|"Brand value? We don't need no stinkin' brand value!" says the market, as UAL's price rebounds to within a day's standard deviation of where it was before Chicago cops showed airline passengers they've forgotten nothing since '68.|
Wednesday, April 12, 2017
Unless you've been hiding out in Tora Bora for the last few days, you know all about United Airline's PR fiasco. Last Sunday, an overbooked flight between Chicago and Louisville led to the "reallocation" (United CEO Munoz's choice of words) seen around the world.
But here's the thing: After that PR disaster -- hell, United basically detonated an atom bomb under its brand -- the company's stock dropped sixteen cents. Considering that the starting price was over $70, the effect of all that incomparably negative publicity was impossible to spot in amongst the normal daily standard deviation in UAL shares.
If you're in advertising, you've spent your working life arguing that your clients' brands are among their most valuable assets. And you've almost certainly positioned yourself as a skilled steward of those brands. But would you dare suggest that any ad campaign could counter United's fiasco? Would you dare suggest that anything -- ANYTHING -- you'd ever do could help United or any other client, as much as that fiasco hurt them?
Of course you wouldn't. There are limits, even to the hubris of ad guys.
And yet at the end of the day, the markets have decided that blowing up United's brand was trivial.
I'd ask, "What does the stock market know that we don't know?" but at the end of the day, I suspect the market's placing about the right value (cost) on this worst-corporate-PR-of-the-year moment.
The truth is airlines' customers have, by and large, adopted one of two operating modes (or, they're combining those two.) Some are pure price shoppers, and they'll buy the cheapest ticket they can find on any given day subject to their personal willingness to endure things like multiple or long layovers; others are points-gatherers who have picked an airline and are sticking with it.
Millions of people have posted, "I'll never fly on United again!" on Facebook. If you're one of them, the market's called bullshit on your threat. If you're in advertising, the market's blithe evaluation of the impact of that event on United's brand, or -- take your pick -- the fact that the market basically doesn't value brands nearly as much as you do, you pretty much have to slit your wrists right now.
While I have to believe that there are still a bunch of companies that thrive because of great customer service, there are clearly plenty that don't.