Helen Edwards: When bad press comes good

The way in which brands respond to crises can have a dramatic impact on awareness - and not necessarily in a negative way.

On 13 January this year, Captain Francesco Schettino steered his 114,500-tonne cruise liner, the Costa Concordia, into a rock big enough to have a name: the Tuscan island of Giglio.

Since the incident involved loss of life, you would expect business for the Costa line, and its owner, Carnival Cruises, to have plummeted over the summer season.

People are a lot less predictable than that. The Costa brand has held up remarkably well, and bookings have surged by 25%.

This looks like the ultimate proof that there is no such thing as bad press. There is even some academic theory behind the adage.

Balance the negative with the positive

In a 2010 paper, Positive Effects of Negative Publicity, researchers showed that when massive bad-news coverage hits a brand, two opposing forces come into play.

The immediate force is destructive, as those who are in the category and know the brand withdraw from purchase. Yet the publicity opens up, in a much more general sense, awareness that the brand exists in the first place, and what it does. The less well-known the brand was before the incident, the more important this slower 'general-awareness' factor becomes.

It is not inconceivable that, for Costa, it has operated at both brand and category level, as people for whom cruises were never top of mind mull over their holiday plans. 'Cruises exist ... The Med looks lovely ... Costa does them.'

There are also more prosaic forces at work. Costa reacted well to renewed interest in its category - albeit negatively derived - by aggressively cutting prices. For those prepared to forgive the incident as a one-off, the temptations of the clear blue waters of the Aegean at a 75% discount have proved hard to resist.

RBS: no good news here?

How might a similar combination of bad news and company reaction play out for the RBS banking group, which recently contrived to run aground on the rocks of public opinion with the failure of its IT systems? Livelihoods, if not lives, were put at risk, as both business and personal customers were denied access to their funds.

This time it is hard to see any good news among the bad. The awareness bonus for NatWest (which was badly affected by the failure, along with Ulster Bank and RBS itself) will be non-existent, since the brand was already too well-known for the story to make any real difference.

So the only positive effect can come from the way the bank reacted to its moment in the spotlight. How did it fare?

It first announced that it would open its doors half an hour earlier. Look how finely calibrated that extension is - not a whole hour, not the grand gesture of opening from, say, 6am until midnight - just an extra 30 measly minutes. Even at the height of the crisis, its opening hours were much shorter than those of the sector's challenger brand, Metro Bank.

Will the fiasco prompt customers to make for the lifeboats? Probably not, since there is yet another factor at work when bad news hits: inertia. NatWest can rely on this old friend of the banking industry to come to its aid yet again, and add further proof that there is no behaviour bad enough to prompt the bulk of the great British public to switch banks.

The hulking mass that is NatWest will sail blithely on, unloved but largely unscathed.

Helen Edwards has a PhD in marketing, an MBA from London Business School and is a partner at Passionbrand. Follow her on Twitter: @helenedw

 

30 SECONDS ON: NOT-SO-BAD PRESS

  • US painkiller brand Tylenol faced disaster in 1982 when traces of cyanide in some pills caused seven deaths. Parent company Johnson & Johnson instantly recalled the entire range, incurring costs to the tune of $100m, and introduced a pioneering tamper-resistant caplet. Within five months Tylenol had recovered 70% of its market share and the long-term value of the brand was preserved.
  • The iPhone 4 scandal christened 'Antennagate' - when some users experienced weaker signal when holding the phone a certain way - generated continuous press in the month or so after the phone's release, when coverage usually starts to subside. The effect on the bottom line? Apple went on to have its most profitable quarter ever.
  • Last year's 'BlackBerry blackout' left millions of users without email or messaging services for days. However, parent company RIM's share price was affected by less than 1% in the following fortnight. Since then, the Curve - BlackBerry's entry-level model designed to work on slower networks - has been a huge hit in developing markets.
  • Last week Barclays hit the front pages after allegedly manipulating interest rates. Only time will tell whether the brand's long-term value is actually affected.

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