Tuesday, September 14, 2010

BP and Trial by PageRank

Over at the NSIS, Alex has a post (downgraded to a rant?) which begins with berating Gideon Rasmussen for calling the BP Deepwater incident a Black Swan, and ends up discussing flaws in corporate governance. Alex correctly describes the incident as a “tail event”, both low probability and high impact but still “on the curve”. True Black Swans are events for which prior distributions are “completely uninformative”, and they belong on a totally different curve to expectations and models.

Even so, for me a Black Swan aspect of the incident has been the subsequent reputational damage to BP. This has not been a trial by public media, but trial by social media and ultimately, trial by PageRank. In web 2.0 there is no such thing as yesterday’s news, or yesterday’s newspapers wrapping up today’s fish and chips. Links are just as good today as they were yesterday, and continue to remain search-worthy far into the future as long as PageRank deems them to be so. Holding steady at approximately two thirds of the search market, Google via PageRank has become the default arbiter of Internet truth. 

A recent article called What Big Brands are spending on Google from Advertising Age showed that BP’s spending on Google Ads increased dramatically, to almost $3.6 million dollars in June, up from its regular budget of less than $60,000. 

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That’s almost a 6000% increase in spending at the height of the BP counter-PageRank campaign, and such unpredictable jumps are the calling cards of Black Swans.  From the article

Before BP could stem the oil gusher at the bottom of the Gulf of Mexico, it unleashed $100 million in ad spending, largely on network TV, to stem the damage to its image. But it also started spending heavily where it had never spent much before: buying ads in Google's search results.

BP was essentially paying Google AdWords to distract Google PageRank - trial by PageRank and forgiveness by AdWords. What’s that saying about judges and juries again?

2 comments:

alex said...

It's a great point, that insomuch as I don't believe we've ever seen reputation damage to a corporation have to cover as much as they are....

You'll have to forgive me for focusing totally on frequency and controls.

Dr. Luke O'Connor said...

of course you are forgiven Alex!