While popular wisdom is that any publicity is good publicity, academic research has largely shown that negative word of mouth hurts company brand and sales. For example, negative movie reviews decrease box office receipts to the point that Hollywood pundits believe that it is “almost impossible to recover from bad buzz.” As a specific example, Viacom Inc. Chairman Sumner Redstone estimated that negative publicity cost the move Mission Impossible 3 more than $100M in ticket sales.
However, there are a startling number of counter-examples. The Wall Street Journal reported that a wine described “as redolent of stinky socks” increased sales by 5% after it was reviewed by a popular website. Similarly, Hotels.com reported a “300 percent increase in requests for information about Kazakhstan” after the movie Borat made relentless fun of the country.
It turns out that bad publicity might even be a reliable way to generate increased traffic – and sales – on the Web. In an article entitled ‘A Bully Finds a Pulpit on the Web,’ the NY Times provides a horrifying account of how one on-line eyewear site encouraged customer complaints to improve their Google page rank. Apparently DecorMyEyes intentionally provided poor service to its customers, expecting them to write negative reviews on advocacy sites like ComplaintsBoard.com and ConsumerAffairs.com. The hundreds of complaints increased the number of incoming links which improved DecorMyEyes’ rank on Google.
The higher a site is in Google results, the more likely someone will click on it. More clicks lead to more sales. This is a new, and obviously controversial, approach to search engine optimization. Maybe there is no such thing as bad publicity.
Recent research published in Marketing Science explains the dichotomy between all of these examples. The researchers found that negative publicity helps smaller brands in crowded markets by increasing product awareness. For these lesser-known brands, consumers forget their negative perceptions more quickly than their general awareness of the product. On the other hand, negative publicity uniformly hurts established brands.
For example, when established authors got a positive review in the New York Times, the researchers found that sales increased by 42%, while a negative review caused sales to drop by 15%. For unknown authors, however, it did not matter whether a book was praised or panned. Being reviewed in the Times improved sales by 33%.
So, as a well-known brand, Charlie Sheen should worry about bad publicity but the stinky obscure wine doesn’t need to. And while negative publicity can boost sales for an unknown brand, it can’t mask unethical behavior. The founder of DecorMyEyes was arrested in December 2010.