Managing Social Media Risks: Egypt And Arab World Boycotts

February 19, 2024


This article first appeared in February’s print edition of Business Monthly.

Social media platforms have become instrumental in influencing buying decisions, as their reach spans almost everyone with an internet connection. “Social media has given consumers a bigger voice and new channels to communicate with brands and share their opinions with peers,” noted The Keen Folks, a developer of AI tools for businesses, in a September 2023 post.

Users, particularly the young generation, increasingly use social media to search for written, audio, and video content. According to Google’s internal data for 2022, nearly 40% of Gen Z, born between 1997 and 2012, prefer using TikTok and Instagram to search for content, including products and reviews, instead of using Google search.

Consequently, reviews on social media act like word-of-mouth recommendations that influence consumers’ preferences and can either build or destroy a brand’s reputation. Nadzeya Rukhlia, customer support operations specialist at Viral Nation, a marketing agency based in Canada, said, “A single bad review or negative post can quickly spiral out of control and damage your reputation beyond repair.”

Recent calls to boycott Western brands across Egypt and the Arab world have accelerated the need for intelligent social media marketing strategies. “Several markets in the Middle East and some outside the region were experiencing a meaningful business impact due to the war (in Gaza) and associated misinformation about the brands,” McDonald’s CEO Chris Kempczinski told international media in January.

Despite such calls receding slightly since they started in October 2023, it showcased how powerful social media has become and the need for companies to remain alert to potential negative sentiments.

Online Societies

Building a positive brand reputation on social media is a “critical and multifaceted exercise,” Jon Younger, principal at RBL Group, a consultancy, wrote on Forbes website in August. Without it, “even the best companies are endangered by actions and reactions that destroy goodwill and leave companies vulnerable to erosion and mischief by competitors and bad actors.”

Negative consumer reviews carry more influence than positive ones. A 2022 study published by Service Industries Journal, which specializes in services research, said, “The impacts of positive reviews are neglected compared to negative reviews, and it is possible that positive reviews are more frequent than negative ones.”

Brands should actively work on mitigating the damaging effects of negative consumer engagement on social media. Vijay Malhotra, Marketing Head of Marg ERP Limited, a developer of business tools, sees overcoming a negative brand reputation demands a proactive approach. He told Time of India in May 2023 that businesses have to “address customer concerns promptly, transparently communicate the steps taken to rectify any issues, and demonstrate a commitment to delivering a superior customer experience.”

Establishing a positive reputation also requires “a strategic blend of authenticity, consistency, transparency, and active engagement,” AIM Technologies, an Egyptian AI-powered consumer and market intelligence company, said in August 2023. By mastering such factors, brands can secure their positions as trusted industry leaders capable of constructing meaningful connections with consumers.

 Boycott impact

As the trend cycle moves fast in today’s digital age, companies must stay alert to emerging trends on social media to manage their brands’ reputations effectively. “It’s imperative to tune into conversations happening around your brand and industry,” Aubree Smith, a content strategist at Sprout Social, a software company, said in February 2023. That is mainly because social listening is a tool businesses can utilize to analyze what people say about them, even if they are not tagged or mentioned.

Brands should be cautious when taking a stand on social and political issues to avoid damaging consumer sentiment. “Before taking a position on highly charged social issues, companies should consider their own history and values, as well as the audience being targeted,” said Deloitte, a consulting firm, in May 2022.

Businesses should also be aware of their customer base and where they are located to manage their brand voice effectively to align with their customers. “If your consumers feel strongly about an issue and lead you in a certain direction, it can be helpful to follow them that way,” said Bill Rand, associate professor of marketing and executive director of NC State’s Business Analytics Initiative, on an April 2022 blog.

It is not new to see buyers supporting or boycotting a brand based on social or political issues. A 2018 study by Edelman Earned Brand, a global communications firm, found nearly “two-thirds of consumers around the world buy on belief. These belief-driven buyers will choose, switch, avoid or boycott a brand based on where it stands on the political or social issues they care about.”

The primary objective of boycotts is to create a compelling incentive for change. Consumers aim to exert financial pressure on targeted companies to influence business decisions. However, Ahmed Metwally, a serial entrepreneur and businessman, wrote in the Egyptian Gazette, “The actual economic impact of boycotts is a subject of much debate. While some argue these movements have significantly hurt the targeted companies, others contend the effects are more symbolic than substantive.”

Regional action

Post Oct. 7 events in the Gaza Strip, social media platforms have been awash with calls to buy Egyptian brands instead of those affiliated with Western nations that directly or indirectly support the war. The spotlight fell on McDonald’s and Starbucks. Hanan Sulaiman, a journalist in the Global South World, a news platform, said in November 2023, “Local brands have been booming in Egypt amid rising calls for a boycott of American and European goods as a form of economic resistance in light of their support to the war in Gaza.”

“This strategy is not just about direct economic impact, but also about sending a strong message using economic leverage as a means of political and social advocacy,” said Metwally. “This movement has gained momentum across various sectors worldwide, reflecting a collective response to complex geopolitical issues surrounding Israel and its policies.”

A December 2023 survey by AIM Technologies showed that 95% of Egyptians actively support the boycott. In December, John Saad, AIM CEO, and co-founder, told AmCham Egypt members that local brands started to gain support and increase in demand as people turned to them as substitutes for international brands that they decided to boycott.

He said that posed unexpected risks, as some people seem unsure about which brands are Egyptian and which are foreign, saying that brands in English are more confusing.

Others argue that boycott campaigns negatively affect Egyptians whose work involves boycotted brands. The Federation of Egyptian Chambers of Commerce (FEDCOC) said in November 2023 that the boycotted brands rely on Egyptian suppliers who “employ thousands of Egyptians and pay taxes to the state’s treasury.”

FEDCOC also noted that boycotted brands operate in Egypt under franchises. That means parent companies remain mostly unaffected by the drop in local sales. That is because most brand owners require a fixed annual payment in foreign currency, not a percentage of sales, and they do not accept fees in Egyptian pounds.

Boycott exposure

According to Reuters in November, Western brands in Egypt and Jordan are feeling the effect of boycotts, and there are signs the campaign is spreading to other Arab countries, including Kuwait and Morocco. “Participation has been uneven with only minor effects seen in Saudi Arabia and the United Arab Emirates,” it reported.

International brands in the Middle East need to adopt strategic approaches to retain customers quickly. “The success of a boycott often comes down to the brand, not the consumers,” said Yakov Bart, associate professor of marketing at Northeastern University in Boston. “When the brands are more easily replaceable, then they’re more vulnerable to a consumer boycott.”

However, he noted that big companies like Amazon have broad global reach and are, therefore, harder to boycott. “The more market power a company has, the more pervasive it and its products are, and the more challenging it is for consumers to make a dent in its profits with a boycott,” he said.

Local boom?

On the surface, boycotting imported brands favors local counterparts, who must rev up their social media presence to stand out in the market and attract consumers. In November 2023, Ahram Online reported that the boycott campaign in Egypt had benefited several local companies, especially in the food and beverage sector, such as Sprio Spathis, an Egyptian-Greek beverages company founded in 1920.

Further fueling that transition is that boycott activists almost always voluntarily place local brands as alternatives to international ones, claiming they taste better, are cheaper, and are better for Egypt’s GDP and employment.

Naturally, local brands have started to capitalize on the power of social media to compete with those boycotted brands. “[That required] local brands … to launch successful marketing campaigns to attract customers,” Mohamed El-Bahi, board member of the Federation of Egyptian Industries (FEI), told Ahram Online in November 2023.

The second pressure point was that those local brands had to live up to the hype by enhancing the quality and availability of products to avoid alarming local consumer feedback on social media. “Higher demand for local brands sparked consumer complaints about service quality, product availability, and rising prices, impacting social media sentiment scores,” said Saad.

Saad added that competition among local brands is fierce, as strong demand for certain products leads consumers to focus on quality and comparison.

That led local businesses to call on the government to support them by mitigating the economic impact of inflation and currency devaluation. “The government should offer more incentives and privileges to local industries, including allocating land at low prices, or even free, for national industrial projects,” said El-Bahi.

On the upside, local consumers are willing to support affordable substitutes for international brands. “Egypt’s economic challenges are fuelling the rise of local brands,” Radwa Abo Shady, a senior economic researcher at the Free University of Berlin, told Fast Company Middle East, a business media brand. “Its limited resource access and global supply chain disruptions force consumers to seek more affordable and reliable alternatives.”