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9 Companies Learn About Social Media the Hard Way

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Give 'em an inch and they'll take a mile. Consumers on Facebook (NASDAQ: FB  ) are excoriating fast-food sandwich shop Subway for selling "footlong" subs that come up short. About an inch short.

When a picture appeared on Subway's fan page showing one of its sandwiches alongside a ruler indicating it was just 11 inches long, not 12, it quickly went viral and soon others were posting their own pictures of their hoagies not measuring up. Now two aggrieved New Jersey men are suing the chain in what they hope will become a class action suit because they say over a six-year period, consumers are losing $0.45 to $0.60 due to the size difference.

It used to be said the shortest amount of time measured was between when a New York City traffic light turned green and the car behind you blew its horn. Nowadays it might be when a company experiences a social media faux pas and a lawyer is in court trying to wrangle a hefty settlement out of them.

I've got my eye on you
Once again companies are confronted by the risks associated with having a social media presence. Whether it's on Facebook, YouTube, or Twitter, engaging consumers on social media platforms hazards the chance the effort backfires. But because Facebook has more than 1 billion active monthly users, Twitter features 500 million registered Twitterers who send over 175 million tweets every day, and over 800 million unique users watch more than 4 billion hours of video on YouTube each month, they're just too compelling to ignore.

Yet it also means that somehow, somewhere, something unflattering is bound to show up.

Last year McDonald's (NYSE: MCD  ) thought it would be hip to have customers share their favorite feel-good stories about the hamburger chain at the Twitter hashtag #McDstories. Unfortunately for the burger joint, the tales they wanted to tell were horror stories that generated tons of bad publicity.

Yum! Brands (NYSE: YUM  ) thought it would re-create the buzz of "boxers or briefs" by having its Pizza Hut chain offer free pizza for 30 years to a knucklehead willing to ask during the presidential debates "Sausage or pepperoni?" Purposely demeaning the electoral process for corporate publicity didn't sit well with the social media crowd.

Gap, American Apparel, and Urban Outfitters all thought it was a good marketing tactic to encourage people via tweets to do some shopping during Hurricane Sandy. Again, cheap promotional ploys driven by calamity didn't really resonate with Twitterers, who lambasted the retailers.

That's my job!
Unfortunately, it doesn't even have to be boneheaded corporate pushes that generate negative social media buzz. Employees can do the dirty work for you, crushing in a moment of stupidity years of hard work and millions spent building goodwill. You were probably one of the 8.9 million people who watched the YouTube video of the FedEx (NYSE: FDX  ) driver tossing a computer monitor over the fence, a costly error that easily countered years of brand-building through its slogan "When it absolutely, positively has to be there overnight."

And United Continental (NYSE: UAL  ) faced sustained criticism after luggage handlers broke a musician's guitar and he turned the incident into a viral YouTube song generating more than 12.8 million hits.

More recently, Delta Air Lines had a similar experience, and while both airlines offered to make amends, the videos remain on YouTube, providing a prolonged public flogging and a constant reminder of the misdeeds.

Go big or go home
Regardless of whether these are self-inflicted wounds or shots fired over the ramparts, the effects are the same: instantaneous, wide-ranging -- global, even -- and potentially financially devastating. But companies can't avoid using social media today, and those that do avoid it put their brands at a competitive disadvantage, because when done properly, a social media campaign can generate millions of dollars in revenues.

According to the market researchers at PulsePoint Group and the Economist Intelligence Unit, 84% of companies surveyed last year said social media campaigns increased the effectiveness of their marketing and sales efforts while 81% said it gained them market share. 

So it's not so much whether Subway's heros are 11 or 12 inches long, but how the chain responds to the social media controversy. So far, the company has provided two different answers, one suggesting its franchisees weren't following proper procedures (not baking the bread right) and another saying the "footlong" name is just a marketing ploy, not meant to conform to reality. Neither sounds like a response that measures up.

Coming up short?
After the world's most-hyped IPO turned out to be a dunce, most investors probably don't even want to think about shares of Facebook. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There's a lot more to Facebook than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here.

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