Last May, the popular blog Engadget published a leaked internal email from Apple Inc. that claimed the release of the iPhone would be pushed from June to October and the company's Leopard server project was headed for another delay.
The news spread quickly from the blog, triggering a selloff of Apple stock that precipitated a $4.50-per-share drop and a $4 billion loss in market capitalization in just six minutes.
The only problem: The email was a fake. Apple responded quickly by requesting a correction from Engadget, which complied immediately. Within 20 minutes Apple's stock price had rebounded, thanks to the company's speedy response to an influential blogger. The iPhone came out on time, and the rest is history.
Indeed, this lightning-fast sequence of events highlights the growing influence that Internet reputation has on the fortunes of enterprises. Experts say it's time for companies to start managing those online reputations.
It's unclear exactly how Apple got wind of the inflammatory posting, but the company was likely monitoring very closely anything and everything on the Internet. Until recently, companies relied on press clipping services and Google to tell them what was being said about them out in cyberspace. Now, however, as opportunities for trashing companies on the Web propagate, it's become nearly impossible to be on top of it by traditional methods alone.
Watch your back
With the rise of social media and user-generated content, online reputation is not just a matter of tracking influential blogs like Engadget. Millions of people can alter the content of popular sites like Wikipedia. Anonymous people can post rumors on obscure chat sites and popular consumer rating sites like Yelp.com and Angie's List. The Internet has become a complex ecosystem where public opinion can be created anonymously, according to Toby Bell, vice president of Stamford, Conn.-based research firm Gartner Inc.
"A business's reputation will be based on an almost infinite amount of information sources," Bell said. The Internet "is a huge database of unstructured information. So when opinions start to butt up against each other, you get a bad-news petri dish. It can start to evolve and extend beyond what was the traditional range of bad news. When everyone is a publisher, the likelihood of libel increases a millionfold. Accountability has fallen by the wayside."
Bell is advising companies to create policies and adopt technologies that can help manage their online reputations.
"IT needs to really help marketing and communications, legal counsel, corporate risk management and the line of business understand how to better monitor, manage and measure online reputation and to remediate problems faster when they occur," Bell said "It's still surprising to me that many enterprises don't have a response mechanism to a reputation event."
Bell said companies need to create policies for how employees spread information online and how to respond to online trashing.
On top of that, CIOs must start looking at technologies for detecting and remediating these events. Googling yourself is a good start, but it isn't enough.
"There are so many conversations out there that there is no effective manual way to get your arms around all of it, to figure out whether there is something you need to take action on, to react to or promote," said Blake Cahill, vice president of marketing at Visible Technologies, a Seattle-based provider of online reputation management technologies.
Bell said providers of intelligent algorithms will rise in importance. He said these technologies will help companies analyze what's being said about them on the Internet and respond to things that can damage their reputations.
Your weapon of choice
In addition to Visible Technologies, there are a handful of emerging vendors that offer monitoring and response services. San Francisco-based MarkMonitor Inc., for instance, monitors corporate brands and how they're used on the Internet. U.K.-based Reputica offers a reputation dashboard based on the online content it monitors and gives suggestions for responses. Others include Factiva Inc. and Market Sentinel Ltd.
RatePoint Inc., a startup in Needham, Mass., puts a twist on monitoring by attempting to keep culprits in plain view. With RatePoint, companies can host customer reviews on their sites. RatePoint collects the comments, verifies that they're factual and written by real customers, and posts them to its portal, which customers can reach via a link on the client's Web site.
RatePoint guarantees that the bad customer comments won't be filtered out, which creates credibility with bloggers and general posters. But its clients get the opportunity to engage angry customers and try to correct situations before the comments are posted. If the client fails, the negative comments go up.
Bell said he expects some larger companies to move into the online reputation space shortly. He said leading providers of credit information services such as Experian and Equifax Inc. will be "getting into the game."
Look at competitors, too
Companies aren't just facing negative consumer buzz, though. Criminals are starting to blackmail corporations by threatening to attack their reputations online. And competitors can get online and cause trouble.
"He talked down Wild Oats so Whole Foods could get it for less," Bell said. "That's an ethical thing that smart algorithms would have detected."
Cahill said many enterprises are just starting to understand the importance of online reputation management.
"People are aware that there are conversations out there," Cahill said. "They are aware that the Internet is a way to reach the market and they've been doing that for a number of years. But listening to and marketing through social media has leaped tremendously in the past 12 months. We have users creating content and pushing back at companies and spreading that message, positive or negative, to friends and family. So brand is in the hands of the consumer."
Cahill pointed to the case of Kryptonite Locks, which suffered from an online reputation event three years ago. A customer discovered he could use a ballpoint pen instead of a key to open one of the company's bike locks. He posted this information on a discussion board, which spread through the Internet and resulted in videos demonstrating this defect being posted online. Kryptonite responded by offering to replace the defective locks for free.
"They couldn't ignore that," Cahill said. "That's their whole business. If they lost their product positioning in the marketplace, they were in trouble. They reacted. They built a new product."
Let us know what you think about the story; email: Shamus McGillicuddy, News Writer