Brief:

• Snap Inc. lost $800 million of market value when its stock fell 3.6% after pop star Rihanna urged fans to delete the image-messaging app Snapchat, according to The Wall Street Journal. The singer slammed the company for approving an ad that appeared to make fun of domestic violence.
• The ad for a mobile game called "Would You Rather" asked Snapchat users to choose whether to slap Rihanna or punch her ex-boyfriend Chris Brown, who in 2009 plead guilty to felony assault against her. "Shame on you," Rihanna posted on Instagram in response to the ad. "Throw the whole app-oligy away." Fans responded by spreading her message on Facebook and Twitter and posting screenshots of them deleting the app.
• Snapchat removed the ad and apologized for letting it appear on the app, which has about 187 million users. The company responded to Rihanna's statement with an apology that called the promotion "disgusting." Snap blocked the advertiser from its platform.

Insight:

It's not surprising that Rihanna reacted to Snap's approval of an ad that appeared to satirize domestic violence. The company clearly needs to make a stronger effort to enforce its policies that prohibit "shocking, sensational or disrespectful" content in ads.

Snap's sudden loss in market value comes just weeks after celebrity Kylie Jenner triggered a similar sell-off in Snap stock by criticizing its social media app on her Twitter account. Its market value fell 6.1%, wiping out $1.3 billion after Jenner tweeted that she doesn't use Snapchat anymore following a major app redesign that spurred online protests by many users.

Rihanna and Jenner, who has 105 million followers on Instagram, demonstrate the power of influencers to use social media against some of the industry's biggest companies. These examples point to the power of social media to fan the flames of consumer discontent, highlighting the importance of social listening among brand marketers to measure sentiment.

Meanwhile, Snap has had a difficult year since going public, as stagnant user growth hasn't matched forecasts amid greater competition from Facebook. Recent signs of a possible turnaround could be dampened by the double whammy of Rihanna and Jenner. The company last year created a self-serve ad manager that was intended to open its platform to a wider group of marketers who didn't have the resources to buy mass-market ads from Snap's sales team. But that self-serve dashboard has opened the platform for abuse, as the "Would You Rather" ad has made clear.