Public Relations Faculty Explore Financial Impact of 'Fake News'
When the fake news story “Pizzagate” surfaced in fall 2016, Comet Ping Pong, the Washington, D.C. pizzeria at the center of the storm, faced financial consequences. The debunked theory that claimed high-ranking Democratic officials were running a child sex ring at the establishment led to lost sales, threatening messages and the need to hire a security guard because of the threats.
Because of the many potential implications of fake news, preparing for fake news is an increasing priority for corporate communications and public relations professionals. Two Kent State faculty members in the School of Journalism and Mass Communication and alumnus Chas Withers, ’87, CEO of the Cleveland agency Dix & Eaton, explored this dilemma in the paper, “The financial impact of fake news: A case study analysis of man-made crises.” Kent State’s Michele Ewing, associate professor, and Cheryl Ann Lambert, Ph.D., assistant professor, presented the paper at the International Public Relations Research Conference in Orlando, March 7-10, 2018.
“Preparing for fake news is increasingly a priority for public and private entities, due to the potential economic, financial and brand equity impact,” the paper found. “… Corporate communicators must consider the bottom-line impact of fake news to all their stakeholders.”
The paper analyzed examples beyond the well-known “Pizzagate,” and focused on companies that experienced the financial impact of fake news. For example:
- A 3.7 percent stock drop was tracked at Kay Jewelers after a fake news story surfaced, accusing the company of replacing customer diamonds with fake stones
- New Balance, because of an expression of support for President Donald Trump’s trade stance, saw a surge of vocal white supremacist support and a reported 25 percent drop in sales for a week following
- PepsiCo, where general criticism of the 2016 U.S. presidential campaign prompted claims that the CEO criticized Trump voters, saw a five-percent drop in stock the month following
Ewing, Lambert and Withers found that the nature of social media accelerated the flow of information in each case. Fake news stories were easily created, manipulated, and shared via social media. Compelling visuals also aided in circulation of messages.
Corporate communicators aided each of the companies in navigating from the early stages of fake news that prompted emotional responses, through to objective techniques to manage long-term strategic responses. In each of these cases, public relations professionals employed multi-platform tactics for companies encountering misinformation campaigns.
“Corporate executives at Kay Jewelers, New Balance and PepsiCo successfully refocused some of the media narrative through deliberate messaging designed to correct false information,” according to the paper.