Guest Post by Howie Goldfarb
It is very rare that social media is used to propel or hurt brands in significant business-altering ways.
There are certainly examples, such as the Toyota acceleration deaths, NestlÃ© palm oil, the Ford Fiesta movement, or the BP oil spill, where the subject takes on a life of its own for good (or, usually, bad). But these are few and far between; exceptions as opposed to the rule.
But when these events occur, they show the power of social media when harnessed by the people. And brands should prepare for such an eventuality with an integrated public relations/social media strategy.
It is hard to regain control of an often uncontrollable situation if you never had control in the first place.
One brand has benefited for years from this lack of control. Apple.
Apple doesn’t play on Facebook or Twitter. It is highly secretive. It has enjoyed a cult following similar to Trekkies and Star Wars fans. So it lets the Apple legions do all the heavy lifting. Apple don’t coordinate this, to my knowledge. It just lets it run on its own, which is easy to do when the results are always positive. Who wouldn’t enjoy free hype and buzz?
For years this was a huge benefit for Apple.
For example, every year, you had Macworld | iWorld. The blogosphere and social media networks would go nuts with rumors and buzz about new products. Often Apple surprised people by showcasing products different than the buzz would have you believe, but they were still so wonderful that no one cared.
People would still line up at midnight to buy the next amazing gadget that would change their life.
There is, however, a huge danger with this strategy.
The stock market hates surprises. And recently Apple has been striking out. Not with poor products, but by not meeting expectations.
The iPad was going to save publishing and advertising. Advertisers claimed people would finally interact with ads and Apple would charge a bundle for these. They flopped.
Advertisers forget we like ads on our terms, not theirs. But that is minor compared to what happened.
I have told many people that the only direction for Apple stock to go is down. The company can’t sustain its growth, and share price is based on future growth, not past results. And it is impossible to sustain what Apple has built in terms of its share price.
For example, it costs only $14 to buy $1 of profits from Apple. Yet it costs $1,200 (estimate) to buy $1 of profit from LinkedIn. The market is saying LinkedIn has a bigger upside than Apple. Microsoft with its major earnings (always top 5 in the world) but flat share price for years is a classic case.
But now, not controlling its story combined with social media’s power has come back to bite Apple… to the tune of billions of dollars in lost share price.
First, suppliers for Apple’s iPad admitted that Apple cut their component orders 25% for the fourth quarter (the holiday season). Apple did not formally announce this. But once it hit the news the company had no control over the information.
Then, the Apple iPhone 4S underwhelmed. Instead of coming out and preparing the masses for what to expect, Apple let its army buzz away. And when the phone launched, people were disappointed.
And then Apple missed its earnings projections for the first time in years. In fact, it blamed the iPhone 4S rumors on this. And it lost $27 billion in shareholder value in one day!
Would this have happened had they shared more clearly what to expect? Did they feel it didn’t matter, that because they were Apple, the masses would buy everything no matter what it was?
Now its legions are buzzing about what is wrong with Apple.
The moral of this story is not that Apple needs to get on the Twitter or have a Facebook presence. In fact, it don’t need to be in social media at all (most major brands don’t have to engage so much as monitor and be able to react, sorry to burst everyone’s bubble).
But it does need to control its story and expectations. Apple needs to pull back some of that power from its army and regain control over its own story.
And to do this it needs more announcements to manage expectations, so that there are no mass disappointments in the future. The era of Apple’s free ride in the social space is over.
And brands need to learn from this.
Howie Goldfarb is Vice President of Marketing and Corporate Strategy at Web Choice Consulting, a full service integrated marketing and Internet agency. He had a 14-year career in direct B2B industrial sales before deciding to lighten up his dreary work life and move into advertising/marketing. He has a CFO’s view of marketing, bringing a dose of reality to the confusing world of jargon, spin, and hype. He currently lives in the Green Mountains of Vermont and is still seeking his first moose sighting.
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Great post @HowieSPM . Whether intentional or not, rumours of new Apple developments used to circulate, and the company would deliver. With the announcement of the iPhone4S, we saw something very different; the rumour mill had gone into over-drive, and speculation about an iPhone5 was greater than just about any other Apple announce I’ve seen. Given the recent advances in the iPad2, we all followed these rumours and whispers closely, with no official word from Apple. As you say, the result was a slump that saw more than $20 billion wiped from the value of Apple stock. Let’s compare it to the example of Form Motor Company who recently unveiled one of their cars literally piece by piece (in images). Not only did they reveal the name of their new product and by doing so begin the product’s story in the media and with fans, but they controlled which pieces they revealed and when. It was then up to the community of fans and commentators out there to use the wonderful world of (new) media to drive the anticipation and build the picture – much like a giant. jigsaw puzzle of great anticipation. At the end of the day, fans knew the pieces that were being assembled, and what the product would be called, but not how it would all fit together. Compare that to Apple’s cloak of secrecy and guessing game of ‘what comes next’, and it’s easy to see why fans were (and perhaps still are) disappointed. I love Apple and hope they can keep that growth going – but as a communicator I would also like to see them take control of the story just a little bit more. The legions of fans are out there waiting – all it takes is a statement, a product name, a crumb of official and confirmed information to spark the conversation and set the life and journey of a new product on its way.
@JGarant Jamie awesome comment. I live for case studies. Often when I rant on blogs I use either my own past experiences working in the corp world of industrial sales for many years or something from the news.
While every business is unique even among industry segment peers there are some common threads that best in class and ones that stumble can be learned from. While I am not slamming Apple here vs using them as an example. I think what if I benefited from such hype why wouldn’t I ride it. In Fact from the Dot.com to the Subprime to the banking derivative boom bust cycles many people and businesses ride waves until the bust with the goal of racking up so much success it will out weigh the damage of the bust.
Will be interesting with Apple since it is so hard to invent new devices constantly. It is much easier becoming best in class for something existing already. But the risk reward has been proven immense and if you can pull this stuff off you can make serious bank.
@HowieSPM very true Howie- serious bank to be made! I guess the problem is, in an ocean of rapid change and ongoing innovation, it’s not enough to just ride a wave- you’ve got to keep on inventing waves that generate momentum to ride. The question remaIns- can Apple keep doing so? I sure hope so, & I hope that in the process they integrate that valued control that you described. With their army of fans ready to champion the story, the sky’s still the limit, don’t you think?
When you get to be a company the size of Apple, the problem becomes one of scale. To continue with the kind of growth that people have come to expect, Apple will need to continue innovating on a rather large scale. Incremental changes just aren’t going to move the needle anymore. I was personally struck by a comment someone made about Microsoft recently. This company that is bring cool technologies like Kinect and Surface to the market is still stuck in the mire, and perceived as no longer being cutting edge. They’re still a giant, but kind of like the Oldsmobile of tech companies. But even though there is good stuff coming out of Microsoft in some quarters, it’s a pittance compared to their overall revenues. That is where Apple has been amazing…they convert their new releases into immediate massive revenue streams. The question is going to be whether they can continue this. Siri may be incredibly cool, but is it likely to be a gamechanger of the sort that sustains the growth engine?
@kstoltz Thanks for the great comment Ken. I am a huge student of business. Only some companies are lucky to have one blockbuster or one industry changing product. Most copy and participate after the fact. And often second or third to market wins because they see the mistakes the innovator made. Apple has had 3 game changers in my view the IPod, IPhone w/ ITunes/App Store. While so far the IPad has been lucrative not sure yet sustainability. I mean we once all had Palm Pilots. Obviously they have a strong computer lineup.
I see the big fight between Google and Apple with Siri helping Apple get into services. I don’t see Facebook surviving unless they change business models and change what/who hey are. Will be interesting to see if Apple goes Microsoft with some cash cow product lines or if they continue to push the envelope.
@HowieSPM I think the popularity and sustainability for the iPad has been established. Less than a year to come out with a new upgraded version, largely based upon the strength of sales of the first version. It’s prompted an area of UX design based around tablets, and what users expect for a tablet experience (far different from a laptop or a smart phone), and Android isn’t even on the radar in this area.
Curious on your thoughts about Facebook…why do you see them dying out? As far as social networks, I think Google+ has shot itself in the foot horribly, even though I like the look and feel and some of the features. Google+ doesn’t have enough users to create critical mass and draw people away from FB, and it has sadly neglected the business user. Unless someone else throws their hat into the ring, I think Facebook is destined to win the “social network war”.
I am an Apple addict/aficionado whatever you want to call me. I have an iPhone, iPad and MacBookPro. I haven’t read the Jobs book yet but see things a little differently. It has been interesting to watch Apple let others tell their public relations story but what I’ve seen in many cases is “experts” who aren’t fans of the company poking at the company when it’s not perfect.
Personally Apple products have transformed how I conduct my business and many aspects of my personal life. Was the iPhone 4s what the “tech gods” thought it would be? Maybe not but it’s an amazing device that does things other phones have not done. Has the iPad transformed the advertising business? Maybe not but it has transformed our lives in other ways.
I too am anxious to see what happens with Apple post Jobs and hope he’s left a company with a vision much like his – where a “magical thought” can transform our world. Time will tell but I want to let Apple show us…not “tech experts” who are already looking for failure.
@mdbarber Hi Mary I fully agree with you. I only use an IPod and ITunes. Nothing else in my life has ever been Apple. But many family and friends use them. They lost me when my folks got one of those big screen desktops and the mouse it came with had no right click. I was like ‘No right click? You are kidding’ and funny thing is I am not a Microsoft fan. I only use windows and if Linux had ITunes I probably would be using a Linux Laptop (it seriously is an awesome op system).
The driving force for this post was them missing their numbers on Wall Street. A company like that hurts a lot of people if they aren’t open and at least prepare the analysts for the earning announcement. Too many people have Apple stock whether directly, as employees with stock options, or as part of their 401k or Pension plan. $27bil is a lot of dough.
@HowieSPM Interesting (or maybe not, LOL), @mdbarber was one of the first people to “ease” me into my transition from Windows to Apple, when I bought my MacBook Pro last year. I was SO worried. How would it work? Would I kill it?! She literally told me – and I believe she conveyed her husband’s words – “It’s like a toaster. Plug it in and it will work.” I did. It did. And that started my love affair with the Apple experience – because it truly is an experience, much more than a product (seriously, you have to read the book!).
It will be interesting to see if them missing their numbers – which, at the end of the day, is what drives business – is a short-term hiccup or long-term phenomenon. I’ll be very sad, personally, if it leads to their demise. Being a very new #Machead, I think it would be tragic if Apple’s magic were to die along with Jobs.
What I took away from your post, Howie, was the incredible control Jobs held over Apple, how he engineered the “buzz” (ok, that’s not from your post, but it is from my reading of Isaacson’s book) and the resultant confusion after his death. As long as he was alive, it was almost as if while he were alive, the sheer force of his personality was so great that it didn’t matter they weren’t on the Twitters or whatever. But that kind of person (and personality) is rare. The question is… now what?
@HowieSPM That makes sense Howie. It’s interesting that they missed their numbers while the 4s has busted all sales records and such too. It will be interesting to see what happens with Jobs gone and, again, I hope they can maintain the magic.
Interestingly I just saw an MSNBC article about an app developer who has been banished by Apple because he “exposed a software flaw.” That seems rather harsh until you read the article and discover he “figured out a way to build apps that can secretly download other programs that are capable of stealing data, sending text messages or destroying information.” That tells a bit of a different story than the headline. The article is quite interesting (http://www.msnbc.msn.com/id/45213777/ns/technology_and_science-security/#.TrnPcFY72KM).
As for a “right click” I didn’t have one until I bought my latest mouse about a year ago. I didn’t see a need for one…and still really don’t…but I have used it as well. I love my Apple products and take pride in the converts like @Shonali . Some day, we’ll convert you as well…
@mdbarber@Shonali I don’t see Apple having a demise but it could happen. There are many companies that once either owned their market or we being touted as unstoppable: EBay, Priceline, Yahoo, AOL, Blockbuster, Woolworths, Sears, etc who either folded or are shadows of past greatness. Apple has one thing going for them. A loyal customer base who are willing to give them a shot vs say Microsoft who often bought a niche like IE where people started using just because it was loaded on a Windows Computer vs because it is the best out there. Apple makes top notch products.
I don’t mean to join in the echo chamber but I have been very curious to see what sort of impact the loss of Jobs has on Apple. His presence and impact upon Apple made a significant difference because people bought into the idea of his being a magician.
There aren’t many people like that and unless something magical really happens Apple is going to absolutely see a cooling off period.
@TheJackB I am curious as well. In B-School type case studies this will be a doozie!
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@kdillabough @WorldcomEMEA @Elizabethsosnow thanks for the kind tweets!
While I’ve not read the Steve Jobs biography yet, I saw several interviews with the biographer when the book came out. A key quote he mentioned about Jobs’ psychology was that he believed in the power of “magical thought”. In other words, if he BELIEVED it hard enough, he could do, change, or control anything. I believe THAT mindset has been at the core of Apple’s PR/Marketing strategy for years. And it’s why they have no control over their message in the social media space or really anywhere outside of apple.com.
You’ve hit the nail on the head Howie. Apple’s PR has been akin to gambling with your life savings. Sure, you have the chance to double it at any moment. You also have the chance to lose it all at any moment. To me, it’s just plain common sense to talk with your customers and temper expectations when necessary. Maybe Apple is learning their lesson the hard way; but I doubt it.
@MattLaCasse a magical thought works! I know both Jobs and James Cameron were LSD heads in their youth and look what they created. But for a business this is definitely gambling.
@MattLaCasse I’m about halfway through the book, which is fascinating. He calls it Job’s “reality distortion” field, i.e. the only reality that mattered to him was his. So if he thought something should happen, he said it should, even if other people told him it was impossible. And the force of his personality was so great, that they made it happen, even if “reality” told them it couldn’t be done. Pretty powerful in one sense, but I think very few people can pull that off.
From what I’m reading – and I never met/heard/saw him, he pretty much controlled everything, down to the messaging, ad campaigns, etc. On the flip side, if people pushed back really hard, he respected them for it. To me, one of the questions is, now that Jobs is gone… what? I guess time will tell, eh?
@Shonali I definitely want to read the book, I’ll probably wait for it to come out in paperback. I don’t want to pay $30 or whatever it is for it. Maybe I’ll buy it on Kindle.
Steve Jobs was a really unique person. I don’t think Apple is going to be able to remain the same company it was while he was in charge though. Never in the history of business has one person been so synonymous with their company. Steve Jobs WAS Apple. The brand didn’t die with him, obviously, but it MUST evolve now that he is gone. The way to honor his memory if you’re Apple is not to remain stagnant and do things as they’ve always been done. It’s to evolve, to transform Apple into the company it needs to be in the next 25 years. If there’s one company out there that can pull that off, it’s Apple.
@MattLaCasse I bought the book on Kindle! It’s much cheaper than the paper version.
You know, I’m not going to make any predictions about Apple. I don’t really have an insider view, but from what I’m reading, while he was a master marketer (yes, @HowieSPM …!), he wasn’t an engineering genius. It was the force of his personality and ability to get people to believe in his “reality distortion” that made Apple transcend its peers. But, also from what I’m reading, he was very smart, particularly towards the later stages of his life, about depending on people like Tim Cook while he (Jobs) remained the face of Apple. He also started things like Apple University (I think it’s called, or something like that), so that people within the organization were inculcated into his way of thinking/doing.
That said, I do believe that if anyone can pull it off – it is indeed Apple.
What’s interesting here is that what is seen as a strength at one point in time, can become a weakness as times change. And I think Apple, like a lot of brands, falls into the trap of being rather myopic. they begin to believe their own press, not understanding the power of the customer. And, Apple of all companies should understand that, as word of mouth and customer loyalty has been their best friend for years. What they forgot is that times change and you need to be on your game every day. Which is actually, interestingly enough, what I wrote about on my blog today (not about Apple though!).
Great thoughts, Howie!
@KenMueller I agree Ken big time. So many brands get complacent. Often it is with Quality Assurance when they get comfy and try to cut costs. But it happens with their marketing as well. BTW love your post today!
@HowieSPM Thanks, Howie! Glad you enjoyed it. It will be interesting to see how Apple adjusts in a post-Jobs world. He really controlled the company and the message, and that will have to change.