Managing Bad News in Social Media: A Case Study on Domino’s Pizza Crisis Jaram Park Meeyoung Cha Hoh Kim Jaeseung Jeong Graduate School of Culture Technology, KAIST 291 Daehak-ro, Yuseong-gu Daejeon, Republic of Korea Abstract Social media has become prominently popular. Tens of millions of users login to social media sites like Twitter to disseminate breaking news and share their opinions and thoughts. For businesses, social media is poten- tially useful for monitoring the public perception and the social reputation of companies and products. De- spite great potential, how bad news about a company influences the public sentiments in social media has not been studied in depth. The aim of this study is to assess people’s sentiments in Twitter upon the spread of two types of information: corporate bad news and a CEO’s apology. We attempted to understand how sentiments on corporate bad news propagate in Twitter and whether any social network feature facilitates its spread. We in- vestigated the Domino’s Pizza crisis in 2009, where bad news spread rapidly through social media followed by an official apology from the company. Our work shows that bad news spreads faster than other types of infor- mation, such as an apology, and sparks a great degree of negative sentiments in the network. However, when users converse about bad news repeatedly, their negative sentiments are softened. We discuss various reactions of users towards the bad news in social media such as negative purchase intent. Introduction Social media is bringing a major headache to the corporate world because it has been shown to facilitate the spread bad news. In January 2012, a Korean-American female cus- tomer, who visited Papa John’s Pizza in New York, discov- ered that the cashier identified her as “lady chinky eyes” on her receipt. She tweeted about the negative experience via Twitter that morning, and a local newspaper picked up the story. Within a few days, the news was reported not only in the US newspapers and broadcasts like CNN, but it also spread to other countries. The employee was fired, Papa John’s in the US apologized, and even Papa John’s in Ko- rea had to apologize to Korean customers. This news started from one tweet by a customer in New York, but its impact reached all the way to Asia (ABC 2012). In the past, only elite journalists could break bad news. Nowadays, anyone can produce bad news and spread it in Copyright c  2012, Association for the Advancement of Artificial Intelligence (www.aaai.org). All rights reserved. social media. From a corporate point of view, the “diffu- sion of bad news” often means a crisis, having a negative impact on brand reputation, word-of-mouth advertisements, and even sales. Before the social media era, companies used to respond to bad news by releasing position statements or public apologies via traditional media within days to weeks. Nowadays, however, the public expects companies to apol- ogy promptly (within 24 hours) and response directly via social media—the channel in which a crisis occurs. Therefore, companies are interested in knowing how bad news spreads in social media. Their major concerns are on knowing how people’s feelings propagate, what influences the public sentiment, and how it impacts corporate repu- tation. Several recent work have paid attention to analyz- ing public sentiments in social media. Studies have shown that online communities like Twitter can be used for pre- dicting election results (Tumasjan et al. 2010) or even stock prices (Bollen, Mao, and Zeng 2011). Another study ex- amined how sentiments embedded in online content affect the persistence of information, measured by decay time in the spread (Wu et al. 2011). However, sentiment analysis in the spread of corporate bad news, in particular, has not been studied. Understanding the diffusion dynamics of bad news in social media is important for crisis communication, as such knowledge can help companies and the government respond appropriately to crisis situations. One of the first companies to experience a serious and global damage in its reputation due to the spread of bad news in social media is Domino’s Pizza. The crisis started when two employees produced and uploaded a vulgar YouTube video in 2009. Within a few days, the video gained more than half a million views, major news media covered the event, and people started to discuss the incident on social media. Domino’s soon released a YouTube video where its CEO apologized and explained the situation. We paid attention to the Domino’s crisis in Twitter, be- cause from the beginning to the end the medium played a central role in spreading both the bad news and the apology. First, the crisis started in YouTube, but soon it was picked up by users in various social media sites. Twitter was one of the key places where discussions took place. Based on our es- timation, more than 15,000 Twitter users posted a message about the event. Second, Domino’s apologized on Twitter by sharing a link to its CEO’s apology on YouTube. 282 Proceedings of the Sixth International AAAI Conference on Weblogs and Social Media