Martin S. Sorrell, CEO of advertising agency WPP Group, sues two blogging ex-colleagues for a Web hate campaign in which, he says, they smeared him and his former lover. The Washington Post grapples with a surge in online comments that read like the racist garbage on neo-Nazi Web sites. Home Depot's (HD) CEO goes into an emergency huddle with his crisis management team after 14,000 bilious customers storm an MSN (MSFT) comment room.
The venom of crowds isn't new. Ancient Rome was smothered in graffiti. But today the mad scrawls of everyday punters can coalesce into a sprawling, menacing mob, with its own international distribution system, zero barriers to entry, and the ability to ransack brands and reputations. No question, legitimate criticism about companies should get out. The wrinkle now is how often the threats, increasingly posted anonymously, turn savage. Even some A-list bloggers are wondering if the cranks are too often prevailing over cooler heads.
Most companies are wholly unprepared to deal with the new nastiness that's erupting online. That's worrisome as the Web moves closer to being the prime advertising medium—and reputational conduit—of our time. "The CEOs of the largest 50 companies in the world are practically hiding under their desks in terror about Internet rumors," says top crisis manager Eric Dezenhall, author of the upcoming book Damage Control. "Millions of dollars in labor are being spent discussing whether or not you should respond on the Web."
In the beginning, the idea of this new conversation seemed so benign. Radical transparency: the new public-relations nirvana! Companies, employees, and customers engage in a Webified dialectic. Executives gain insight into product development, consumer needs, and strategic opportunities. All the back-and-forth empowers consumers, who previously were relegated to shouting at call-center minions. Venom can be a great leading indicator.
Trashing brands online can also be high theater. Rats cruising around a Greenwich Village KFC/Taco Bell (YUM) on YouTube (GOOG). MySpacers (NWS) busting their employers' chops. Faux ads bashing the Chevy (GM) Tahoe as a gas-guzzling, global-warming monster. Millions of people watch this stuff—then join in and pile on. Is it any wonder companies lose control of the conversation?
When the Web turns against them, executives are faced with the problem of how to manage the blowback. They have two choices: ignore the smaller furies and hope they won't metastasize, or respond outright to the attacks. It's rarely a good idea to lob bombs at the fire-starters. Preemption, engagement, and diplomacy are saner tools.
Companies such as Lenovo Group (LNVGY), Southwest Airlines (LUV), and Dell (DELL) have specialists dedicated to engaging or co-opting their critics. Dell has made blogger outreach into such a discipline that the company's team, including refreshingly straight- talking blogger-in-chief Lionel Menchaca, recently sat down for drinks, nachos, and fried zucchini at an Austin (Tex.) pub with blogger Jeff Jarvis. He's the man who ignited the original Dell Hell customer-service crusade with his rants about the company. (Jarvis picked up his own tab.) "In a flash he transformed the borgish image of Dell for me," says Jarvis. That wasn't all. At Davos in January, Michael S. Dell sought out Jarvis at a cocktail party and apologized to him.
Other businesses hire outfits such as BuzzLogic, which uses algorithms to analyze which bloggers and social media are driving the conversation around issues that matter to marketers. For executives there's a new, $10,000 premium service from ReputationDefender.com that can promote the info you want and suppress the news you don't. The company also claims it can make information disappear altogether. One CEO, it says, watched a negative story about wrongdoing at his company drop from the first page of his Google hits to the third. In another case, ReputationDefender helped focus attention on a financier's recent hedge-fund glories so his previous career as a banker wouldn't overshadow them.
But what happens when the uproar grows so noisy that the mainstream media is bound to pick it up? That's exactly the position new Home Depot CEO Francis S. Blake found himself in last month. MSN Money columnist Scott Burns accused Home Depot of being a "consistent abuser" of customers' time. Within hours, servers were caving under the weight of 10,000 angry e-mails and 4,000 posts, which took the company to task for pretty much everything. It was the biggest response in MSN Money's history. Blake's predecessor, Robert L. Nardelli, the guy who famously didn't allow comments at the company's annual meeting, simply would have ignored the mob. But Blake knew the controversy could quickly mushroom.
The only way over it, he decided, was through it. So Blake penned a heartfelt and repentant online letter to all Home Depot customers, essentially copping to the company's less-than-stellar service. He promised to increase staffing and begged for the chance to make good. He created a site to deal specifically with service. He thanked Scott Burns.
In crisis-management circles, the gamble was viewed as a win. Blake actually generated rare applause on an unofficial Home Depot employee site called the Orange Blood Bank, where workers are more likely to post riffs knocking the company. ("You can't do it, and we'll never help.")
Of course, the Web is like Whack-A-Mole: For every proactive move, another crisis can flare up elsewhere. Even an innocent comment can backfire. On Apr. 1, Starbucks (SBUX) CEO James L. Donald told The Seattle Times he'd know he had been successful in life if employees attended his funeral. In about the time it takes to gulp an espresso, Starbucksgossip.com, a site founded by the chain's employees, had linked to the interview. The baristas massacred Donald. "I'd love to attend his firing," wrote one. "Sounds like he needs a good dose of Turbo Lax," wrote another. "Go to his funeral? Sure, if we get tips."
Where is all this headed? Inevitably, someone will file a big, scene-changing lawsuit. "At some point one of these sites is going to hurt someone very, very big who is not afraid to be emotionally blackmailed," says crisis manager Dezenhall. Martin Sorrell, who tried to take advantage of Britain's liberal libel laws, eventually settled. A courageous stand—or a clumsy PR move? And should advertisers start insisting that their ads not appear alongside user-generated venom? The answer may seem obvious. On the other hand, nastiness is quite a draw.
By Michelle Conlin