Yahoo’s data breach further dents its already flailing brand

Yahoo’s massive data breach has dealt yet another blow to the one-time internet star’s brand.

Yahoo said Thursday that a recent investigation confirmed that personal details of at least 500 million users had been compromised in 2014. The hack by a “state-sponsored actor” may have included names, phone numbers, dates of birth, hashed passwords and even security question and answer details, the company said. For Yahoo’s brand, this is doubly bad since it plays into the narrative that it is a bumbling company far beyond more nimble digital giants like Google and Facebook.

“This is yet another sign that they don’t have their act together to everyone,” said Erich Joachimsthaler, CEO of brand consulting firm Vivaldi Partners. “It is the perfect example of a confirmation bias, and will only serve to cement people’s existing views about the brand.”

Even worse for Yahoo, its email service — the third largest in the world — is a key cog in its connection to consumers, giving it a vital daily habit. The data breach could cause more people to consider leaving Yahoo for good.

The past couple of years have been particularly turbulent for Yahoo, which has struggled to maintain authority and relevance in a rapidly evolving market. Once the go-to destination for everyone on the internet, it has since been overtaken by the likes of Google and Facebook. While it still has more than a billion monthly active users, its revenues have been falling and were down 20 percent in 2016’s second quarter.

The data breach comes on the heels of the former tech giant’s acquisition by Verizon, and further adds to its already flailing brand narrative, fraught with tales of squandered opportunities and mismanagement.

“This is not good news because a large number of their email users have only stuck around due to inertia,” said Rick Milenthal, CEO of The Shipyard. “But now due to the shake-up, there will be significant attrition.”

Indeed, the brand has taken a hit. Yahoo’s stocks were down 1.5 percent on Friday and it was also trending on Facebook. The audience sentiment around Yahoo has also been overwhelmingly negative since Thursday, according to social analytics firm Brandwatch.

Yahoo has been mentioned over 314,000 times online in the past week, with over 134,000 mentions on Thursday alone, a 474 percent increase from the day before (Sept. 21). A majority of these mentions (70 percent) are negative in sentiment, according to Brandwatch.

It may take a while, but it’s not impossible for Yahoo to recover, experts said. Data breaches are increasingly common, with several brands including Target, Citibank and Playstation having suffered in recent years. Yahoo too has been at the receiving end of hacks before. Tumblr was hacked in May, while Yahoo Japan faced a hack in 2013. Yahoo’s massive brand awareness may help it tide over the crisis, as long as it takes responsibility and other necessary steps.

“They must give a very clear explanation and find a way from the PR perspective,” said Joachimsthaler.

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