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Brand Reputation Management Crisis Management

Trainwrecks: 7 PR Disasters from 2016

February 01, 2017 10:29 AM
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David Moore

David Moore

Integrated Communications & Digital Marketing Strategist

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Seasoned PR pros know that a crisis can hit out of left field and, with the help of social media, escalate like wildfire. Every year there are a few PR disasters that stand out for being - well, really awful. The past year did not disappoint. Here are some of the worst and a few thoughts on how the crisis was managed.

Samsung

You know it's bad when the FAA bans your products from all commercial flights and requires the flight attendants to bring it up before takeoff, but for Samsung, it got even worse. The company’s flagship mobile phone, the Galaxy 7, had an unexpected habit of exploding. This problem caused widespread embarrassment, forced a recall of the phones, and cost the company at least $5.3 billion. As if that wasn't bad enough, Samsung was forced to recall 2.8 million washing machines because they could explode. (People really wanted to get a visual on that one, so YouTube videos went viral...)

Samsung has received both criticism and praise for its handling of the Galaxy 7 situation. In the very early days, consumers and PR experts felt like Samsung did not do enough to make people aware of the seriousness of the issue. Users were just told to power down the devices and trade them in. Also, part of the challenge is most people interact with their Samsung device through wireless carriers like AT&T and Sprint, who did not want their own brands to be damaged by more talk of the problem. And think about that perspective…you aren’t Samsung but you sell and advertise their products. How do you track and control your brand from being pulled into the chaos?

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Wells Fargo

In September, the banking giant reported it would pay $185 million in fines for illegal sales practices that included opening as many as two million accounts for customers without their knowledge. It subsequently fired about 5,300 employees it claimed engaged in illegal tactics, including creating fake email addresses to enroll millions of unknowing consumers in online banking services, including credit card accounts, to hit sales goals.

As part of the crisis response, the bank took out ads noting allegations that customers had received products and services they didn’t want. They also laid out changes, such as automatic email to customers and improved employee training, to prevent such problems in the future.

“We truly regret and take full responsibility for any such instances and have refunded those customers who incurred fees,” Wells Fargo stated.  “Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.”

The response did not impress some PR experts who cited the formal, lawyerly letter as more about placating regulators than apologizing to customers. Fortune magazine noted, "The Wells Fargo scandal is now reaching VW proportions." Not good.

At TrendKite, we used our advanced PR analytics software and did a little data crunching, just to see what Wells Fargo was dealing with. The data showed that not only did the crisis news hit fast and hard, but despite Wells Fargo’s best efforts, the crisis news had a long tail that their PR team just wasn’t able to squash.Wells_Fargo_PR_Crisis_01.png

Mylan (Epi-Pen)

Approximately 3.6 million Americans, including many children, use Epi-Pens as a potentially life-saving response to severe allergic reactions. Five years ago, an Epi-Pen cost $160. That has ballooned to more than $600 today. Apparently, price gouging children with health problems is not a good look. After the New York Times ran an article about the price hike, Congress began investigating and pushing the company to explain the surge. People also took to social media to condemn the company.

As a response, the company announced it would offer copay assistance to more customers and a $300 savings card to help cover the out-of-pocket cost. This move was seen as far too little to help the company’s reputation by many. PR World spoke with John McDonald, founder of crisis communications firm Caeli Communications. McDonald was not impressed. "The best way to manage the crisis is to mitigate the damage and get in front of it," he said. "The best way they can do that is to significantly roll back the cost, admit it was a mistake to increase it, and engage the medical community. That would give them the opportunity to redeem themselves in the eyes of the public."

Cinemark

Following the tragic 2012 shooting at a Cinemark in Aurora, Colorado, some of the victims’ families sued the theater chain claiming negligence. Cinemark was victorious in court, but then made a move that had heads shaking. They sued the families for $700,000 in court costs. While in other contexts this may be a perfectly sound legal tactic, in this one it was a terrible PR move. Media monitoring showed the coverage was fierce and the community took to Twitter with a vengeance. Eventually, Cinemark quietly settled with the families, dropping the request for court costs.

This is likely the result of the legal and finance teams having goals that are not well aligned with the PR team. Any competent PR professional would have advised against doing this because the $700,000 is a small price to pay for not coming across to the market like a monster. We suspect that the PR team was not consulted.

Tesla

In May, a Tesla owner in Florida was killed when his Model S could not tell the difference between a white truck ahead of it and the clear sky in the distance. The vehicle slammed into the back of the truck, killing the driver and causing a public relations backlash that threatened the future of the driverless car. It didn’t help matters that the NHTSA released a picture of a mangled Model S whose autopilot feature had failed.

Of course, people get in car crashes all of the time and the accidents don’t generally hurt the reputation of car makers, but the newness of this technology made Tesla a target. CEO, Elon Musk’s comment that the crash was, “Not material,” did not help on the PR front.

Yahoo!

Yahoo suffered the worst cyber security data breach of all time. That’s bad for PR. Not telling people about it for two years is worse. Just two months after agreeing to sell to Verizon for $4.8 billion, the company disclosed a security breach affecting more than 500 million users. Months later a second breach was revealed, doubling the number of impacted people. The company filed a document with the Securities and Exchange Commission admitting that some in the company had known about the initial breach since 2014. Now, that Verizon deal is at risk.

It seems that Yahoo! did not head the PR wisdom that it is better to admit to a problem than to try to cover it up.

Miracle Mattress

A President’s Day sale is a fine idea. Why not have a Labor Day blow-out? But as one mattress firm in Texas discovered, the anniversary of the deadliest attack on U.S. soil is not the good basis for a promotion. A Facebook commercial featuring a 9/11 “Twin Towers” sale got exactly the response you would expect.

Owner Mike Bonanno, who insisted he had no advance knowledge of the promotion, did about the only thing he could, he penned a letter apologizing and begging for forgiveness. He also promised to tighten up the company’s marketing processes to ensure that nothing of the sort ever happened again. Good call.

We hope your 2016 wasn’t as brutal as it was for these PR pros. Even if it wasn’t, it might be a good idea to invest in media monitoring software that will keep you alerted if talk about your brand ever takes a turn for the worse.

 

 

David Moore

David Moore

Integrated Communications & Digital Marketing Strategist

All POSTS

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