Is Bad Publicity Good For Business?

badpub

There is no such thing as bad publicity, goes the adage. This is bunk. Just ask Toyota, a firm that once had a peerless reputation for reliability but spent much of last year battling allegations that its cars had defective accelerators. Or Sanlu, a Chinese company that was revealed to be peddling poisonous milk. It is now bankrupt and its top executives are in jail.

Yet if your starting point is obscurity, even bad publicity may be helpful, argues Alan Sorensen, an economics professor at Stanford University’s Graduate School of Business. He looked at the effect of book reviews in the New York Times. In a study published in Marketing Science, he found that well-known authors who earned glowing reviews for a new book could expect to sell 42% more copies, whereas a negative review caused sales to drop by 15%. For unknown authors, however, it did not matter whether a book was panned or lauded. Simply being reviewed in the Times bumped up sales by a third.

Mr Sorensen extrapolated his findings to other businesses. For small brands fighting for recognition in crowded markets, almost any publicity is beneficial, he reckons. One reason is that, for lesser-known brands, negative perceptions fade more quickly in consumers’ minds than their general awareness of the product. Read more

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