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  • 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.

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    41 Responses to “United Airlines Lose Millions following YouTube Complaint Song!”

    1. Gabriella says:

      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?

    2. CopperBot says:

      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”

    3. If my camera would get damaged.. – on ‘United Breaks Guitars’ « Sylwia Presley says:

      [...] 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 [...]

    4. SuperMan says:

      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.

    5. [...] United Airlines Lose $180 Million due to YouTube Video! …  SEOptimize [...]

    6. Bradley Robb says:

      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.

    7. 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…

    8. 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.

    9. 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.

    10. MinuteManSEO says:

      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?

    11. Excellent study Kevin – thanks very much for sharing. It’s been a fascinating story to watch!

    12. 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.

    13. 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.

    14. 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.

    15. 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.

    16. Ben Florin says:

      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…

    17. tudza says:

      Slashdot take on this:

      1. PR firm reports PR gaff and claims huge loss of revenue.
      2. ?
      3. Profit!

    18. Friday Afternoon Link Love » CommonPlaces Gazebo says:

      [...] United Airlines Lose $180 Million Due to YouTube Video! [...]

    19. 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.

    20. Sara says:

      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.

    21. 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.

    22. simplerich » Blog Archive » Break the Rules — not guitars! says:

      [...] 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. [...]

    23. United Airlines vs. Dave Carroll | Blog Kommunikation says:

      [...] United Airlines Lose Millions following YouTube Complaint Song! (SEOptimise) [...]

    24. Footprints (27.07.09) | Chris Deary says:

      [...] United Airlines Lose Millions following YouTube Complaint Song! [...]

    25. Tanya says:

      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.

    26. Cool articles – SEO, blogging, internet marketing(july19-august16 2009) « Stefanm, my link collection says:

      [...] United Airlines Lose $180 Million due to YouTube Video! story on bbc; [...]

    27. [...] 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 [...]

    28. [...] 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 [...]

    29. [...] 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 [...]

    30. [...] 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 [...]

    31. United Airlines Social Media Case Study : United Breaks Guitars | Social Media Risk says:

      [...] SEOoptimise.com and SocialMediaToday [...]

    32. [...] SEOptimize Search Engine Marketing Blog YouTube Video Costs United Airlines Millions [...]

    33. Stan says:

      This is what we all need to keep doing. Slam them. I have had aweful experiences with United. They suck!!!

    34. Thin Customer says:

      Coool !!!!!

      If I knew how United is acting … UA is taxing thin passangers 100 $ !!!!!

      - 1 human as me = 105 pounds

      – total weight of my bag and my husband bag = inferior to my weight

      – surplus of one bag 3 pounds taxed by UA “only” 100 $

      – no cabin bag

      – my thin person travelled squezed between 600 pounds persons

      – United Airlines do not reimbursed me as they promised and make me send by mail and call them several times ( means the tactics of let it go )

      UA, please note :

      1. Wihin my position as PM, my company of 6’000 persons will never purchase a UA ticket ( and when I say never, it is never )

      2. I will send my case to ALL who want to hear me – that is a perfect publicity for 100 $ surtax of thin human

      3. I think UA should tax thin persons not 100 $, but 10’000 $

      A very proud thin ex – UA customer with 105 pounds weight

    35. [...] the den of social media; some still do, but the lessons learnt by companies such as Habitat and United Airlines show that social media can neither be ignored, nor treated with [...]

    36. [...] And what of the brands themselves? After all, this tidal wave of social activity is supposed to be for their benefit. The reality is that brands still spend considerably more on conventional advertising than on social media, mainly because they fear the amplification of the wrong kind of storytelling, like when United Airlines carelessly broke a passenger’s guitar, and the world laughed at them while viewing his viral response. [...]

    37. Tammy Lamb says:

      Great You Tube video!!!!! Recently had a horrible experience with United, still trying to receive a refund which was promised, but can’t get through to anybody. They transfer me around, hang up on me, say they have no record of my flight, etc. I hope they not only suffer financially, but I hope they go bankrupt!!!!!!!

    38. [...] about social media and lack of reputation management have impacted some organisations – United Airlines , Goldman Sachs , Toyota. PR has always been there, but now it is the difference between a [...]

    39. Roy Howard says:

      My video “Allstate: Where Are Those Good Hands?” on youtube.com was done to embarrass Allstate insurance company into becoming the company they pretend to be. After our house burned, Allstate’s treatment manner towards us was perceived as worse than the fire! I felt that as a songwriter/musician, it was my duty to do a public service announcement about Allstate. I found an amazing cartoonist and I receive many comments from viewers who thank me for presenting the video and links which illustrate Allstate’s business techniques. They drop their Allstate coverage and move to another insurance company.
      Allstate spends an immense amount of money on advertising and lobbying politician, minimizing their claim payments. I hope the video gets them to change, supporting their clients as well as their shareholders!

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