The United Breaks Guitars Affect on United Airlines

Did you hear about (or more importantly see the YouTube video) of the United Breaks Guitar song and story? Here’s how the Vanno blog sums it up:

Social media marketers (all 100 million of them, if my Twitter count is correct) are bending over backward to congratulate themselves on the effect the 4M YouTube views of a song about a broken guitar had on United Airlines.   Some social media PR types are touting the enormous brand damage done by the incident, and a journalist at the UK Times Online has even connected a 10% drop in United’s stock price with the spread of the YouTube video.

In the last few weeks, this question about the impact of this video on the United stock price has been quite a fun debate. Here’s how Vanno continues on the topic:

So let’s put the United 10% stock price claim to bed first. If you look at other airline stocks on July 10 (the low point immediately after the YouTube guitar video release) you’ll see price drops for Delta, American, Continental and even Southwest. All the drops occurred on small trading volumes, and were followed by a quick recovery. Moreover, United’s stock (UAUA) had fallen by over 100% in the previous month, and day-to-day variations of 25% or more were common. It is, after all, a very low-priced stock in a brutal industry during volatile financial times. In fact, the average day-to-day variance in UAUA price is more than 10% in the period shown in the graph above!

Let me first say that I’m not convinced that “social media” can take credit for anything in particular. But we know for a fact that any number of things can affect stock pricing. We’ve seen it happen numerous times and long before social media is a thing.

Having received phone calls from CEOs who have read a random blog post and been motivated to react or respond, you’d be surprised what makes it to the board room. Which is why I flat out disagree with this point from the Vanno blog:

United may have made a belated attempt to assuage the offended customer/musician, but I seriously doubt very many executive cycles or board moments were dedicated to the incident – despite all the social media navel-gazing.

Sorry, but wrong. When news cycles start picking up stories, execs spend cycles on them. Period. And with 4+ million views of this video, tell me how this issue didn’t come up in the United offices?

That said, I would have to wonder about this same point:

It’s not like the guitar story somehow broke a pattern of behavior on the part of United, or the 4M YouTube views changed the direction of customer perceptions.

Would this cause United to change the way they do business? Probably a yes and a no answer. Yes, everything adds up over time. Even companies like United have to reach the bottom at some point. These types of stories add up, although impact may not be seen or felt instantly.

And when sites like Orbitz and Travelocity make it just as fast to select American or Delta rather than United when booking your trips, 4 million people have another reason to skip United. In a business with tight margins and spiraling revenue, literally everything helps and everything hurts.

It’s not as simple as saying “social media dropped United’s stock price 10%”, but to blow off the impact of 4 million people seeing negative brand impressions is to blow of the overall concept of marketing generally. Any time you discount something as big as the concept of marketing, you’re probably not paying enough attention to the issue at hand.