Vestas - "We don't need no stinkin' social media"

03.11.2011 | Author: Eric Reiss

Investors have totally lost confidence in the leadership of the Danish windmill giant, Vestas. Earlier this week, on October 31, 2011, their stock plummeted almost 25% - the most recent, most dramatic swing in a roller-coaster ride that started in 2008.

This most recent disaster was triggered by a discreet announcement late Sunday evening that a German turbine factory, owned by Vestas, couldn’t deliver on time, which was going to severely reduce earnings for the year.

I’ve been monitoring Vestas for over a year, not as an investor, but because I am fascinated by how poorly this company handles social media. Let me be blunt: Vestas just doesn’t get it - and it has cost them millions.

A story about “Black Tuesday”
On the morning of October 26, 2010, I read the headline on the Danish business newspaper, Børsen, that Vestas was going to fire 3000 employees. At 9:45, someone told me that Vestas’ CEO, Ditlev Engel was holding a press conference at 10:00. Around 10:15, another colleague told me that a Danish windmill company was declaring bankruptcy and that there would be a statement at 11:00.

About 10:20, as Engel rambled on to the press corps (streamed live on the internet), the first remarks started to appear on Twitter: “So when is he going to tell us the company has gone bust?” Actually, another, smaller windmill company, Skycon, had gone into receivership. Although this news had been announced earlier that morning, the particulars were overshadowed by the happenings at Vestas. No interesting statements were made at 11:00.

However, looking at Vestas’ stock price that morning, there was a curious, minute-by-minute correlation between the tweets and the stock. About 10:20, when the stock was falling, but not yet in free-fall, the first social media messages appeared. And during the next 15 minutes, Vestas lost almost DKK 20 million in stock capitalization. After 11:00, when it was clear from the news updates that Skycon, not Vestas, had gone broke, Vestas stock rallied briefly. But only briefly; the company lost a bundle that day - the company’s communication punctuated by occasional tweets providing a link to the online video of Engel’s press conference.

Coincidentally, a senior VP at Vestas told me later that day that the company had a community manager responsible for their social media. But what does this person actually do? For the next 26 hours, there wasn’t a single tweet - during which time Vestas lost over 10% of its total market capitalization.

Late in the evening of October 27, 2010, Vestas finally posted a tweet. Too little, too late.

Could social media help?
If you had looked at social-media activity related to Vestas on October 26-27, 2010, it was clear that people - including Bloomberg - were looking for some kind of useful communication. But there was none.

On October 27, 2010, Vestas had roughly 450 followers. A couple of days ago, Vestas stock again plummeted, this time by almost 25%. They now have 3,600 followers on Twitter. But did Vestas tweet? No. A repeat performance from a year ago.

Finally, a tweet - at 9:20 AM on Tuesday November 1, 2011. Throughout the dismal Monday, Vestas remained silent.

So here’s my message, dear Vestas: people WANT to talk with you. The dramatic rise in your number of Twitter followers shows this. So why aren’t you engaging with them? Do you have a social-media strategy or are you just making this up as you go along? If so, consider taking a different approach. The most recent debacle reduced the value of your stock by 24.3%. The costs to prepare a professional social-media strategy and the salary for an effective community manager are far less. You do the math.


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  23. It's strange that you are bashing Vestas for lack of their social media strategy when at the same time your company Twitter account is very bad with no real content apart from some retweets.

    When can we expect to see your social media strategy being implemented there?

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  24. The difference is that we know we have work to do, Vestas doesn't. Nor do we have stockholders to whom we are responsible.

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