During the financial crisis of 2008 our firm saw a tremendous surge in online reputation management (ORM) issues, particularly in the financial industry.
Many factors contributed to them. There was consumer anger related to AIG’s crash and the resulting Federal bailout, mass layoffs of white-collar professionals and high unemployment among recent college graduates, as well as the mortgage meltdown and what many saw as unfair foreclosure practices. A report published post-crisis by the Pew Research Center placed wealth inequity as the greatest current source of tension in the United States.
Concurrently there were groups such as Occupy Wall Street that helped form an accessible and emotional narrative for these events, channeling anger toward distinct targets. As with most contemporary social movements, the Internet became the primary medium for venting that anger. It also became the main battleground for the reputation of Wall Street.
Internet became a battleground…and where people turned for research
By 2008 the Internet had matured into a powerful enough media force to be such a battleground. Twitter reported 100 million tweets posted per quarter in 2008; Facebook had 200 million users; and Blogger, the most popular social media platform at that time, had 222 million users. Most importantly, the Internet had become firmly established as the first place most people turn to for research.
Social media outlets became popular platforms for discussion about the financial industry, but the industry itself had too slight a presence on them to effectively join the conversation.
Events came together to form a reputation crisis for the financial industry. Up to that point, the industry had been notable for its minimal utilization of online reputation management tools. But several financial firms did adjust—remarkably quickly in some cases—and they have produced what represent models of excellent ORM.
Threats to the financial industry
Financial companies and their executives faced numerous threats after the crash of 2008. Many of them have been threats that can be effectively handled with ORM. Following are several of the most notable:
- Hacktivism and cyber attacks.
- Organized (and often anonymous) defamation campaigns against an organization or its key executives.
- Emails and internal company documents leaked by inside sources and published online.
- Groups using social media, including Twitter and other platforms, in an organized manner to criticize the financial services industry.
The sources of these threats were broad. The results were measurable: an organized online protest against Bank of America in 2011 cost the company approximately $600 million in anticipated profits.
Not all ORM issues resulted from malicious parties, but the impact upon a firm’s reputation could be direct. Frustrated investors posted large numbers of critical posts on investor forums, often attacking the firm’s business practices. Such posts could dominate those forums—and some of these posts rose into the first page of searches conducted in those firm’s names, reaching a much broader audience.
The dangers to investment firms from such threats could be acute. The mere suggestion of impropriety can be fatal, causing investors to flee en masse. Even disregarding effects on clients, investors and customers, failure to manage a reputational crisis can impact future employee recruitment efforts.
A similar situation arose from owners of homes in foreclosure that were confused about their options. The financial industry did not have online services in place to help them. Consequently, these home owners gravitated toward third-party sites, where discussion more often ended up in anger and protest than in solutions.
A new response
The reality was that the financial industry’s reputation was very vulnerable. Five years ago, it had little to no presence on Facebook, YouTube or Twitter. Many firms—and most executives—in the financial industry had preferred to keep a relatively low profile. But the central rule of online reputation management is that if you don’t have a significant amount of information about yourself or your organization online, information provided by other parties will dominant search results.
The financial industry became the least liked industry in America. Banks were at the top of the list. Wall Street followed. Once it recognized the problem, the financial industry made a focused effort to catch up. It has since utilized two main strategies to counterbalance consumer anger: using online forums to communicate with and help consumers and establishing large-scale philanthropic programs.
The response of Fannie Mae, the largest financial services company in the U.S., is a good example of communication and help. The company built extensive resources into its website to help its customers, including many ways to communicate with company representatives. They hosted a Twitter account, as well as a YouTube channel with numerous informative videos.
As the company understood, if you do not provide your customer with a place to vent online, they will find somewhere else to do it. Now, except for the private investment sector, most large companies in the financial industry have Twitter customer service systems. They also have far more extensive online customer support resources.
Large-scale philanthropic initiatives
Fanny Mae also established large-scale philanthropic initiatives (for instance their “Help the Homeless,” which itself has a presence on Facebook, Twitter and YouTube). However, Goldman Sachs has the most prominent philanthropic program in the financial industry. It can be found in the Citizenship section of their website. Goldman Sachs’ Twitter feed has over 65,000 followers.
The financial services industry has been especially effective in providing customer service platforms online—where consumers both are most likely to complain and are easiest to reach directly. It has also established a strong presence on the platforms where consumers are most active: Twitter, YouTube and Facebook.
These actions have not eliminated online reputation threats. But they have decreased the industry’s vulnerability significantly.
Toward the next crisis
The tools of ORM are best used to preempt reputational threats, before they have a chance to damage your brand.
The key to this process is building a robust online presence. This begins by auditing a brand, evaluating the main online sources of risk and providing a diagnosis of the steps needed to mitigate those risks. Daily monitoring of online information about the brand identifies red flags before they become major problems.
In ORM, those are the two most important steps for protecting a brand. The remaining tools focus on repairing damage that was impossible to stop.
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This article appears in the journal (published in March 2014) following The 2nd Annual Reputation Management Conference in Istanbul. It is based on a presentation made by Shannon Wilkinson at the conference in October 2013.