The Rumor Mill’s Power to Help or Harm Your Business

Whether good or bad, rumors can have a big effect on an organization. Stories about a company’s positive results can send its stock price soaring. Negative gossip about a firm can seriously hurt sales. 

Rumors don’t have to be true to have impact.  In the 1980s the “Leaflet of Villejuif” began circulating in France. This plain typewritten pamphlet exhorted parents to boycott popular soft drink brands like Coca-Cola, Schweppes and Canada Dry, charging they contained dangerous chemicals that could harm children. 


The power of rumor and innuendo

A survey of 150 French housewives found that 19% had stopped buying the brands mentioned. Another 69% said they intended to support the boycott.  Elementary school teachers and physicians were surveyed; half of the doctors and nearly all the teachers agreed with the leaflet’s statements. Fewer than 10% of these educated professionals bothered to check the truthfulness of its claims. That’s sad, because virtually all of them were false. Eminent social psychologist Elliot Aronson, PhD and colleague Anthony Pratkanis, PhD state in their account that E330, the food additive claimed to be highly carcinogenic, was actually the European Union’s code for harmless citric acid, found in oranges and grapefruit.

Mark Twain wrote, “A lie can travel halfway around the world while the truth is putting on its shoes.” It can do a great deal of damage in its travels. Because we hear rumors from people we know, or we learn about them through trusted media sources, we often don’t bother to check their validity. But they can have a big impact on both reputations and sales.

One study asked participants to rate political candidates after reading fabricated headlines.  Some contained a direct accusation (“Bob Talbert Linked with Mafia”), a damning question (“Is Karen Downing Associated with a Fraudulent Charity?”), a denial of impropriety (“Andrew Winters Not Connected to Bank Embezzlement”) or a completely neutral statement (“George Armstrong Arrives in City”).  Aronson and Pratkanis relate:

The results showed, not surprisingly, that candidates linked with a directly incriminating headline were perceived more negatively.  Strikingly, however, merely questioning whether a candidate had performed an undesirable behavior also resulted in negative perceptions of the candidate – just slightly more positive than those evoked by a direct incrimination…The source of the innuendo made little difference. The candidates were still rated negatively even if the source of the headline was a newspaper lacking in credibility (the National Enquirer or the Midnight Globe as opposed to the New York Times or the Washington Post).

What can you do about it?

According to marketing professor Allan Kimmel, one key to rumor control is: “Talk!...For the most part, a refusal to talk, whether it be to journalists, customers…or other concerned parties conveys the message that the company has something to hide and adds to uncertainty, or sometimes merely serves to confirm the fears underlying the requests for information.”

But, “In order to stand a chance of succeeding," say Aronson and Pratkanis, “such refutations should not overstate the case, should embed the rumor in a negative context (or damn it, refute it, then damn it again and replace it), and should not repeat verbatim particularly memorable rumors.” Quick action by high-ranking officials can limit the damage false "factoids" may cause. Organizations who have established a record of integrity will find it easier to protect and restore their reputations.

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