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‘Fake news’: effects on brand resilience and reputational risk for business

31Mar Posted by Alex Cook

Companies are more vulnerable than ever to being swept up into the maelstrom of fake news stories and conspiracy theories (even when later exposed) causing lasting damage to brand and reputation. A prominent example and cautionary tale is the story of ‘Pizzagate’ in the USA during the recent general election campaign.

‘Pizzagate’ case study

Allegations were made that the Democratic Party in the USA was linked to a fabricated child pornography ring, which regularly met in an array of Washington D.C. restaurants, including pizza restaurant, Comet Ping Pong. Even though the claims around ‘Pizzagate’ were debunked with no physical evidence found or alleged victims coming forward, Comet Ping Pong was swamped with threats and the story even caused a gunman to enter the restaurant to take investigating the matter into his own hands.

Michael Flynn Jnr (son of the erstwhile National Security Advisor) said in December 2016 ‘Until #Pizzagate proven to be false, it'll remain a story.’ However it is very difficult to prove a negative and the damage to the business is material, if not from the original allegations and threats, then certainly from the knock-on effect of an armed man firing an assault rifle inside the venue.

New challenges for the public and for businesses

Advances in social media have allowed information to be disseminated quickly to millions of people with the click of the post button on Twitter or Facebook. Algorithms are not developed enough to independently research the veracity of a story and these platform operators risk being accused of infringing on personal privacy if they are seen to censor free speech and do not themselves have the capacity to manually screen the millions of posts that are put out every day anyway.

This leads to much of what is disseminated on social media platforms being almost completely unfiltered. Therefore individuals with a large following and the social media accounts of news sites can quickly perpetuate these stories, creating a snowball effect; the more times a link or an article is re-posted, the more it seems to attract an air of legitimacy. Because of the ‘at-a-glance’ nature of social media, many do not trouble to investigate a story beyond the headline. That may change as the pervasive nature of ‘fake news’ and ‘alt facts’ becomes more widely recognised.

While it persists though, fake news provides another problem. It is a key right of the public to hold corporations to account when they have fallen short of the social values society expects of them. However, when false news stories are mixed with legitimate critiques of business, it becomes very difficult to tell them apart without arduous investigation. Sports Direct for example, recently hit out at ‘fake news’ claims City AM had published on their executive remuneration packages: were they simply cutting false reporting off at the source or muddying the waters of what could turn out to be legitimate criticism?

Influencing the flow of news can be very beneficial to companies to promote products, reputation and brand image. The flip side of that coin is that fake news can be deliberately perpetrated to gut a rival’s stock price or toxify a competitor’s brand, as happened in China a couple of years ago. New tools, therefore, have to be employed to build resilience if we really are living in the post-truth era some proclaim.

How can companies respond to this emerging threat?

The scale of this new threat underscores the need for companies to proactively engage in media training, reputation resilience and compelling storying telling to build a cohesive, authentic brand which will encourage the public to question whether an emerging news story aligns with their understanding of the company’s reputation. Comet Ping Pong did not have a well-known brand and was thus very susceptible to the public relations storm that came its way, and it is a significant risk for which larger businesses should ensure to be well prepared.

It is vital for companies (especially larger companies with bigger reputations) to vigilantly monitor the media, both social and traditional, to arrest false news stories at the source, before they snowball and gain traction. In the ‘kangaroo courts’ of the internet, perception trumps reality. Businesses therefore must cultivate a strong image of themselves to their various stakeholders to ensure that if they become embroiled in ‘fake news’, their involvement is so jarring to public perception that it is not credible.

Alex Cook
Alex Cook

Alex joined Sermelo in March 2017, having previously worked at the Chatham House. Chatham House engages governments, the private sector, civil society and its members in open debate and confidential discussion on the most significant developments in international affairs. While working there, he gained valuable relationship building skills and developed a nuanced understanding of the needs of corporate clients in guarding against political risk, which feeds directly into his current work in public affairs with Sermelo. Alex graduated from King’s College London with a BA in Classics in 2014. Alex enjoys football (watching and playing), volleyball, reading, theatre and politics.

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