“TweetDeck” is facing being closed down and dissolved and has been given just three months by the UK’s business regulator ( Companies House) to put its business practice in order. No matter what the outcome of this news promises to affect some 2.7 million business users of the platform.
Despite the apparent gravity of the situation, in response to the threat of closure, via official letter from Companies House (for failing to meet accounting disclosure deadlines for the second time since it was taken over by Twitter, from its British founder.) TweetDeck remains somehow, aloof. Two of TweetDeck’s executives , when asked for their reaction, appeared to duck the issue and merely gave a statement regarding future innovations in the pipeline to make the user experience even better. Those executives, Dick Costolo and Alex Macgillivray are also senior executives of the San Francisco based parent company Twitter Inc. Dick Costolo (below right) is the social media giant’s chief executive and Macgillivray is general counsel and head of trust and policy.
What signals does such apparent intransigence send, and can it damage the brand ?
For those unfamilair, TweetDeck is a platform used by ‘power users’ of Twitter which also helps integrate the programme with other social media platforms, but , it appears has repeatedly failed to file compulsory accounts since the change of ownership. Since being bought from British founder Iain Dodsworth in May 2011 for a reported £25m, TweetDeck has not filed any accounting to Companies House. In fact, they missed account filing deadlines last September and again last month. (Companies are given a generous full nine months after the end of their financial year to file )
Both of Twitter’s social media British firms, TweetDeckLtd and Twitter UK Ltd, had been fined £375 each by Companies House for separate filing “oversights” last December. Twitter UK subsequently filed its “abbreviated” accounts for 2011, revealing a suspiciously low profit of just £16,500. With this latest failure to account TweetDeck has been fined £750 and increased the likelihood of it being struck off the business register and into forced closure and face possible further legal redress.
With all this, it is odd that TweetDeck Ltd declined to comment and simply released a very brief statement about the benefit to users of Tweedeck in the pipeline. This apparent “head in the sand approach” to accounting legislation and not taking timely responsibility for being open with accounting surely cannot be ducked by simply beefing the product up with promises of further improvements to that product and more seriously invites suspicions about the actual viability of the business model or its apparent runaway success.
Most of us who use social media, whether it is for personal or business use, accept and enjoy Facebook and Twitter and the veritable free nature of these services. We also may grudgingly accept that that there are actually no “free rides” and thus accept that platform owners are going to tweak and pimp their vehicles , bring in what they tout as “exciting innovations” which ,when undressed, we know usually means they have found another subtle way to increase their revenue stream. Twitter’s income in the UK comes largely from mobile phone ads and it is through mobile devices that 80 % of users access the service .
Lack of transparency and contact-ability, a business model flaw?
The owners of such global platforms, and what staff they have, typically tend to be largely anonymous and contact systems seem designed to avoid all contact with a human because , we can only presume staffing phones and e mails has a cost which reduces margins. With companies on line that do not willingly engage , that does nothing for the brand cause but from a global social media communications facilitator , you would think they would practice what they preach and interact more with users and at least appear to be listening and valuing them. If we don’t feel we “know them” and can identify with them, our loyalty to the brand may be more fickle, unsympathetic and any reactive, user miffed disengagement is going to be without an ounce of regret on the part of the user if they go belly up.
These social media firms often lack genuine transparency, and are notoriously hard to reach if you have a problem and need an answer from other than an FAQ help page – an FAQ page is a low budget non-recurring expense and is suggestive that the business is not as humanly focused as we might wish. Nonetheless, as with all businesses, reputation is really everything and while for most users the actual business’s ethics don’t matter, ( as long as it is relatively free of charge and functional), there is always the background risk of being “hoisted by your own petard” injured by your own device – as in shooting yourself in the foot.
I do not of course know if this latest lapse will seriously damage the brand, or it will be seriously wounded by Tweets from the service’s own users , but it is going to raise a few eyebrows and this is not a good time for especially foreign owned brands to come across as selfish and secretive about the contents of their ledgers.
Reputation and its possible vulnerability in a recession stressed UK public’s perception of business practices – the “Starbucks effect.”
I say this because, in the current UK economic climate citizens here are being forced to “tighten their belts” , accept job cuts, increased food and energy bills. They are faced with inflation outstripping the rate of pay increases, fuel duty and travel cost increases, manufacturing ever declining and production outsourced overseas. So in my view they are less likely to forgive, especially a foreign owned company , trading directly and indirectly in the UK, if they appear to be or are found to be avoiding paying their way. You’d suspect they are making, likely, much bigger profit than people would expect but even appearing to be dodging tax duty and milking the system is not going to go down well and it defies belief they have failed to file their accounts not once but twice and what might people be thinking is the cause of that procrastination.
Too busy profiting to present your accounts?
Can the USA owned Twitter Inc brand remain unaffected by this TweetDeck Ltd apparent PR fail?
Google, and notably Starbucks, have been under the spotlight as recent examples of what can happen with foreign owned brands trading in the UK and it has been damaging where question marks about those company’s tax arrangements have caused anger. Their alleged financial gymnastics to avoid tax through apparently redirecting and therefore allegedly concealing profit out of the UK and being economic with the actual profit truths ,according to some commentators, has done their reputations no favors although not fatal. TwitterDeck Ltd here is not ostensibly in tax avoidance mode but failure to be transparent with accounts will lead to suspicions , rightly or wrongly, that this is why they are missing deadlines and yet they appear to feel they are bullet proof.
The written and unwritten rules, and bending them ?
Good PR isn’t rocket science but ignoring tailoring your business practices (and now especially your on line social media presence) to at least maintain and not damage your reputation is prudent if not vital. That includes sticking to the common sense trading rules and also , of course , the laws of the land and being seen to be trading ethically. With regard to the unwritten rules of social media engagement and on line business practice ,that rule applies to most of us in business and to ignore it costs our business. What people think of us matters as does what they say about us to their friends.
We should be listening to customers and responding as if they matter. How we deal with complaints or incidents which , like this TweetDeck story , bring negative publicity through the press or word of mouth, is best addressed immediately, openly, honesty and sincerely and if we get it right that can increase brand loyalty .
Will Twitter Inc be biting their nails now ? The Ryan Air “two fingers” model !
It would of course be naive to presume that Twitter and TweetDeck will be too concerned or to presume that the brand will by seriously harmed by this accounting lapse. If TweetDeck is actually a viable business , likely they will bite the bullet and come clean with the ledgers to avoid compulsory closure and further legal action. Few other brands manage to increase profit and customer numbers despite breaking all the rules and defying PR basics but one company at least has a CEO that actually seems to enjoy being the black sheep of the business family and appears to lead a charmed life. I refer of course to the “Fawlty Towers “of budget airlines , Ryan Air ,whose chief executive famously listens to criticism of the brand experience from customers and then , incredibly ,uses social media to insult them.
Most of us have yet to find on Ebay where on earth to buy the magical (now legendary), bullet-proof Golden Cloak worn by Ryan Air’s ”Basil” , CEO’s Michael O’leary. ( Chances are if you find one, it will probably be very cheap and tacky and characteristically involve an on line minefield of additional hidden costs to work your way around!) O’leary appears supremely arrogant, but his confidence is based on being a hard nose and so has no problem with being the butt of internet jokes as he laughs all the way to the bank because he knows people will keep flying with him.
Conclusions. Business as usual ?
All those who use social media to reach and interact with their customer base know that open shop trading and public comment dialogues provide a vehicle where very speedily you can grow your business reach and develop your brand credibility, but if you get it wrong, the speed at which your “#fails” are transmitted to millions is vital to keep in mind. the huge increase in internet access to social media using mobile phones actually makes reaction times even quicker and further increases the reach and impact of tweets.
The Ryan Air strategy is the exception that proves the rule and the best advice is always to appear to be doing things correctly and protect and build your reputation in any media you chose to have a market presence in.
Instagram and Starbuck fails – is Twitter bothered ?
Instagram saw a savage 50% drop in membership when it got it wrong so being free and really useful doesn’t come with guarantees. On the street Starbuck’s name was in trouble for appearing to use and exploit UK tax exemption loopholes and off loading profit overseas to avoid tax but the power of the internet and social media were pivotal in the brand doing a U turn and , facing the prospect of a damaged name and more café boycotts, they made very public reversal and pledged substantial tax contributions. That was a very costly bit of damage limitation PR.
TweetDeck safe for now?
Because Twitter and TweetDeck offer such low cost effectiveness the general response to the accounting failings will probably be forgiven. But , when those accounts are finally presented , they then become publicly accessible. When we actually see the balance sheets and crucially know the actual profit figures, my guess is that may raise further issues. The big interest here, then, will be what tax if any has been paid and/ or if duty has actually been avoided. It is difficult to see why TweetDeck is so coy about filing accounts but given that some commentators (with insider information) have called into question Twitter’s revenue claims as being greatly exaggerated that might be the real motive for avoiding showing the TweetDeck books or thus it seems.