Abu Dhabi, UAETuesday 17 September 2019

The top 10 PR disasters in history

The National’s business writers reveal their top 10 list of PR disasters and how those companies and indivduals either reaped the whirlwind or weathered the storm.

As the United Airlines chief executive Oscar Munoz contemplates how to navigate a course through the flack of outraged public opinion, there are lessons from history that he can consult.

The National’s business writers reveal their top 10 list of PR disasters and how those companies and indivduals either reaped the whirlwind or weathered the storm.

1. Ratners Group

It’s hard not to feel sorry for Gerald Ratner. His family-run jewellery company was a darling of the stockmarket in the 1980s, developing a network of almost 900 high-street shops. Yet some throwaway remarks at a business dinner in 1991 about how he could sell products for such low prices – “because it’s total crap” – combined with a slow news day in tabloid newsrooms the following day led to a publicity storm that cost the company millions and Mr Ratner his job. The company also ditched the family name, which only lives on in popular culture as a reminder of the incident. Committing a spectacular public relations gaffe is colloquially known as “doing a Ratner”. – Michael Fahy

2. Volkswagen

By far the biggest scandal ever to engulf the car industry came in September 2015, when the German motor conglomerate Volkswagen finally admitted it had deployed cheat software in its VW and Audi brand diesel cars to give false readings on exhaust emission levels on some 11 million vehicles. The “dieselgate” revelation led to the resignation of the chief executive Martin Winterkorn and several other top executive. VW’s reputation took a hammering and three days after the scandal was made public, the stock had plummeted more than 40 per cent to below €100.

In an apparent show of humility part of VW’s response was to change its worldwide ad slogan “Das Auto”, meaning “The Car” to just “Volkswagen”. VW has since agreed to pay US$4.3 billion in civil and criminal penalties and the total cost of the scandal has been pegged at about $21bn. But the company is nothing if not resilient. Volkswagen Group’s global sales jumped 3.8 per cent last year on 2015. Full-year deliveries at the multi-brand group, including at Audi and Porsche, rose to a record 10.3 million. Its shares were trading on Wednesday at €133.50. – Chris Nelson

3. BP

“I’d like my life back,” blurted then-BP CEO Tony Hayward when trying to apologise to US Gulf coast residents for the worst oil spill in the country’s history.

The quote made headlines, cost him his job, and made its mark as one of the worst PR disasters in corporate history.

BP had already been embattled by its handling of the PR around the 2010 Deepwater Horizon oil explosion that caused 11 deaths and consequently led to an environmental disaster. – Dania Saadi

4. Samsung

Early reviews suggested that Samsung’s Galaxy Note 7 would be one of the best smartphones of 2016. Unfortunately such claims were undermined by the tendency of its battery to catch fire on airplanes, prompting the company to launch a massive recall and replace programme.

Worse still, the new certified-safe Note 7s proved to be anything but, burning up as before, prompting Samsung to ditch the phone entirely in October, at the cost of about $5bn.

5. Pepsi

Sometimes a PR blunder can be resolved by fortunate timing.

Just a week ago the internet was getting up in arms over a Pepsi ad featuring Kendall Jenner. The company, whose featured the Kardashian half-sister strolling up to a political protest and resolving it by doling out a can of Pepsi, was mocked as tasteless and insensitive, given the divided political climate in the United States right now. The company pulled the ad and apologised to Jenner. But in a stroke of luck, another brand came along and eclipsed the Pepsi controversy a few days later: United Airlines. The company must have breathed a sigh of relief as the internet’s fury was redirected.

Well, mostly:

Justin Sanak

6. Tim Hortons

This is pretty Canadian, but in 2003 moderate outrage swept the land when it turned out that the beloved Tim Hortons restaurant chain had been freezing its doughnuts rather than serving them fresh, like it used to. This undermined the company’s “Always fresh” marketing tagline, was front-page news and even led to a class action lawsuit. And a media spokeswoman for the company unwisely provided this take on the cruller crisis: “Until I confirm or deny anything, it simply doesn’t exist.” – Rob McKenzie

7. Topman

Back in 2001 the brand director of British men’s fashion chain Topman was forced to apologise after he called his customers “football hooligans” who wore a suit only when appearing in court.

David Shepherd told trade magazine Menswear that “Very few of our customers have to wear suits to work. They’ll be for his first interview of first court case.”

Mr Shepherd later said that his comments had been taken out of context and that he did not mean to cause any offence.

8. Janet Jackson

Janet Jackson’s “wardrobe malfunction” in the 2004 halftime Superbowl show will go down as a memorable mom­ent in television history. The brief glimpse of Jackson, broadcast to over 140 million viewers, led to CBS being fined $550,000 and Jackson effectively blacklisted. The fine was appealed and ultimately voided in 2012.

If Jackson was the loser in the PR stunt, then Tivo was the winner. The technology, which allows one to pause and rewind live TV, gained 35,000 subscribers after the event.

9. Cigarettes

One of the first great PR debacles started off as a great triumph and foundation of the business itself when Edward Bernays, Sigmund Freud’s New York-based nephew and the “father of PR”, devised his “Torches of Freedom” stunt in 1929 to associate smoking with the early feminist movement for his client, the American Tobacco Company. Both took off in popularity. Decades later, the guilt of what he had helped to unleash led Mr Bernays to devote his energies in retirement to campaigning on behalf of the anti-smoking lobby, Action on Smoking & Health. – Anthony McAuley

10. Wells Fargo

The US bank made history last year after it fired more than 5,300 bankers and has since forced two former executives to return $75 million in compensation – the largest in banking history – over the creation of two million fake banking and credit card accounts.

Employees moved funds from existing customer accounts into newly created ones without permission to meet high sales expectations. Customers were then charged for insufficient funds or overdraft fees while bank employees also signed people up for credit cards, racking up nearly a half million dollars in fees.

The bank announced an $185m settlement while pinning the fiasco on the former chief executive, John Stumpf, and the former head of banking, Carrie Tolstedt.

Mr Stumpf was allowed to retire in October after appearing before Congress to discuss the scandal while Ms Tolstedt was fired. – LeAnne Graves

business@thenational.ae

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Updated: April 12, 2017 04:00 AM

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