24/11/10

By Matthew Cain, CEO of Trufflenet

Vodafone experienced a social media backlash last month after a long-running argument with HMRC over the size of its tax bill was turned into an issue for popular protest, thanks to a Guardian article by tax expert Richard Murphy and an in-store protest organised by UK Uncut — a direct action campaign against public sector cuts.

Vodafone isn’t unique for being in the spotlight over its tax affairs. During the past few days, Barclays and Kraft have both been accused of avoiding tax on social media. What’s different about Vodafone is that the company is an active user of social media — delivering customer service through Twitter, Facebook and customer forums, with some claims that it is involved in more than 4/5 of all online conversations about the company.

There’s little evidence that having a social media presence increases the likelihood of being criticised. Apple, Carter Ruck and Jan Moir (to name but a few) have all experienced a backlash on social media and none of them had ‘raised their head above the parapet’; the familiar mantra of communications professionals.

There’s no doubt that the issue generated lots of interest. UK Uncut was a trending topic on Twitter this morning (suggesting over 1,500 tweets in an hour) as was Vodaphone. That’s significantly more interest in the protest than the 10s of people actually protesting outside Vodafone’s flagship store in London. But apart from demonstrating that spending £10m+ on high profile sports sponsorship is no guarantee that people can spell your name, what meaningful impact did it have on the brand?

The protest also sparked a wider debate about Vodafone’s tax bill. 86% of people criticised Vodafone compared with just 4% who used it as an opportunity to criticise the government. But mentions of its tax bill accounted for just 34% of all conversations about Vodafone.

But away from the Twitter storm, people were less convinced. Comments left on news sites and forums were more sceptical about the merits of the protest — and the case against Vodafone (45%) than they were critical of the company (26%). Just 1200 people signed a protest petition promoted by the campaigners.

But although the campaign generated more froth than substance, Vodafone also under-utilised the benefits of its social media profile. Its response — despite being posted on its forums — used the same tone and language of its official media statement. That may have been popular with the legal department, but was ill-suited to the medium.
Secondly, within the constraints of the poor language, the company could have done more to communicate its position.

Whilst it tweeted its official response, just 1% of Vodafone’s Twitter followers talked about it — and so Vodafone’s stance was acknowledged in just 4% of the overall debate about the issue. The message was also poorly targeted. For example, Vodafone did not engage Guardian journalist @jemimakiss, despite her considerable influence on Twitter.

Ultimately then, the social media backlash means little. With £6bn being argued about, for a company with an average revenue per user of around £250 per annum, it would have required more than 10 million customers to quit the company for the cost/benefit analysis to have weighed differently.

The share price barely budged despite the criticism. It fell just 0.6% during the day - but it was up on the previous day — and for the year as a whole. That’s underscored by Trufflenet’s analysis, of the 1956 comments on the issue. Just 11 people suggested that they would change mobile phone provider as a result of the social media ‘backlash’.

But unless Vodafone can take the social media users for whom it has provided a customer service transaction, and build them into brand advocates, it will face an uphill challenge using social media to defend itself from a genuine threat.