Five Steps to Managing Social Media Risks

On the one hand, companies want to capture the attention of potential customers roaming the social media space. On the other hand, conversations in the blogosphere are largely uncontrollable, and raise a myriad of risks. Social media can cause serious losses if not handled correctly.

How Should Corporate Counsel Address the Phenomenon?

Unlike in other areas, it's difficult to find a specialist who can deal with all the social media platforms and their impact on the diverse operations of a large multinational corporation.

Yet the increasing evidence of real risks lurking in social media requires attention. This article suggests five things corporate counsel can address as first steps in understanding and dealing with social media and its risks.

1. It may not be comfortable, but open accounts with LinkedIn, Facebook and Twitter. Invite colleagues to be “friends,” contacts and “followers.” Without joining the conversation, one can never really understand its impact and potential. Surf Facebook and YouTube. See who is there and engage in the conversation. Post comments. Submit reviews. Learn the game.

2. As Bob Dylan put it: “The times they are a-changin'.” What was said in the living room is now published on Facebook. What we do in private is now broadcast on YouTube. What employees talked about at the water cooler now appears as tweets on Twitter, or worse, goes viral across myriad social media platforms. And all of it memorialized in discoverable form. All of it available to millions with the simple press of “send.”

While policies can be written (and they should be), it's critically important to monitor the conversation. Find out what your customers, competitors and employees are saying.

3. Social media moves brand management into reputation management. Brand and reputation management have been intertwined historically and well before social media. McDonald's support of the Ronald McDonald Charities had nothing to do with the quality of its hamburgers. Yet through paid advertising and word-of-mouth (the earliest form of social media), those charitable activities unquestionably enhanced the goodwill associated with the McDonald's brand. But McDonald's-controlled advertising and word of mouth was largely local and nonviral, making it somewhat controllable and low risk. Social media has changed the playing field.

United Airlines broke a passenger's guitar. They handled his complaint through traditional procedures, eventually refusing to pay for repairs. The musician launched a scathing, but admittedly entertaining, video on YouTube making United look incompetent. To date, there have been nearly six million views of the video.

United responded through traditional means, issuing a press release that said: “We will fully investigate what regretfully happened.” But United didn't satisfy the disgruntled musician.

So along came another video attack on YouTube with more than a half-million views. And a third video is promised.

Worse, on a recent flight, United managed to lose the same musician's bags, an event that was reported to millions in the blogosphere. The story was a lead item on CNN's “Situation Room,” reported by anchor Wolf Blitzer. According to the London press, United's stock value fell 10% because of this flub.

While one can certainly question whether the London press reports are accurate, the fact remains that the video had a serious impact on United's equity. And to add insult to injury, Sen. Barbara Boxer (D-CA) is championing the Airline Passenger Bill of Rights Act of 2009, citing the United debacle.

When two employees of Domino's Pizza posted a disgusting video on YouTube in which they adulterated the chain's food, Domino's management immediately responded via social media. In addition to reporting the video to the police, Domino's Pizza's CEO posted his own video, apologizing for what consumers saw and assuring them that such things were not condoned nor practiced at Domino's. It all made the “Today Show” and other media reports.

Both traditional media and the blogosphere applauded his open communication and willingness to engage in a conversation about the problem. Rather than seeing its brand value and reputation take a major blow, it survived the negative media and came out with an even more loyal customer base.

United mishandled the problem by applying traditional media responses and sound bites. Domino's handled the problem by engaging in the conversation. Public relations and crisis management have changed. As social media pioneer Erik Qualman put it: “A lot of companies say we're not going to do social [media] because we're concerned about letting go of the conversation, and what I argue is that's like an ostrich putting its head in the sand. You're not as powerful as you think. You're not going to enable social [media] to happen, it's happening without you so you might as well have a piece in the conversation and be part of the conversation.”

4. Adopt a social media policy for both internal and external communications. But be careful to stay on strategy, don't ban what you can't stop, and keep in mind the basic rules of monitor, engage and influence.

5. Social media present the rare opportunity to appoint someone just a few years out of law school as the point person on the issue. Today's law school graduates have lived in the social media space throughout college and law school. They understand it and know how to maneuver though it. Then monitor them!

Social media are powerful tools and ones that are becoming increasingly central to corporate communications at every level. But with them come new risks as conversations get too casual and typing too loose. Ignoring those risks is no longer an option.

We are in the middle of a communications revolution with the advent of the phenomena collectively referred to as “Social Media.”

Everyone is familiar with the plethora of Internet offerings ' Facebook, YouTube, MySpace, Twitter, Digg, Yammer and LinkedIn to name just a few. There are more than 100 active social media sites, with millions participating in conversations every minute of the day, all over the world. Multinational companies and their CEOs are blogging, populating their walls on Facebook, and tweeting. It's an epidemic.

Accompanying these social media platforms is a growing new vocabulary: “user-generated content,” “podcasts,” “advercasting,” “vlogs,” “RSS,” “twitterjacking” and “astroturfing.”

On the one hand, companies want to capture the attention of potential customers roaming the social media space. On the other hand, conversations in the blogosphere are largely uncontrollable, and raise a myriad of risks. Social media can cause serious losses if not handled correctly.

How Should Corporate Counsel Address the Phenomenon?

Unlike in other areas, it's difficult to find a specialist who can deal with all the social media platforms and their impact on the diverse operations of a large multinational corporation.

Yet the increasing evidence of real risks lurking in social media requires attention. This article suggests five things corporate counsel can address as first steps in understanding and dealing with social media and its risks.

1. It may not be comfortable, but open accounts with LinkedIn, Facebook and Twitter. Invite colleagues to be “friends,” contacts and “followers.” Without joining the conversation, one can never really understand its impact and potential. Surf Facebook and YouTube. See who is there and engage in the conversation. Post comments. Submit reviews. Learn the game.

2. As Bob Dylan put it: “The times they are a-changin'.” What was said in the living room is now published on Facebook. What we do in private is now broadcast on YouTube. What employees talked about at the water cooler now appears as tweets on Twitter, or worse, goes viral across myriad social media platforms. And all of it memorialized in discoverable form. All of it available to millions with the simple press of “send.”

While policies can be written (and they should be), it's critically important to monitor the conversation. Find out what your customers, competitors and employees are saying.

3. Social media moves brand management into reputation management. Brand and reputation management have been intertwined historically and well before social media. McDonald's support of the Ronald McDonald Charities had nothing to do with the quality of its hamburgers. Yet through paid advertising and word-of-mouth (the earliest form of social media), those charitable activities unquestionably enhanced the goodwill associated with the McDonald's brand. But McDonald's-controlled advertising and word of mouth was largely local and nonviral, making it somewhat controllable and low risk. Social media has changed the playing field.

United Airlines broke a passenger's guitar. They handled his complaint through traditional procedures, eventually refusing to pay for repairs. The musician launched a scathing, but admittedly entertaining, video on YouTube making United look incompetent. To date, there have been nearly six million views of the video.

United responded through traditional means, issuing a press release that said: “We will fully investigate what regretfully happened.” But United didn't satisfy the disgruntled musician.

So along came another video attack on YouTube with more than a half-million views. And a third video is promised.

Worse, on a recent flight, United managed to lose the same musician's bags, an event that was reported to millions in the blogosphere. The story was a lead item on CNN's “Situation Room,” reported by anchor Wolf Blitzer. According to the London press, United's stock value fell 10% because of this flub.

While one can certainly question whether the London press reports are accurate, the fact remains that the video had a serious impact on United's equity. And to add insult to injury, Sen. Barbara Boxer (D-CA) is championing the Airline Passenger Bill of Rights Act of 2009, citing the United debacle.

When two employees of Domino's Pizza posted a disgusting video on YouTube in which they adulterated the chain's food, Domino's management immediately responded via social media. In addition to reporting the video to the police, Domino's Pizza's CEO posted his own video, apologizing for what consumers saw and assuring them that such things were not condoned nor practiced at Domino's. It all made the “Today Show” and other media reports.

Both traditional media and the blogosphere applauded his open communication and willingness to engage in a conversation about the problem. Rather than seeing its brand value and reputation take a major blow, it survived the negative media and came out with an even more loyal customer base.

United mishandled the problem by applying traditional media responses and sound bites. Domino's handled the problem by engaging in the conversation. Public relations and crisis management have changed. As social media pioneer Erik Qualman put it: “A lot of companies say we're not going to do social [media] because we're concerned about letting go of the conversation, and what I argue is that's like an ostrich putting its head in the sand. You're not as powerful as you think. You're not going to enable social [media] to happen, it's happening without you so you might as well have a piece in the conversation and be part of the conversation.”

4. Adopt a social media policy for both internal and external communications. But be careful to stay on strategy, don't ban what you can't stop, and keep in mind the basic rules of monitor, engage and influence.

5. Social media present the rare opportunity to appoint someone just a few years out of law school as the point person on the issue. Today's law school graduates have lived in the social media space throughout college and law school. They understand it and know how to maneuver though it. Then monitor them!

Social media are powerful tools and ones that are becoming increasingly central to corporate communications at every level. But with them come new risks as conversations get too casual and typing too loose. Ignoring those risks is no longer an option.