Why Companies Should Beware Engaging In Fake News

I’ve written an increasing amount about fake news in recent times, and the perception is that it’s the preserve of dubious states.  Indeed, a recent report from Freedom House found that 30 of the 64 countries they analyzed interfered in the media in some way.

It isn’t just governments however, as companies pay great heed to their online reputation.  Given that ‘black hat’ practices such as faking online reviews and using sock puppet accounts have been around a lot longer than the term ‘fake news’ it’s perhaps not surprising, but a recent study from the UBC Sauder School of Business reminds us that it really isn’t worth the risk.

Smearing a rival

The study revolved around a real-life case from South Korea where a dead rat was reportedly found inside a loaf of bread by a customer of a popular bakery brand.  The public reacted with horror to the story and the companies business plummeted, whilst it was subject to intense media scrutiny, both in the mainstream press and social media.

“People doubted the credibility of this firm and its management practices,” the authors explain. “What’s more, the offender was a franchisee, which ultimately tarnished the reputation of the larger company. This study showed that deceptive marketing just doesn’t pay.”

Around three years worth of data was examined, including news articles, social media content and blog posts.  The researchers trawled the content for positive and negative references to both companies.

It emerged that whilst in the short-term, the damage to the victim was significant, when the truth emerged, the damage to the firm that concocted the story was both more lasting and significant.  Indeed, the fallout from the story affected the perpetrator for twice as long as the victim.

The researchers believe that with technology designed to detect fake news becoming increasingly proficient, the chances of getting away with smearing a rival is low and therefore not worth the risk.

“Social media services like Facebook, Google and Twitter are building very sophisticated fake news detection algorithms now, which means it’s increasingly easy to be caught,” they say. “Practically speaking and also ethically speaking, you don’t want to do that. Ultimately the truth prevails.”

The moral of the research is not to go down that path.  Whether it’s a lesson that companies heed however remains to be seen.

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