Uber Bummed: How Uber and Lyft Lost an Important Political Fight

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Earlier this month, residents of Austin, Texas were faced with a ballot measure called Prop 1, a proposition aimed at overturning new city ordinances for ride-hailing apps passed last December. Transportation network companies (TNCs), including Uber and Lyft, were significantly affected by the new ordinances, which created additional layers of compliance and scrutiny such as requirements for fingerprint-based driver background checks.

Related: Uber, Lyft Spend Big, Lose Big in Texas Vote on Driver Fingerprinting

More important, in the minds of leaders at Uber and Lyft, the new regulations in Austin would set a dangerous precedence that other cities might follow. For this reason, Ridesharing Works for Austin, a political arm set up and sponsored primarily by Uber and Lyft, spent an unprecedented 9.1 million dollars to promote Prop 1 -- more than seven times the previous record of $1.2 million for any Austin political campaign.

Despite the tremendous gap in campaign spending, however, residents overwhelming voted against Prop 1.

"Uber, I think, decided they were going to make Austin an example to the nation," said David Butts, the leader of the organization opposing the proposition, Our City, Our Safety, Our Choice. "And Austin made Uber an example to the nation."

While the TNCs contemplate what to do next in Austin, and how to prevent similar ordinances from spreading to other cities, perhaps the biggest lesson taken from the failed campaign comes from the questionable marketing tactics used by Uber and Lyft.

In the weeks leading up to the election, marketing tactics to recruit voter support of Prop 1 were significantly ratcheted up. The tactics included television and radio ads, which were often considered misleading and abrasive, and an onslaught of flyers, direct mailers, emails and phone calls. The campaign even sent direct text messages to voters, often unsolicited and without any opt-in or permission.

Related: If Uber Drivers Are Employees, They're Owed $730 Million More, Say U.S. Court Papers

Kickstand Communications, a full-service communications agency that helps fast-growing tech brands from around the nation collect and analyze market data quickly, performed a follow-up survey with eligible Austin voters in order to understand why they felt so strongly against Uber and Lyft. What they found was that nearly 30 percent of respondents indicated that the aggressive campaign by Uber (supporting Prop 1) made them more likely to vote against the proposition (and against Uber), while 26 percent indicated that the campaign made them less likely to vote at all.

Moreover, Kickstand’s survey demonstrated that about one in four voters felt that Uber and Lyft did not have permission to call or text, and 36 percent cited receiving unwanted and unwarranted text messages.

In general, Austinites felt Uber and Lyft overstepped boundaries by using phone calls and texts to promote and drive support for Prop 1, which resulted in the opposite outcome the marketing strategy intended. In fact, the tactics have led to at least one lawsuit to be filed against Uber claiming the campaign violated the federal Telephone Consumer Protection Act.

Maybe most compelling -- and certainly most disappointing for Uber and Lyft -- is that 47 percent of survey respondents who indicated they did not vote also indicated that they wished they had, because the ruling was opposite to what they wanted. In the end, the real victims of the overly aggressive marketing strategy used to support Prop 1 may have been those who supported the services of Uber and Lyft in the first place.

The technology, means and channels through which brands communicate with customers are changing rapidly. And with automation and greater access to consumers comes an even greater level of corporate responsibility. To maintain consumer loyalty and stay ahead today, brands must understand their customers' expectations for how brands engage with them -- and only then cater communications accordingly. Ultimately, consumers want and expect control of communications from brands, and failing to give that control -- or at least provide the perception of control -- can be costly.

Related: Lyft Agrees to Revised $27 Million Deal in Driver Lawsuit

For Uber and Lyft, this was a lesson learned the hard way -- and at a big price.