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RobinHood created its own Streisand Effect
Can it recover?
Brand reputation management in the modern media ecosystem is a challenge, requiring teams of in-house comms folks and lawyers and outside PR agencies and lawyers to make sure that a message is shaped for various forms of media. Did I mention the lawyers?
Companies spend a small fortune on monitoring media (traditional and social; legacy and digital; all points in between) for mentions of their brand. And when they start to bubble up, how to react. The last thing they should want to do is create a Streisand Effect.
(Image via South Park)
For those who might not know what the Streisand Effect is: In 2003, someone took an aerial picture of Babs’ beachfront home as part of a series documenting erosion in California. She didn’t like that, so she sued the photographers for $50 million. Which, of course, had the inverse effect of drawing media attention to something few even knew about because a) Streisand is what you might call uber-famous; and b) $50 million is a lot of money.
In the month before the lawsuit, the picture had been downloaded only 6 times, including twice by her lawyers—whereas the image was downloaded more than 420,000 times during the month following the lawsuit. This paradoxical result—where an attempt to silence, suppress, or stop something backfires—was dubbed the Streisand effect.
Over the last few days, as the world watches the power of social media collide with the influence of Wall Street in real time, one narrative tributary is that of how a company trips into the Streisand Effect.
The tl;dr—as Vice reports, Redditors “purchased huge numbers of GameStop stock at low prices (and then kept buying more as the prices rose), held it, and are currently forcing something known as a “short squeeze” that is driving the price up and is emptying these hedge funds in the process.”
This caused a whirlwind for hedge funds, ultimately ending up where today, when Robinhood, an app meant to democratize trading, giving the little guy the ability to make some money, decided that it was going to dismantle its public perception by aligning with institutional investors.
Some good explainers here
The Discourse: The house always wins
The Margins: Game. Stop.
Platformer: Reddit roils Wall Street
Talking to a couple of reputation and public relations experts, by blocking trading and seemingly aligning itself with those institutional investors and not its user-base of retail investors, Robinhood has done quite a number on itself.
“When your entire messaging is built around the idea of democratizing trading and rooting for the little guy, a move like this is pure poison,” said Ed Zitron, founder and CEO of EZPR. “There’s an argument to be made that this was somehow in service of protecting users from making bad decisions, but if that was the case they would have done it days ago. If they were so against the little guy losing money, they never would have launched an options product in the first place. Or maybe they’d have cut options products when a guy killed himself after being assigned millions of dollars of leverage.”
Zitron points out that the company’s brand position from its start has been about “enabling people to trade and take advantage of the same mechanisms that the elite have used to get rich. They have positioned themselves as ‘us’ and other brokerages as ‘them,’ and they’ve now starkly, brutally said that they are truly in the camp of the haves.”
As Matt Van Hoven, co-founder of Raven Public Relations, puts it: “Robinhood just screwed the very group of people they purported to be in existence for.”
“First off, the irony of a brand called Robinhood screwing retail investors (aka 'the poor') is not lost on the 2.7m million members of /WallStreetBets - they're all talking about it,” Van Hoven said. “For a company that had a banner year in 2020 built on people being stuck at home and playing with stocks as entertainment, this was a massive fail.”
Adding that over the course of a few hours, Robinhood effectively destroyed its reputation.
“It's decimated. Like I said, 2.7 million people are in that group, but now the story has gone international,” VanHoven said. “People around the world are buying GME on apps etc. that are allowing them to do it, just to stick it to 'the system' they see as keeping the little guy down. It's a global phenomenon.”
And as if to put an exclamation on le affair RobinHood, when you manage to unite Ted Cruz and Alexandria Ocasio-Cortez, you know you’ve stepped into a danger zone.
“This is going to hurt them long term, though I doubt it’ll kill them,” Zitron said. “Their entire messaging strategy is in the toilet now - how can you say you fight for the user when you do something like this? Who’s going to believe you?”
Or, perhaps we’re all going about looking at this incorrectly. NYU professor, book author, and podcast host Scott Galloway tells us this, and apparently all of life’s issues, can be solved by letting young men have more sex.
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The Rolling Stones, “You Can’t Always Get What You Want”
Some interesting links:
For privacy nerds:
Global Privacy Control wants to succeed where Do Not Track failed (The Verge)
Facebook's 'Oversight Board' overturns 4 cases in first rulings (NBC News)
Responding to the Oversight Board’s First Decisions (Facebook)
Facebook CEO Calls Apple ‘Significant’ Future Competitor (Bloomberg)
For former employee calling out old workplace:
I called Arizona for Biden on Fox News. Here’s what I learned (L.A. Times)
YouTube says its TikTok competitor is getting 3.5 billion views a day in India test run (CNBC)
Facebook predicts ‘significant’ obstacles to ad targeting and revenue in 2021 (TechCrunch)
For tales in SEO:
What time does the Super Bowl start? (WSJ)
For retailers-turned-media companies:
Walmart revamps ad-sales business to expand its reach (WSJ)