Public Relations fiasco and the finance outcome

By Stefano Virgilli — April 2017 will be remembered for 2 major Public Relation fiascos: Pepsi and United Airlines. They both happened quite close one to another, but the financial outcome was completely different. Let us starts from the facts. Pepsi’s internal creative team put together a new tv commercial that was taken down shortly after being aired. The content of the 2 minutes ad was quite controversial. It is played in a city that could be San Francisco. It starts with the American top model Kendall Jenner posing for a photo shooting in front of a posh hotel. In the meantime the music leads to a crescendo while a protest takes place.
The directing team carefully placed a “scientifically chosen” diverse audience, encompassing all sort of racial, religious and other minorities. An Asian cello player joins the protest, followed by Muslim girls with a camera. Finally is Jenner’s time. She joins the crowd, picks up a Pepsi can and hands it to a policeman. The cop takes a sip of it and smiles. End of the commercial.
In some cultures, audience would just take the ad lightly, interpreting it as an overdone attempt to represent the millennial generation. But in the USA, this ad generated so much heat that Pepsi had to have it suspended.
On Twitter, many celebrities have mocked the ad with jokes and statements such as Writer and Director Xavier Burgin (@XLNB) who posted a picture of an old movie with a “CEO looking” old man (hinting that Pepsi’s CEO lives in the past century) demanding from his intern a new creative campaign. The intern suggests “Police brutality” and “Kendall Jenner”. The CEO thanks him labelling as a genius.
In a simple joke Burgin has highlighted both how some multinational corporate struggle to connect to the younger generation as well as the fact that the suggestion could have come from an (underpaid) intern, as an emphasis to the lack of connection between MNCs and the rest of the population.
A multitude of complaints arose around the fact that the crowd is overly artificial and tends to over simplify the individuals. Especially after Trump’s election as President of the United States of America, the left wing has been quite loud in voicing disagreement. Pepsi tried to capitalise on the emerging movement, but represented such crowd only for how it appears to be on the surface.
Even more bitter was the comedian Ziwe (@Ziwe) who tweeted: “and to think, all Rodney King needed to avoid that beating was a Pepsi”.
Despite the PR fiasco, Pepsico’s shares went up $2 (approximately 1.66 per cent) on the stock market right after the ad was suspended.
Certainly did not have the same outcome the United Airlines fiasco, just a few days later.
A number of video taken from passengers using their cellphones showed the incident. In the most viral video, an Asian man is being beaten and dragged out of an United Airlines airplane. In another video the same man is seen holding the curtain separating the business and the economy classes, while he repeats: “Just kill me…”
While the Asian media called as main cause of outrage the racial origin of the passenger, many have commented on the brutal way the passenger was removed from the plane.
In other commentaries on the Internet, it is said that the man was asked to disembark due to an hiccups with a United’s crew of 4, who was needed elsewhere urgently. Hence the crew was given priority over some passengers. In the particular instance, some say that this specific passenger was offered $800 to disembark, but he still refused.
Both videos are shocking and they inflamed the Internet hitting the status of most viral topic of the day. For United Airlines it was a bad PR day and had even more horrible stock market consequence. The shares went down drastically, causing a loss of $1 billion in shares value. Later on, the CEO Oscar Munoz released an official apology, and the shares recovered by nearly three quarters. However the total financial damage remained of approximately $250 million.
In the official statement Oscar Munoz addressed the incident with the word “Re-accommodate”. Such terms sparked even more outrage among the e-citizens.
Ironically the CEO of United Airlines, was recently awarded as Communicator of the year by PR Week USA. He also used to work for Pepsi. Interesting coincidence. It was an April that certainly very few in the PR industry will forget.