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Power and Influence: What Can Make or Break You?

March 2018


Did a Kardashian really just wipe US $1.3bn off the share price of Snapchat?

Whether you watch reality TV or not, it's pretty likely you've heard of the Kardashians.  In an era of social media and digital marketing, there's an equal reality that a person with a large following online has the potential to be a strong influencer that can make – or break – your business.

It's common for businesses to work through a list of external influencers and stakeholders to manage risk. Normally, the list considers Government regulation, environmental factors such as location, competitors, and changes in the marketplace but the cycle of impact of external influences has become much shorter.  It's unusual to have a celebrity in the mix but the positive impact of a celebrity adopting your brand is undeniable. And the potential risk is equally so.

The problem for businesses whose products become a trend is that trends go both ways - exponential growth and sharp decline. You are either in the spotlight or you're not.  

Consider the impact from one of reality TV's most famous families, the Kardashians. A tweet from Kylie Jenner saying "sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad" is being credited as the catalyst for an 8% drop in Snap Inc's share price.*

While the price clawed back 2% that same day, and Jenner softened her commentary with another tweet saying, "still love you tho snap … my first love," the effectiveness of Snapchat's strategic direction had already been judged by its own social media jury. 

The share price of Snap rose to a high of US$20.75 from US$14.06 with the release of the update but had been buffeted by negative feedback. The share price had been gradually falling since 16 February. Jenner's tweet made that decline a much sharper descent.

Other examples point to the positive impact: Jimmy Choo credits Princess Diana's stylish influence as a catalyst for taking the brand from simply beautiful to desirable – a trend that has not significantly diminished. Kaftan designer Camilla became globally recognised after Oprah Winfrey wore her colourful designs. And, when Kate Middleton wears a Topshop outfit it sells out almost immediately. 

The lesson is to have a strategy to capitalise on the trend and sustain it for as long as possible, and never forget your core client base – your core still needs to be there when the trend is over. 

* Snapchat's parent company

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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