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Dec 13

Econometer: Will a bad advertisement really hurt companies like Peloton? – The San Diego Union-Tribune

Lose Weight Quickly Comments Off on Econometer: Will a bad advertisement really hurt companies like Peloton? – The San Diego Union-Tribune

Fitness equipment maker Peloton was mocked throughout social media recently for an advertisement featuring a woman receiving a Peloton bike for Christmas from her husband.

Critics said the woman was already skinny and didnt need the bike, and it would be insulting to get a gift from a spouse suggesting they lose weight. A lot of companies have faced backlash for ads in the past few years Nike, Pepsi, Procter & Gamble but a Wall Street Journal article noted it did little to change stock prices.

Q: Do companies need to worry about social media backlash to advertisements?

Bob Rauch, R.A. Rauch & Associates

YES: Companies should always worry about backlash if they do something that is highly controversial. As for Peloton, Im not sure why they would have had any backlash over the ad in question because the product is for fitness. However, I certainly understand why Nike had some backlash re: Colin Kaepernick. We are in a social media-driven environment and need to use caution with our messaging or risk paying a price.

Norm Miller, University of San Diego

YES: The power of social media and explosive viral herd-like transmissions, sometimes informed and sometimes not, cannot be overestimated. Weve seen several firms quickly pull ads when recognizing a misinterpretation or unexpected reaction. Social media can also spot the YouTube video of a man on disability payments at the ski resort or the woman on sick leave at the beach, so we should all assume big brother is listening or watching and keeping us all in check.

Jamie Moraga, IntelliSolutions

NO: Depending on what it is, usually, its a short-term hit or miss. We have seen companies like Nike take controversy in advertising or by recalling shoes and make it work for them. Whether intentional or not, Peloton released an ad that made waves in the social media world. This has now led to millions of views of the ad that may not have happened should the controversy not occurred. Sales will determine if the backlash had any long-term impact to Peloton. In the end, this too shall pass, and the public will be onto the next thing.

Lynn Reaser, Point Loma Nazarene University

YES: While anecdotal evidence suggests that stock prices may briefly suffer from negative feedback, there also appears to be little lasting effect of ads positively received. Stock prices are affected by a multitude of forces, including interest rates, trade talks, and economic activity. If companies social media has no effect on their sales and profitability, why are they spending $84 billion this year worldwide? A companys brand is its most important asset and that asset must be carefully safeguarded.

Chris Van Gorder, Scripps Health

YES: I suppose worrying about backlash would depend on the sensitivity of the issue. Having said that, its always important for companies to think through what reactions they may get to their advertisements. A little research and testing upfront go a long way. Because of social media, the voice of the consumer is much more magnified today than it used to be. How a company responds to a backlash can be just as important to consumers as the initial messaging.

Kelly Cunningham, San Diego Institute for Economic Research

YES: It is a calculated risk. In continual quest for attention, staking a position through advertising may have both positive and negative consequences. This can work in the advertisers favor. Controversy and heightened perception generate greater top-of-mind awareness for whatever reason. So long as the highly valued target market demographic connects and reacts positively brand loyalty is promoted and enhanced, despite those who may react negatively and likely not buy the product in any case.

Gary London, London Moeder Advisors

NO: Edgy is almost always good. Even negative publicity usually translates into sales. I am thinking about Colin Kaepernicks ad with Nike earlier this year. As for Peloton, the inference that biking is for weight loss is a little narrow-minded. Exercise is for health. If you want to lose weight, you should eat and drink less, and better. The actor Monica Ruiz probably shouldnt be drinking all of that Aviation Gin if she really wants to maintain her ideal weight.

Austin Neudecker, Rev

YES: Today, everything inevitably receives numerous social media responses, good and bad. Companies should be cognizant of the social zeitgeist and attempt to be inclusive and respectful to their audience. While it is impossible to satisfy all consumers, companies can easily test messaging and anticipate likely responses. Likewise, as social media consumers, we should be forgiving to companies that make truly unintended mistakes, especially if they take action to correct the mistake.

James Hamilton, UC San Diego

NO: Theres an old adage that claims, theres no such thing as bad publicity. Its not always true. But Peloton got a lot of people talking about their product, and thats a key goal of any advertising campaign. Some people may even be attracted by the controversy, thinking that while others are offended, I do as I please. The Betsy Ross kerfuffle ended up working to Nikes advantage, and the Peloton ad could turn out the same way.

David Ely, San Diego State University

YES: A social media backlash to an advertisement can result in lost sales, a lower stock price, and a drop in employee morale. The successful execution of mitigating strategies may limit the negative impact to the short term. But even this outcome will require that the company spends time and resources developing their response. It is much better to thoughtfully consider potential public reactions to advertisements before they are released than to control damage afterwards.

Phil Blair, Manpower

YES: Any advertisement by any company that is rude or offensive to any group of clients is wrong and downright stupid. But lets remember with the advent of social media it is very easy for anyone to complain about anything and they will. But this should not encourage advertising campaigns to be so milk toast that they dont accomplish their goals of being part informational and part entertaining. Offensive people who unreasonably criticize and complain should be ignored and left in their little negative world.

Alan Gin, University of San Diego

YES: Companies have always had to consider public reaction to their actions, including their advertisements. Companies have sometimes been adversely affected, including having their sales affected, having their stock price decline, to simply having their image tarnished. Social media is just the latest venue in which that reaction can take place. Given its popularity among the more coveted demographic groups from a business point of view, companies should definitely be concerned about reactions on social media.

Have an idea for an EconoMeter question? Email me at phillip.molnar@sduniontribune.com.

Follow me on Twitter: @PhillipMolnar

Read the original post:
Econometer: Will a bad advertisement really hurt companies like Peloton? - The San Diego Union-Tribune

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