Nestle, Greenpeace, social media, crisis management, facebook, YouTube, Twitter. PR measurement. Interested?

Prediction: we should see signs of Nestlé’s share price recovering from its latest issue within about 15 days.

Prediction 2: at some point this year, 2010 will be named the Year of the Social Media Crisis. So I’m doing it now just to be the first. (If I’m not the first then please let me know so I can link to that person’s blog and boost my traffic But it didn’t come up on Google today).

Last week Greenpeace kicked off the latest element of its ongoing campaign against the use of non-sustainable palm oil, lining up the cross hairs on Nestlé, and in particular the iconic Kit Kat.

What started out as a fairly run-of-the-mill campaign (Greenpeace has run similar palm oil campaigns in the past), took a bit of a turn when social media gurus jumped on Nestlé’s response to criticisms on the company’s facebook fan page. This was the point at which I started to pay a bit more attention as it was no longer just the Greenpeace campaign that was fuelling the issue (and thanks to fellow H&K blogger Matt Muir for flagging it to me on a Friday afternoon!). Interestingly, the official video in question still only has around 80,000 views on YouTube (sorry folks, one of those is mine).

The problem the company now faces is that the story of its engagement with stakeholders via social media has, as was probably expected by anyone with a facebook account, overtaken the original issue of its sourcing practices, as highlighted by this PR Week story.

Since there are 90,000-odd people out there all with an opinion on that, I’m going to leave that particular debate alone. I’m more interested in what’s happening with the company’s share price, which, as you’d probably expect, has taken a bit of a dip. (Hopefully on Monday our IT wizards – or Matt – can explain to me how I insert that as an actual image – to be updated…).Now updated with actual artwork.

While that’s not wonderful for the company’s shareholders, it’s useful as an in situ case study. As mentioned previously on this blog, good crisis management can have a remarkably positive impact on shareholder value.

The Knight & Pretty study on which that assertion is based shows that companies that recover well from a catastrophe tend to show the start of an upward trend returning to their share price around 10-15 trading days post-disaster (recoverers are the top line):

Figure 4 from Knight & Pretty's "The Impact of Catastrophes on Shareholder Value"

This recovery is largely attributed to the performance of company management in the early stages of the recovery. I think Nestle is the kind of company that will be able to manage its way out of this fairly promptly. However, there are some additional challenges the company will face in getting there (I think):

  1. Getting the facebook thing right will probably involve a bit of sword-falling. But that’s no good unless you mean it (which means there has to be some kind of behaviour change first, before the public perception piece will work).
  2. The marketing sub-set of social media guru-dom will continue to feast on its young, until more tech-savvy marketers take the point of view expressed by @mediaczar (thanks @Matt_Muir yet again). Great example of Twitter as a debate platform. In the meantime, watch the carnage continue.
  3. Institutional investors will remain all over the shop courtesy of having to work out how the economy works again after a global financial crisis. The upturn in value I think will be affected by just how much brokers and analysts value the impact of social media vs. the old fashioned kind.
  4. They’re still going to have to do something about the palm oil. Incidentally, so are thousands of other companies because it’s remarkably pervasive stuff – you wouldn’t believe how much of it’s out there, and ever since we all got scared of trans fats in our diet, palm oil’s been making a comeback in ingredient lists.
  5. Supply-chain scrutiny is going to return to the fore. We’ve not long ago finished Fairtrade Fortnight, when Kit Kats across the world were celebrated for the appearance of the new logo. The ease with which this issue has captured public opinion will, I think, galvanise a lot of other interest groups who have previously struggled with highlighting labour/sourcing/deforestation practices in the past, having another crack.

Time will tell if I manage to fluke at least one of these (or my two predictions). I have a feeling there’ll be a hat eaten at some point this year…

As an adjunct to all of the above, I think communicators/marketers/crisis managers and PR students should spend some time with a PR text book and the Greenpeace website.

Professionally I have a lot of time for the sophistication Greenpeace brings to its campaign activities, because they show all the hallmarks of strategic, issues-led communication campaigning. PR measurement isn’t rocket science (well, only rocket science is really)…point being, if you set your PR or communication objectives properly, measurement becomes a binary thing. Either you achieve your objective, or you don’t. Pretty simple stuff, and yet remarkably difficult to do well – usually because we get side-tracked by things like events, press clippings and “we want to do a viral video”.

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7 Comments
21

Mar
2010

Chris

This seems like a very sticky situation for Nestle. That is the downside AND upside to social media sites. They can help to connect to customers but they also allow people the access to tell you what they think about your product, good or bad. I am on Greenpeace’s side in this battle, but I believe Nestle can salvage this situation with a bit of fine tuned PR work.

22

Mar
2010

Soyini

Media Czar’s point about schadenfreude & Social Media are excellent. Proof really that the dicipline itself is new and people are fighting like crabs in a barrel to be named King of the new terrain.

Yes Nestle will recover, they survived breastmilk, they’ll survive Greenpeace and palm oil.

Greenpeace isn’t above neferious tactics to get their point across (my opinion).

But this quote from Nestle:
“Thanks for the lesson in manners. Consider yourself embraced.
But it’s our page, we set the rules, it was ever thus.”

Beyond ridiculous.

Their concern may be legally sound, but they came across as completely unaware of the new rules of social media with their edit. ie you can’t control everything.

BA is much better at handling the social media response to their staff crisis.

http://youcouldbelievethis.blogspot.com/2010/03/corporate-identity-and-social-media.html

22

Mar
2010

Grant Smith

I think there are some good points here about companies being able to learn from crises for the future. Some of the best crisis management is done by the companies that previously did it…less well.

22

Mar
2010

Marlena

Excellent evaluation of the situation! So much more accurate than the PR week article which was just looking for a scapegoat.

It might be the year of the social media crisis, but let`s hope that eventually companies will understand how to truly engage in social media!

Also, this is one of the first blogs to mention the palm oil, people seem to forget about the actual issue because of the facebook crisis!

Read my thoughts on the crisis:
http://bit.ly/9p2MG3

22

Mar
2010

Grant Smith

Thanks Marlena – we always appreciate a happy reader! To your point about the actual palm oil issue, @vikkichowney made the point in this feature (http://bit.ly/caWmFf) in Marketing Week: “Being seen to do something in a crisis is almost as important as actually doing it.” I like this – contextualises the actual fixing bit, which I think gets overlooked an awful lot.

22

Mar
2010

Grant Smith

Sorry all who tried to click this link above – let’s try again…

http://bit.ly/caWmFf

26

Mar
2010

H&K London’s Blog » Blog Archive » Web Curios

[...] The Year of Social Media Crises – My esteemed colleague Grant Smith has declared that this will be the year of the ’social media crisis’. He might well be right – couple of fun ones this week: [...]

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