Question to Oracle: Will Populist Media Campaigns toward Corporations Be a Major Threat?

ORACLE RESPONSE:

Yes. New media campaigns are starting to shape consumer-purchase and business-policy decisions of corporations. This new media is enabling blitzkrieg communications, including fake news, to the public by individuals, social groups, and political groups about the political, social, or economic attitudes of corporations or their senior executives. Those blitzkrieg communications about corporations and their products and services are likely going to increase and become more effective in the speed, targeting, and messaging. In the future a company’s identity, business reputation, and brand could be heavily influenced by the demographics, attitudes, and beliefs of company’s employees, particularly the senior executives. It’s very uncertain, how big populist attacks are going to become for corporations, particularly consumer-product/service companies, and it’s uncertain what can or will be done to protect a corporation’s identity and business activities from those attacks. But it’s critical for corporations to have a business policy for how it addresses political, social, and economic issues, whether and how it communicates about those issues, and how it will manage blitzkrieg campaigns against them.

RECENT SIGNALS OF CHANGE

New media is changing how people conduct their lives, including how they participate in their communities and the political process and how they make choices about the products they buy and services they use. Everyone now has endless opportunities to say something or act in some way. Each act provides the individual a feeling of satisfaction or pleasure, while the cost or risk to the individual feels small, unless you’re in China where the goal is to register every individual act and keep a tally. The influence of the new media is getting bigger and bigger.

  • Advertisers rushing to online, digital ads. Online, digital ad spending is beginning to approach TV ad spending. Newspapers are really suffering.
    • Digital ad spending is rapidly catching up and could soon be greater than TV ad spending. Global ad spending in 2017 is expected to be ~ $180 billion (33 percent of the total) in digital, online media and ~$220 billion (40 percent of the total) for TV. This compares to global ad spending in 2010 of ~$66 billion (16 percent of total) for digital, online media and ~$181 billion (or 44 percent of total) for TV ad spending.
    • An article in The Wall Street Journal on February 1, 2017 titled “Facebook’s Steep Wager on Online Video Has to Pay Off” noted Facebook’s revenue in 2016 is expected to increase 46 percent from the year before, but that this growth is going to “come down meaningfully” in 2017. The article indicated Facebook is betting on video, including Facebook Live, to play a much bigger role in the future. CEO Zuckerberg has apparently said he envisions the company becoming a “video-first” company.
  • Rise of live video
    • In January 2016 GoPro teamed with Twitter-owned Periscope to allow users to broadcast live from their GoPro devices connected to iPhones. Users have the ability to switch instantly between the GoPro and the iPhone’s video camera—i.e., each user can do two-camera live action shots.
    • Live video is the current big battleground for Facebook, Snapchat, Twitter/Periscope, YouTube, and many smaller startups. China has 200 live-streaming platforms. In September 2016, ii-Media Research predicted there would be over 300 million viewers of live streaming in China, or about half of China’s internet users, by the end of 2016. Source: “Cash Flows in China Live Streams,” The Wall Street Journal, 9/28/16, p. B6. Until recently TV and cable broadcasters exclusively broadcast live video. Live new media video is totally disrupting the traditional media industry.
    • In December 2016 China issued new regulations requiring foreigners to submit a formal application with the Ministry of Culture before they can post live-streaming videos from their smartphones and websites.
    • Another WSJ article on February 6, 2017 about the content of Snapchat’s registration filing for its initial public offering was titled “How Millennials Are Turning Snapchat Into the New TV.” Snapchat noted in the registration that its users view 10 billion videos a day.
    • In November 2016 The Wall Street Journal reported Amazon has been talking to major sports organizations like the National Basketball Association, Major League Baseball, and the National Football League about providing streaming live sports.
    • Online businesses are buying traditional media assets. High-quality content online will likely differentiate new media companies. In December 2015, Alibaba Group, China’s e-commerce giant, bought the South China Morning Post and all other media assets from the SCMP Group. Alibaba’s digital strength will enable the 112-year-old newspaper to become a global media entity covering China for readers around the world. While the Hearst Corporation’s Cosmopolitan magazine just announced it is teaming up with Snapchat to launch the Cosmo “channel” on Snapchat’s “Discover” newsstand.

Two big brothers: New Media Superstars and Government. An individual’s private life and work life are increasingly inseparable and increasingly visible to everyone, while at the same time governments and corporations are gathering more and more digital data everyone, including a lot of information about how individuals behave in a wide variety of circumstances.

  • Big data enabled computational politics. In December 2015, a database containing the records of 191 million US voters found its way onto the internet. Politicians and government agencies could target individuals with personalized messages. But this is not just happening in the United States. In Britain, the Conservative Party used targeted ads on Facebook to help win the general election in 2015.
  • Hangzhou’s local government is piloting a “social credit” system the Communist Party wants to roll out nationwide by 2020. The aim of the national social credit system is to “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.” The plan for the system is to compile digital records of citizens’ social and financial behaviors to calculate a personal rating that will determine what services they are entitled to, and what blacklists they go on. A person can incur black marks for infractions such as fare cheating, jaywalking, and violating family-planning rules. The Economist notes “The scale of the data-collection effort suggests that the long-term aim is to keep track of the transactions made, websites visited and messages sent by all of China’s 700m internet users.” The Economist, “Creating a digital totalitarian state: Big data gives Chinese rulers new ways to monitor and control citizens,” December 17, 2016, p 21.
  • For most corporations, new digital media has become an important new channel of corporate communications, marketing, and selling the company’s products and services to millions of customers and potential customers. For many corporations—particularly new, high-tech ones—it’s the primary channel. A new book published in 2016, “Super-Consumers,” by Eddie Yoon of Cambridge University describes the importance and influence of the group representing ten percent of consumers that accounts for 30-70 percent of sales and almost 100 percent of “customer insights.” This high-passion group is defined by both its sales size and its attitude to the product. Facebook and Google are focused on developing strong relationships with their super-fans.
  • In a special report in The Economist, September 17, 2106, entitled “The rise of the superstars” Adrian Wooldridge described how high-tech companies become superstars by discovering niche markets and then scaling up as fast as possible. This “blitzscaling” is required to develop the necessary millions of customers to earn any money and prevent potential competitors from reaching those customers first. The article points out a downside of the emergence of superstars with global scale, namely the negative feelings they generate in the general population toward big business. One reason is a customer’s perception of being at the mercy of one company. Another is the emergence of superstars and the consolidation of industries result in unique, large relationships between the superstars and government. And because of those connections to government, the government policy preferences of superstars and the political connections of their business leaders are news information.

Social and political dynamics. Digital media communications is today’s means for creating political or social action.

  • ISIS might not exist without the internet and social media.
  • We are now experiencing chaotic pluralism where mobilizations spring from the bottom up, often reacting to events. Thousands of events are occurring each day, most of which don’t result in surge responses.
  • Collective action based on online postings leaves a big digital footprint. Governments can use this information to monitor protests and intervene when they feel it’s necessary. They can also identify and do something about the online activist leaders.
  • Most governments, particularly those with authoritarian regimes and some resources—like Russia and China—are investing heavily in web-based propaganda. These include social-media bots and other spamming tools to drown out real online discussions and “trolls” to act on their behalf in Western comment sections, Twitter feeds, etc. China authorities have an extensive censor system for blocking any comments or online postings.
  • A study at the University of Konstanz found that the internet tends to grow fast in countries in which the governments are concerned about the flow of information, but there is no evidence so far “that democracy advances in autocracies that expand the internet.”
  • It was reported in early February that Facebook and Google have active programs in Europe to combat “fake news”—the rapid spread of online misinformation—in upcoming important elections in France and Germany.

New Media Actions toward Corporations. An important new development is that opponents of a corporation’s business policy, its industry, its products or services, or even the politics or social positions of key executives are starting use this same new media infrastructure against the corporation. And given the potential speed, intensity, and potential impacts of the new media actions, this is critical business policy for every corporation to address and plan for.

  • The Trump election result stimulated a number of business boycott and support actions. A group called Grab Your Wallet identified after the election a number of stores that shopper should boycott during the Christmas holiday. Trump supporters are using Twitter to encourage consumers #buytrump or #buyivanka or asking people to boycott Starbucks stores because Starbucks Corp. pledged to hire 10,000 refugees. The success or failure of the various actions will be closely analyzed for lessons learned. The first analysis of Grab Your Wallet’s campaign indicated it had little impact on the targeted merchants’ sales.
  • In January 2107, Uber fell behind its much-smaller competitor Lyft in the Apple App Store after Uber app users deleted their accounts largely in protest over Uber CEO Travis Kalanick’s ties to President Trump. Kalanick then resigned from Trump’s business advisory council in the first week of February.
  • The CEO of Under Armour was criticized recently for remarks made in a television interview where he said he respected President Trump’s willingness to make bold decisions and said, “To have such a pro-business president is something that is a real asset for the country.” Some groups called for boycotts of Under Armour products and a financial analyst covering Under Armour’s stock downgraded his rating for the stock to “negative” from “neutral” saying “We believe the decision to express a view in today’s highly charged political climate was a mistake.” A week later the CEO announced he would publicly fight President Trump’s proposed travel ban, trying to mitigate the damage of his earlier comments.
  • President Donald Trump praised Boeing Co. on February 17, 2017 in a visit to a Boeing manufacturing plant in South Carolina. He also said, “This is our mantra. Buy American and hire American.” Boeing CEO has met a number of times with following Mr. Trump’s initial blast on Twitter in December 2016 against the cost of the new jets it will build to serve as Air Force One and threatening to even cancel the plan.

 

PLAUSIBLE DEVELOPMENTS WE MIGHT SEE IN THE FUTURE

New-media actions could be a major threat for corporations. At a minimum, corporations need to consider the range of possible campaigns they could face and develop plans for how they monitor new media activities and how they would respond to a major surge action affecting them.

More powerful new media actions likely in the future:

  • Larger online user bases will enable testing of thousands of models about the behavior of online social networks, including the movement of misinformation or fake news online.
  • The massive amounts of data about events and responses could enable people or organizations to become very effective in predicting or purposely triggering desired surge responses. In other words, new media campaigns may become much more effective.
  • More and more will be targeted at corporations.

Less privacy for corporate employees:

  • More information will be available online about each individual’s personal and work lives. A lot of that online information will be restricted, but an increasing amount will publicly accessible.
  • Government agencies, corporations, activist groups and the general public will likely increasingly seek personal information about employees of large corporations.

Nationalism and multinationals:

  • Most corporations are already readily identified with their original home country and not seen as independent of geopolitics. Those country-to-company alignments could become catalysts even more for new-media actions.
  • A multinational’s identity may become even more aligned with their home country’s policies and behavior, despite protests to the contrary.
  • Social campaigns on new media may influence foreign governments to discriminate more than they do today against multinationals based on nationality. Will China treat German companies different from US companies?
  • Issues for new media could be the locations of the company’s headquarters, political views of company executives, nationalities of work force, geographic footprint of the multinational, environmental footprint, etc.

New online rules and tools:

  • European efforts to help individuals to be forgotten may stimulate efforts around the world for individuals to be able to manage what information about them is available online.
  • Online media companies that search for, gather, store, or transmit personal data could implement new policies to protect an individual’s personal information online, minimize the ability of third parties to publicize personal information about an individual, and provide individuals the means for controlling what personal information is shown, including perhaps the ability to hide information already online.
  • Public opinion will likely vary significantly within each country, and from country to country, on how open and transparent the internet should be and what personal information, particularly about senior corporate executives, should be private and what protections should be provided.
  • Governments will likely impose new restrictions on how personal information can be accessed, transmitted, and used. Those restrictions could likely vary significantly around the world from tighter restrictions to fewer restrictions.
  • New tools and technologies for protecting an individual’s online personal information online or identifying an individual online may develop.
  • Applications may develop for the Dark web so an individual’s online personal activities remain hidden.

For companies that sell consumer products or services:

  • They could experience significant new media actions based political, social, or work activities of their senior executives.
  • An executive’s social and political identity could increasingly be a factor in corporate brand strength and reputation and vulnerability to populist action.
  • With the heightened publicity, discrimination lawsuits by individuals often employees against corporations may increase over issues of employee nationality, religion, language, hiring of foreign legal residents, etc.

Corporate affairs, identity, and brand management:

  • Corporations large and small and not just consumer companies will most likely need new business policies, marketing strategies, and corporate affairs capabilities for navigating a business environment where customers and users overnight can be turned off or on in response to new media surges, stimulated by external events or outside agents, friend and foe.
  • New corporate affairs capabilities—reaction time (time to get in front of an issue), crisis management, managing the information flow, use of new media tools, participation of more employees in social media responses, monitoring of employees’ social media and online activity, use of live video will likely be required
  • Managing the risks and opportunities from new-media actions will require corporations to spend more resources on corporate affairs, identity, and brand management.
  • Corporations may need to develop a new business policy with regard to corporate positions on social and political issues and how corporations should participate in political or social processes related to those issues. Should corporations attempt to remain neutral on social and political issues because of the risks, participate more strongly on social and political issues, or what.
  • New corporate policies about employee behavior outside the workplace or online may be needed, even if only to reaffirm no restriction.
  • New corporate policies may be required for executives’ social media postings.
  • Executives could be required to sign morals clauses with their employers—like pro athletes, entertainers, and newscasters do now—to help protect their employer in the event the executive engages in reprehensible behavior or conduct that may negatively impact his or her public image and, by association, the public image of the corporation.
  • We might also see reverse morals clauses where executives protect their personal reputations against actions or behavior of an employer that negatively impacts the executive’s public image.

 

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