Groupon vs. Nokia: The Right Way to Respond When Backed Into a Corner
When CEOs of tech and digital media companies speak, people pay attention. With lofty valuations of several billions being thrown around, and talk of another tech bubble fast reaching its apex, everyone is listening to the titans of the tech industry.
Therefore, it wasn't much surprise when recent statements from two well-regarded tech CEOs made international headlines. The first came by way of Groupon's botched attempts at explaining its much-hyped and controversial Super Bowl ad. The second was intended to be far more subdued; it was surely not meant for a global audience of several hundred million -- the leaked "burning platform" memo from Nokia CEO Stephen Elop.
The Groupon fallout has many questioning the company's maturity and ability to handle immense market pressures. The Nokia communiqu?, meanwhile, has quickly become a larger-than-life proclamation for successful, modern-day executive communications.
Groupon's situation reminds me of the early 2000s, a time when the burgeoning tech and digital scene showed its immaturity. Similarly today, with scores of startups poised for public offerings and huge investments, the time for brushing aside their sometimes cavalier approach to communications is long past.
What exactly has allowed Groupon's Super Bowl ad to continue haunting the company, while Nokia's memo helped turn the tide of negative attention on the tech giant? Some might argue it was Groupon's juxtaposition of social causes with an appeal to consumers' bargain instincts. It's not that simple, however.
If it were, Groupon's subscribers would have fled in droves. They haven't. As Ad Age's Kunur Patel reported last week, subscribers actually increased.
The undercurrent of concern has far more to do with a general lack of acumen in Groupon's communications with its customers and stakeholders, rather than the visual offensiveness of its advertising.
Like many digital-media startups, Groupon often eschews traditional forms of public relations and marketing in favor of innovative social-media and word-of-mouth tactics. Nothing wrong with that. Unless, of course, you recently raised "like a billion dollars," turned down a $6 billion acquisition offer from Google and you're reportedly planning an initial public offering.
Companies to which this description applies can no longer rely on the goodwill of the digerati. Letting slip an errant message in an email blast is one thing; offending a good portion of 111 million U.S. consumers is quite another.
Rather than using the opportunity of the attention gained from its ad faux pas to clearly describe the value the company and its charity partners derived from the ad, Groupon chose the path of least resistance, with multiple attempts at acquiescing to outside interests.
After initially issuing an apology, Groupon CEO Andrew Mason followed with a slightly bewildering blog post, in which he attempted to explain the ads by rehashing some pre-Groupon history. The week concluded with a rash decision to pull the ads. This slapdash approach clearly affects the company's image and reputation.
Contrast Groupon's explanations to the skillfully-written Nokia memo. Facing increasing pressure from investors, shareholders and the media to regain the Nokia luster, CEO Elop eloquently expressed his concerns, comparing the company's faltering sales and prestige to "standing on a 'burning platform,'" while imploring that "[Nokia] must decide how [it is] going to change [its] behavior."
Little chance analysts, investors or employees might misconstrue that message.
Mr. Elop's impassioned plea was decisive and clear; it required delivery only once for its full impact to resonate. In doing so, he delivered a superbly contrasting perspective of how to act (and not react, in Groupon's case) when your company is on the brink of international acclaim, or merely trying to regain its former buzz.
Also revealed by leaking the memo was a long-held secret of successful brands: people respond remarkably well when executives appear to have their act together and when they explain the "how" and "why" behind their thinking. That's no slight to Mr. Mason. He deserves all the respect he has earned for turning Groupon into one of the fastest-growing tech companies in history.
But it puts the onus squarely on the company to regain the public's trust and its unique voice in an increasingly crowded and skeptical marketplace. Groupon's "burning platform" moment may have just arrived.
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