A video of a Tesla Motors Inc. (TSLA) car on fire that was posted on Google Inc.'s (GOOG) YouTube helped push the firm's stock price down by nearly 10%. There was no logical reason for this. An incident like that of the "flaming Tesla S" could have been caused by the collision of almost any car. As a matter of fact, Tesla did not recall a single car after the incident, and no industry experts voiced worries about the vehicle's safety. Social media claimed another corporate victim.
YouTube usually is not considered a social medium the way that Facebook and Twitter are. However, it is as much a product of hundreds of millions of people who use video communications exclusively instead of text and phones. And many of the posts on Twitter and Facebook have as their reference points video content, much of which appears on YouTube.
One of the dangers of social media for companies and brands is that, as they market to these hundreds of millions of members, the members often criticize the companies and otherwise post content that is ultimately very harmful to the brands. Tesla has gotten more positive brand public relations than many companies in the United States this year. One incident, circulated first on social media, has undermined that.
A case in point about the risks posed to big brands by social media are recent "reviews" of the new Apple Inc. (AAPL) iPhone 5S. One evaluation posted at YouTube compared the Apple product to older versions of the smartphone. Almost five million people watched the video review, which is several million more than could have seen it on many traditional media. YouTube is littered with widely viewed videos that critique products and famous people. To that extent, it is a first cousin of other large social media.
A rising body of opinion holds that social media will become the single most important place where brands can be built and burnished. As the Tesla video shows, the process can work the other way around, and there is nothing brand management can do about that.