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Tale of two controversies

This time a year ago, Nike celebrated the controversial “taking the knee” campaign by American football player Colin Kaepernick. Half a year ago, Gillette criticised “toxic masculinity”.

The global sales of the Nike brand rose 7% over the 2019 financial year; Gillette had US$8 billion dollars of brand value written off its balance sheet.

What can we learn from the difference? This has important implications for companies being urged by activists, including those within their staff, to take value positions on social issues.

There was a difference in the campaigns themselves. Nike continued with a marketing approach it had long established, linked to values of endeavour and pushing boundaries. The Kaepernick campaign didn’t celebrate what Kaepernick had done, but his willingness to do it. In contrast, Gillette broke with its product-orientated marketing convention and criticised the attitudes of its core customers.

The effect for Nike one year later is barely noticeable. The Kaepernick campaign was US-based, but most of the brand sale increase came from its international markets. Its US sales were relatively flat, and generated a down-tick in the share price when announced. The company attributes the revenue and profit to its strategy of growing direct sales. Moreover, the growth was unremarkable as it was entirely consistent with the steady increase over the past five-to-10 years.

The situation for Gillette six months on is awful. Proctor & Gamble, the owner, wrote off $8b in Gillette brand value from its balance sheet in July this year. Sales for Gillette are not reported, but net sales in the grooming business of P&G were down in 11 out of the 12 quarters prior to July 2019.

This performance signals something pivotal to the Gillette campaign – it was motivated by desperation. The company wanted to either get noticed or attract new customers. It did one, but not the other.

The effect of getting noticed is often critical to early naïve evaluation of companies campaigning of social values. “Expert”’ claimed the high profile of both campaigns was worth millions in free publicity – as if being noticed equated with sales because consumers don’t care about the message.

In our continued close examination of such social marketing efforts, we’re seeing two trends: when consistent and closely aligned with an existing brand value, contrived controversy doesn’t help or hinder big companies. Where there is a positive effect from value-signalling, it’s almost unrelated to the position taken – but draws from brand consistency and market presence.

The other trend is that positioning on social values hurts sales when it’s either trite, out of step with the brand’s history, or out of step with the customer base.

Either way, our recommendation, based on mounting evidence, is to resist those urging your company to take positions on social issues.

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