Media / Social Marketing.
Major companies beware: If you can’t/won’t/don’t back up your products and services, this could happen to you.
Now where’s my camcorder? I had a bad experience too recently…
July 23rd, 2009 at 8:40 pm
Funny, but the title of this article reads “United Airlines Lose $180 Million due to YouTube Video!”. It seems to me they lost $180 million because they weren’t paying attention to their customers. It just so happens that one of their customers came up with a creative way to tell them that. Not only is customer service the most critical part of social media but its the most critical part of any business.
July 23rd, 2009 at 8:44 pm
Thanks for the comment Katrina, completely agree with what you’re saying about the importance of customer service being the main cause of the problem.
The difference with using social media is that this that Dave Carroll’s bad experience has gone out to 3.6 million people online – as opposed to the just the people he’s told in-person.
July 23rd, 2009 at 9:34 pm
I agree with SuperMan. Sorry for the pun, but it is a leap of faith to assume that this incident alone, and this video series, has caused a 180 million loss. In all likelihood it was a few contributing factors, and not this one event in isolation, which goes to Katrina’ rationale above. It’s like saying that if I threw a rock in the pond, and then a dead fish floated to the surface, that I was responsible. What if the fish was dead in the water already?
July 24th, 2009 at 2:25 am
Excellent study Kevin – thanks very much for sharing. It’s been a fascinating story to watch!
July 24th, 2009 at 6:38 am
It proves absolutely nothing. There are simply too many factors to attribute UA’s stock price decline solely to Carroll’s video. Let’s not confuse consumer impact with an impact on investment behavior. Plenty of consumers have been dissatisfied with their banks, and extremely vocal online about their experiences, yet investors continued to pour billions into the banking industry up until the meltdown.
Causal oversimplification? Coincidental correlation perhaps? The BBC Breakfast News should be ashamed of itself for reporting opinion as fact.
While Carroll had a legitimate issue with UA’s horrible service, for every Carroll there seems to be a consumer hoping to use the Internet as a way to extort undeserved refunds, replacements, or free goods/services from vendors who fear any negative online publicity regardless the impact. Reports such as the BBC’s add fuel to that fire. That’s simultaneously good and bad for consumers.
July 24th, 2009 at 6:51 am
A correction, and an apology. It was Chris Ayres at Times Online, and not the BBC Breakfast Club, who made the mental leap from Carroll’s video to the UA stock decline. I’m a victim of my own proofreading.
July 24th, 2009 at 6:56 am
Thanks Joseph, just to confirm the BBC breakfast news reported a drop of millions in share price. The Times Online quoted a drop of 10% and $180 million loss for shareholders.
July 24th, 2009 at 7:25 am
You’re very welcome Kevin. And thank you, I did not realize that.
Just to be clear, I view social media as a wonderful resource that enables consumers to easily share their experiences with a global audience. However, I have also seen the darker side – when it is used by groups and individuals who will stop at nothing to get their way with a vendor/supplier, even when they know what they’re doing is wrong. And it’s not always easy to tell the difference between the legitimate and fraudulent claims.
In the same way that social media can be used to shame vendors into doing the right thing, it should be used to shame consumers into doing the right thing as well. Selfish vendors and consumers affect all of us.
July 24th, 2009 at 4:46 pm
The $1 billion drop in revenue that United just reported probably had more to do with the share price fall than this video. Just a hunch…
July 24th, 2009 at 8:03 pm
Slashdot take on this:
1. PR firm reports PR gaff and claims huge loss of revenue.
2. ?
3. Profit!
July 24th, 2009 at 8:21 pm
[...] United Airlines Lose $180 Million Due to YouTube Video! [...]
July 24th, 2009 at 11:55 pm
United Airlines (UAUA) has suffered a drop in share value similar to the other major airlines of the world. American Airlines, Delta Airlines, US Airways, etc. have all seen volatility in their share prices due to factors of the price of oil, broad-market movement, value of the US Dollar vs. other currencies,etc. Believe me, the video had little effect.
July 25th, 2009 at 3:29 pm
As Bradley Robb stated, “Sadly, air lines don’t typically focus on bargain flyers…” That is a fact, so I highly doubt UA would’ve been so extremely affected by one “non-elite” flyer’s guitar damage. Elite flyers, aka, most valued airline customers, are generally taken care of swiftly and with priority.
July 25th, 2009 at 5:29 pm
Why would any ordinary consumer “think twice” about booking with United?
I happen to agree with Bradley and Sara that the airline industry tends to focus on its most profitable passengers. I would go so far as to say that it is not unique in that regard. Industries tend to follow the money trail.
Many consumers are bargain hunters with no loyalty to a particular airline. I suspect that “elite” fliers are, at the very least, somewhat more loyal to an airline than the average consumer. [Though I wonder how much better their treatment is, really.]
So me must ask ourselves…what is the incentive for average consumers to switch to another airline, regardless the reason? The probability that they will be treated exactly the same way – if our assumptions are correct – is very high. Surely switching to another airline will not solve the problem or result in substantially better service.
And, average consumers – who are very price sensitive – switch airlines with such frequency that I believe it would be virtually impossible to trace influence [on their decisions] back to specific events such as Carroll’s video.
Viral video can be powerful entertainment, but let’s not confuse its ability to entertain with its ability to influence behavior.
July 25th, 2009 at 10:47 pm
[...] United, as shown in this song… believed their rules were more important than their customer. They were wrong… to the tune of around 180 Million dollars lost to shareholders according to this article. [...]
July 26th, 2009 at 8:12 pm
[...] United Airlines Lose Millions following YouTube Complaint Song! (SEOptimise) [...]
July 27th, 2009 at 11:23 am
[...] United Airlines Lose Millions following YouTube Complaint Song! [...]
July 30th, 2009 at 6:58 pm
One thing about all this commentary…no-one really knows whether the Youtube video was a catalyst, the straw that broke the camel’s back or really nothing more than a blip on the screen. What we simply have to note is it became news. That alone still is an issue with regards to one’s image being tarnished (at no cost to those that posted it) while viewed by over 3 million persons and then some.
July 31st, 2009 at 1:27 am
Hello everyone, below is my latest Delta Airlines experience. If the fees weren’t so outrageous, they’d be a joke:
http://bx.businessweek.com/delta-air-lines/delta-airlines—they-dont-nickel-and-dime-you-they-want-your-franklin-bills/13399429538410343443-c625dd8dc5580b73f09b9da4e4e425d9/
August 10th, 2009 at 10:59 pm
[...] http://www.seoptimise.com/blog/2009/07/united-airlines-lose-millions-youtube.html [...]
August 18th, 2009 at 2:51 pm
[...] United Airlines Lose $180 Million due to YouTube Video! story on bbc; [...]
January 10th, 2010 at 4:43 am
[...] of the King of Pop. I was also very interested to hear about the power of social media in both ‘United breaks guitars’ and Kiruba – Cleartrip incidents. I have heard enough of Twitter and then decided to check [...]