Failure gets a bad rap. As much as it hurts in the aftermath, it's actually a perfectly normal part of life. What's more, it's immensely useful. It's why software and video game companies employ whole teams whose entire purpose is to make the thing break — so they know what needs to be fixed before the product ends up in customers' hands.
So, here's hoping people have been able to learn from these big business blunders, because wow, they were spectacularly bad.
Italian carmaker Fiat has a reputation for cute, little city vehicles, the kind that get you from A to B and can fit any parking spot, with trunk space meant more for shopping sprees at fancy boutiques than, say, a trip to the lumber yard. They’re adorable cars, the kind you’d pinch on the cheek and never once feel threatened by.
For the questionable campaign, the company sent out 50,000 letters to women in Spain, personally addressed to each recipient. And while authenticity is generally a desirable quality, these letters were just a bit too real.
Written on pink paper, the letters contained a litany of flattering comments and compliments, and the anonymous writer said “we met again on the street yesterday and I noticed how you glanced interestedly in my direction,” and asked the women to consider a “little adventure.”
Six days was much too long to wait. Some women locked themselves inside their homes, convinced they were being stalked. Others insisted on only going out in public in male company, while many others had to fend off jealous partners.
A rather embarrassed Fiat had to come clean and end that campaign early, profusely apologizing after an outcry that included the nation’s Social Minister. But they did make history as the first ad campaign to receive a penal conviction in Spain.
There’s a good reason why you’ve heard of Apple, IBM, Hewlett-Packard, Asus, Acer, and many other computer makers, but probably not Osborne. Indeed, if you own an Osborne, it might just be a valuable collector’s item.
Well, it was probably more accurate to call the computer "luggable" than portable.
Nevertheless, by 1981 standards it was a leap ahead, as the computer was small enough to fit underneath an airplane seat. Indeed, the first model, the Osborne 1, had the company set up to be a huge success. It received enough orders that the company had to expand from just two employees to more than 3,000.
See, the company was having some trouble keeping up with demand for the Osborne 1. But with 50,000 units on backorder, Adam was already thinking about the future. In April 1982, the overly excited CEO started showing off the Next Big Thing to journalists and dealers: the Osborne Executive.
The Osborne Executive would make the Osborne 1 obsolete! So, naturally, all those folks who were still waiting on the Osborne 1 started cancelling their orders so they could get the Executive instead.
Despite desperate price cuts, the Osborne 1 stopped selling, and coupled with losses from some quality control issues, the company was forced to shut down in September, just five months after Adam unveiled the Executive.
Now, in economics circles, announcing a new product too early and killing demand for current offerings is called “the Osborne effect.”
Listen, it’s a good thing to have faith in the products you put out into the market, but there’s such a thing as hubris, too. There’s little that underscores that quite like what LifeLock CEO Todd Davis put himself through.
Identity theft is a huge problem in the digital age, and in that, LifeLock saw an opportunity to help people protect their identities online. And just to show how secure he thought LifeLock’s service was, Davis put his real, actual Social Security Number in the company’s ads.
It was a bold move that did not pay off.
Identity thieves seemed to take Davis’s ads as a challenge and, over a period of five years, Davis had his identity stolen 13 times.
Thirteen times!
It did not provide a lot of confidence that LifeLock could keep personal data safe.
“While LifeLock promised consumers complete protection against all types of identity theft, in truth, the protection it actually provided left enough holes that you could drive a truck through it,” FTC Chairman Jon Leibowitz said in a statement.
Then, in 2015, the FTC levied another $100 million in fines for contempt charges over failure to abide by the 2010 settlement.
There’s a wonderful moment in an early episode of The Simpsons in which Homer takes a seafood restaurant’s all-you-can-eat buffet as a challenge and winds up in court as a result.
You could say that, as with so many other things, The Simpsons predicted a disaster for Red Lobster, but perhaps in the venerable seafood chain’s case, they should have taken the episode as a hint before tempting fate.
Instead of the usual, low-end fare at their limited buffet, they would add in higher-end snow crab legs.
According to their calculations, raising the price from $14.99 to $22.99 for customers who wanted to eat all the snow crab legs they possibly could would still pay off. Unfortunately, their calculations did not take into account the American appetite for snow crab.
Anyone who has seen an episode or two of Deadliest Catch knows why Red Lobster needed to raise the price on the buffet when adding in the snow crab legs. Snow crabs don't just jump into a boat.
The other thing about snow crab is that it doesn’t fill you up quickly. It’s delicious, but thin, and it takes a long time to get out of the shell. So customers were going back to the buffet for helping after helping of snow crab legs, and spending a lot more time taking up tables doing so.
Think about it, Red Lobster had 679 restaurants in the U.S. in 2003, all of which needed a ridiculous amount of crab meat to keep their customers satisfied. Snow crab already has quotas to prevent overharvesting. So, the longer the promotion went on, the costlier the snow crab was for Red Lobster to acquire.
Worse, their stock took a hit, leading to a selloff that cost the company $400 million in market value. CEO Edna Morris was forced to resign over the promotion.
“It wasn’t the second helping on all-you-can-eat but the third,” Chairman Joe R. Lee said at the time, the NY Post reported.
“And maybe the fourth,” COO Dick Rivera added.
The internet was a wonderful idea. Asking the internet to name, well, anything, is not a wonderful idea. And, weirdly, that seems to be a concept that marketers have had to learn the hard way more than once.
Back in 2012, Villa Fresh Italian Kitchen had a new green apple flavor on its hands and rather than having some marketers come up with some sort of name for it — “Code Green” perhaps? — they decided to let the soft drink’s fans have a say on the internet.
Of course, it didn’t take long for internet pranksters to hijack and overrun the campaign.
Among the names to make the top 10 were “Diabeetus” and “Hitler Did Nothing Wrong."
In the end, Villa Fresh Italian Kitchen had to shut down the Dub the Dew website without a name for its new beverage.
Flying has never really been a wonderful experience for travelers, but of course, there’s still no better way to get from New York to Paris in a matter of hours. And hey, traveling first class is much better than the livestock-like experience of traveling coach.
So it was actually kind of a tempting idea when American Airlines unveiled its AAirpass promotion back in 1981.
For an extra $150k, you could get a companion pass to travel with a friend, too.
American expected that maybe corporations might snap the deal up for employees who needed to go all over the place, but in the end, only 28 people ever purchased an AAirpass. Even that was almost enough to sink the airline.
Steve Rothstein, a Chicago-based investment banker, was among those who thought so, and he forked over his cash in 1987, going for the companion pass as well. Then he went on a travel spree. Over the next 20 years, Rothstein booked more than 10,000 trips. He’d fly to Canada for a sandwich, to Europe a dozen times a month, and offer random strangers a chance to use his companion pass.
He’d fly to France for lunch, to the East Coast to catch his son's college football games, and took his daughter to Buenos Aires to help her with a school project on South America.
You can really see how this was adding up for American, but hey, that was the deal.
Facing such losses, the airline took a couple of steps. First, they jacked up the price of the AAirpass before finally terminating the all-you-can-fly promotion altogether in 1994. Second, they started investigating their more costly members, including Rothstein and Vroom, to find some sort of pretense to have their lifetime passes revoked.
Of course, American’s agents did come up with what they needed, accusing both Rothstein and Vroom of “fraudulent activity” and stopping their travel in 2008. Although both filed lawsuits, American’s lawyers proved victorious in the end, and neither received their AAirpasses back again.
We all know about Coca-Cola’s big New Coke blunder. That was indeed one for the history books. But it just goes to show you that the big guys take chances that don’t always pay off and bounce back — sometimes twice in the same decade.
The idea was to give their fans a way to literally just find cash. After all, what’s better than found money? Coupons were included in the promotion as well, but let's face it, cash is king.
It might be a dollar, five dollars, anything up to $500. It was a huge, huge deal, a $100 million campaign.
And yet, by late May, before summer had even officially begun, Coca-Cola had to call the promotion off.
See, cans that contain cash don’t weigh the same as cans that contain soda. So the MagiCans were weighed down with water that contained chlorine and ammonium sulfate, a foul-smelling chemical that should have been sealed away from customers.
Unfortunately, some of the MagiCans leaked.
Worse, one kid actually drank some of the water and his folks called the police.
Coca-Cola had to issue nationwide newspaper ads explaining that MagiCans might be faulty and what to do if you find one that’s broken. Before long, it became clear that the campaign would put the company in some serious legal jeopardy and it was better off ended completely.
Viral marketing campaigns can be quite effective, but there’s certainly such a thing as being too effective. Unfortunately, Sunny Co Clothing got a bit ahead of itself with an Instagram promo that went much further, much faster than expected, as tends to happen on social media.
Yes, based on that Pamela swimsuit.
All you had to do was repost the company’s post and tag the company within 24 hours, and you would be sent a free “Pamela” swimsuit, which retailed for $64.99, of your very own. The only other stipulations were that you had to live in the U.S. and agree to pay shipping and handling.
A $65 swimsuit for $13 in shipping? Come on! And at the time Sunny Co only had about 7,000 followers on Instagram. However, within that 24-hour time period, Sunny Co’s post was liked more than 300,000 times. Just imagine how many actually went through the trouble of reposting and tagging it as well.
Shortly after, they added a second post stating that Sunny Co “reserves the right to cap the promotion...due to the volume of participants,” as well as noting that the number of responses meant that processing and shipping would be delayed.
As if that wasn’t bad enough for Sunny Co, people started complaining online that they had been charged $64.99 for the swimsuit in addition to the shipping costs, even after jumping through the company’s social media hoops and entering a promo code.
Sunny Co founder Brady Silverwood had to go on record with a statement saying that he was committed to making it right and sending out all the orders and making sure those charged full price actually got a refund. Even after capping the giveaway at 50,000, Sunny Co said it lost $73,000 just on refunds, and they lost half their Instagram followers. Only two months after the post went out did Sunny Co start delivering the Pamelas.
In a way, the Pamela giveaway could be considered a success. Before the promotion, Sunny Co was largely unheard of, and they went from 7,000 Instagram followers to 750,000 literally overnight. Even after the dust settled, they’ve still got more than 318,000 followers.
In Britain, the name Hoover is synonymous with vacuuming. It’s a wonder they ever had to resort to any kind of large giveaway to drum up business, but true to their products, when they did, they found one that truly and profoundly sucked.
So, they started offering customers free return flights to Europe with the purchase of £100 worth of Hoover products. It sounds like a great deal, and it was, so Hoover was counting on fine print and upsells to offset the cost of their promotion.
Hoover received a strong response from the public, but they really got themselves in trouble when they sweetened the deal, offering return flights to America, again just for spending a mere £100 on Hoover stuff.
In this case, it was far too good to be any good for Hoover. Instead of depleting the stockpile in the warehouses, customers flocked to stores to buy the cheapest vacuums they could to possibly qualify for the plane tickets. Faced with overwhelming demand for the cheap vacuums, Hoover was forced to increase its production, taking on overtime shifts and running its factories 24/7.
Each of those cheap vacuums netted Hoover £30 profit. The airline tickets would cost £600, so each customer applying for their travel voucher would lose the company £570. It would take a lot of upselling and some serious discouragement of customers redeeming the flights to keep the company in business.
They claimed customers filled out forms wrong, offered flights departing from hundreds of miles away from where customers lived, and even sent out forms Christmas Eve in hopes that mail delays would prevent customers from meeting deadlines.
Needless to say, it was an epic mess as customers demanded their flights and Hoover looked for any way to not provide them. Just 220,000 customers ended up actually taking the flights, with another estimated 350,000 never getting the flights they were due. Hoover Europe’s corporate parent, Maytag, shelled out $72 million for the flights, and three execs lost their jobs. In 1995, Hoover Europe was sold off to a competitor for $106 million, a loss of $81 million. Hoover’s flight promotion is now remembered as one of the worst of all time.
Social issues sometimes bleed over into the business arena. We’ve seen it happen plenty of times. Businesses often try to support causes that are close to their hearts, and that will occasionally lead to some controversy.
“Values are a big part of both the balance sheet and the income statements of Starbucks—it’s behind the performance,” he told Fast Company. It's an admirable stance, and Starbucks clearly hasn't suffered for it. But it hasn't been an entirely smooth experience, either.
Influenced largely by the protests in Ferguson, Missouri after a grand jury decided not to indict Darren Wilson, the police officer who shot and killed Michael Brown, Schultz wanted to do...something. Like many of us, Starbucks’s employees were having race-related discussions with their own families at the time, and it seemed like the time was ripe to take some action.
“I can’t just run this company and not say something, not have an opinion, and not allow others to have an ability to talk about what we’re not talking about,” he recalled telling his wife.
Those forums eventually grew into #RaceTogether, a campaign in which barista would write “Race Together” on cups as they served customers, encouraging them to engage in conversations about race.
Well, even if you’ve forgotten 2015, you can easily picture how well that went over.
Within 24 hours of the campaign’s launch, Starbucks and #RaceTogether were trending on Twitter, and not for anything good. People called out the company not just for being a giant bring-down, but also for tone deafness, noting that of the company’s 19 members of the leadership team, just two were Black. The company’s head of communications even suspended his Twitter account for a while.
But, mercifully, it didn’t affect Starbucks’ bottom line, as the company posted increases in revenues and operating income that quarter. Perhaps the short cycle of the Twitter firestorm helped Schultz avoid a disaster, but the troubles with Race Together didn’t blunt his determination to take a stand where he thought a stand needed to be taken.
Feeling sleepy? Perhaps you need a cup of the world’s strongest coffee. Called ‘Black Insomnia,’ just one serving (12 oz) has a huge 702 mg of caffeine.
While this sales pitch isn't a total failure in terms of marketing, it's definitely limiting one's audience if even the founders recommend "building up a tolerance" to caffeine first and experts have deemed the amount "dangerous".
One serving is almost triple the daily recommended maximum.
The big, household names like Coca-Cola, American Airlines, Starbucks, and Red Lobster have all messed up spectacularly, so why should McDonald’s be any different?
I mean, they have playgrounds inside, for crying out loud. Generations of kids grew up on Happy Meals and collected the toys inside. Kids are the prime driver of traffic at McDonald’s. Heck, even for adults, fond memories of childhood and a simpler time when a six-pack of McNuggets were all the soothing you needed can be a significant reason to visit your local McD’s.
Nevertheless, in 1996, some of the execs at McDonald’s decided it was time to try to diversify a bit, and the way to do that was with a new, flagship menu item geared more towards grown-ups.
To be fair, it wasn’t a huge departure. It was still a burger, with lettuce, tomato, and cheese. What set it apart was slivered onions, a homestyle bun, and a mustard-mayo sauce. The idea was to market it as a burger for a more sophisticated palate. Backing that up was a massive, $75 million marketing campaign.
Ads for the Arch Deluxe featured kids rejecting the new burger, suggesting the burger tasted too grown-up or sophisticated for them, some even disgusted by it. Not showing your product being rejected by or revolting any customers should probably be Advertising 101.
And flop it did! Between development and marketing for the burger, McDonald’s forked over $300 million. The Golden Arches pulled the Arch Deluxe off the menu in 1997.
It just goes to show you, failure isn't necessarily the end of everything.
What do you think is the biggest marketing disaster of all time? Let us know in the comments!
