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Knowledge@Australian School of Business

New Marketing Rules: When Social Media Spins Out of Control

Published: October 16, 2012 in Knowledge@Australian School of Business
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The shifting landscape of social media is new and difficult terrain for business players to navigate. There's so much grey area, with lots of risk and few precedents to follow. Indisputably, social media is making customers more powerful. And controversial action by regulators on major brands, including Smirnoff and Fosters, means this area is getting tougher - legally and financially.

Marketers are in a spin following the Advertising Standards Board (ASB) ruling that brands are responsible for user comments posted on their Facebook pages, and an Australian Competition and Consumer Commission (ACCC) warning that court action can result for larger organisations if inappropriate material is not removed quickly. What do the rulings mean for the future? To what extent can companies control what customers and advertisers say on their Facebook pages or on other social media?

The ASB determination "may be a little bit of a knee-jerk reaction", according to Iain McDonald, chairman of the Communications Council's Digital Committee. "I don’t necessarily agree with [it]," he says, adding that companies should self-regulate - instead of having to follow rules.

"The idea that a person’s post on a Facebook page can represent an advertisement when it’s in the context of a brand page does not really make any sense to me. I think it may be making too much of an assumption that consumers think that other consumers’ comments are always true, which is not the case," says McDonald.

With the number of social media users growing worldwide - Twitter now has 500 million registered users and Facebook one billion - there’s an urgent need for companies to take social media management more seriously, says Sydney-based social media expert James Griffin.

"I think what’s happened is that the conversation about social media has left the marketing department and made its way up into senior management," Griffin says. "I also think the outrage that some organisations have shown in asking how they are going to manage and properly resource these new requirements to moderate and read all the comments suggests that they have not been doing that in the first place."

Griffin notes that because social media accelerated so quickly, the law and other regulatory authorities have been slow to provide guidance. "They have certainly caught up now," he adds.

Business may need to spend more on monitoring and updating social media channels, suggests Griffin. But the cost can be prohibitive, particularly for corporates. Telstra employs 60 staff on its social media team and the Commonwealth Bank of Australia had more than 100,000 Facebook likes early in 2012.

Management of social media campaigns can be complex and may need to be outsourced, says Griffin. "What we are starting to suggest to organisations is that they consider a social media audit as part of their internal audit process. Part of that is formulating a social media crisis plan for when things go wrong."

Such an audit costs between A$15,000 and A$30,000 at Griffin’s social media monitoring company, SR7, and takes a holistic look at the use of social media by the whole organisation. Monthly management fees cost from A$2,000 upwards. "An audit is actually very smart and some of the leading companies we are working with have adopted that approach, which has put them in good stead," Griffin says.

Controlling Commentary

The ASB ruled in August that social media is an advertising platform under the Advertising Code of Ethics and that the Facebook site of a company is "a marketing communication tool over which the advertiser has a reasonable degree of control". The ruling was in response to complaints about comments on Diageo’s Smirnoff Vodka page and Fosters' VB page. The board found the Smirnoff complaints were not justified, but that the VB page comments breached the alcohol industry code by encouraging excessive drinking and insulting gay people and women.

Not surprisingly, business has reacted nervously. Stephen von Muenster, who runs a specialist media legal practice, von Muenster Solicitors & Attorneys, says he has received many calls from the advertising industry and clients. His advice is that social media can be managed through sensible approaches. "It’s a risk management approach which comes down to the risk profile of the business. If you want no social media risk, then don’t engage in social media," he says.

A number of laws govern content on social media. According to von Muenster, the ASB decision concerns false, misleading or deceptive conduct under the Australian Consumer Law and extends a 2011 ruling by the Federal Court against health company Allergy Pathway. The court found the firm was liable for postings of third parties on social media and knowingly took no steps to remove misleading testimonials on Facebook and Twitter.

"There is a whole array of laws that can influence what you do on social media," says von Muenster. The main areas of risk are copyright, defamation, injurious falsehood, causing menace and trademarks, and social media defamation cases have been dealt with in the US and the UK, he says. Von Muenster hosted a social media legal seminar in September, to launch the Communications Council’s Social Media Code of Conduct.

"The reason we released the code of conduct is that we believe the landscape is shifting so dramatically and quickly," says McDonald. "There need to be more guidelines in order for the industry to evolve at the same rate that the landscape is shifting." The code recommends that social media pages be transparent, avoid making false representations or obscene, defamatory, threatening or discriminatory remarks, and address issues of confidentiality, intellectual property and copyright.

Damaging social media campaigns can take off fast to a wide audience, warns Lisa Messenger, of The Messenger Group, in her 2012 marketing book, Social Media to Boost your Brand. "A dissatisfied customer would probably tell their experience to about 10 people face-to-face," she says. "On social media, however, these 10 people quickly become 10,000."

In one recent social media backlash, Target Australia found itself being attacked by its customers on its own Facebook page. In less than a week in August 2012, one post from a mother asking Target to design more appropriate clothing for young girls attracted 3,000 comments and 54,000 "likes". Target then posted a response on Facebook, inviting customers to email the chain with their concerns about specific products and said it was taking the feedback from customers very seriously.

Messenger outlines two other cases where social media has gone wrong. Facebook fans of clothing retailer SUPRE complained about the size of the models used. But SUPRE retrieved the situation by launching a "real-sized model search" and asked Facebook fans to send in pictures. "The response was phenomenal," says Messenger.

Less effective was a Facebook advertisement by ChapStick showing a woman bending over a couch to find her missing ChapStick. Fans posted complaints, which ChapStick deleted. "These people were outraged their feedback was deleted - and the firestorm erupted. It wasn’t the ad as such that was the problem. It was ChapStick’s reaction," says Messenger.

Evaluating Brand Damage

Alan Thorogood, a senior visiting fellow in management at the Australian School of Business, says brand damage can result if companies fail to listen to customer complaints and act appropriately. He notes that business has been "inappropriately spending" on social media in the past, treating it as a one-way broadcast from the marketing department, rather than a two-way conversation with customers.

Thorogood says there is often no standard prescription for handling social media: "But the first thing you do is listen. You don’t just jump into conversations and start mouthing your media story. You have to listen and understand what it is that people are saying about you and then actually start taking part in the conversations. And manage the control issue. Companies want to control the conversation and the people using these sorts of technologies are very sensitive to that."

If businesses are going to invest in social media, they need to resource and manage it properly, adds Thorogood. "Some companies have been dipping their toes in the water and then leaving it there. That’s a complete waste of money and is actually doing damage to your image. It’s best not to get involved, rather than to do it badly. You can end up with a site full of complaints, where you can accurately measure how much people hate you," he says.

Having a crisis management plan is important, says McDonald. "It could be as simple as making sure you have the right legal advice in place. You should also be able to moderate properly and quickly. Another question is: Do you go through normal press channels to respond or do you use social media?"

In one case a few years ago, cruise line P&O faced a crisis when one its ships was quarantined at sea due to swine flu. Advised not to use normal press channels to respond, P&O posted video of the ship on YouTube. "What happened was that all people on the boat were doing well and certainly the comments from relatives and friends of passengers reflected it," says McDonald.

But McDonald concedes that social media is a difficult area for a lot of companies to manage. "I do think the environment is really challenging and I expect most brands to make a mistake of some sort in social media. If you look at who is managing Facebook pages, they are not legally trained people for most brands. Monitoring social media pages is expensive and time-consuming," he says.

"Social media should be used as a place to create engagement and have fun and create brand love. It can be very poisonous to a brand when Facebook and Twitter are just a list of ongoing complaints."

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