Are politics good for brands?
Politics come in different flavors for brands. Contributing to community organizations and lobbying for business-friendly policies are relatively uncontroversial.
The other flavor of politics is what this question is about. Which is social politics involving flashpoint social issues that fall roughly into one of two shorthand groupings—DEI (diversity, equity, inclusivity) or ESG (environmental, social, governance).
Brands are under growing pressure to get involved in such politics, from less to more—purpose to signaling to financial backing to advocacy. Some brands are eager to support causes because they see it as a way of building value and growth. While other brands are weighing in against these causes for the same reason. Most brands just want to lay low. But at this moment, it’s difficult to duck social politics because even doing nothing can be construed as taking sides.
The pressures bearing down on brands are also the very reasons why it’s hard to make a prudent business case for all-in brand advocacy. The worst thing about politics used to be the distraction from business as usual. Nowadays, politics can be an existential threat.
It is the rare brand with the strength and wherewithal to dive in and then keep from getting dragged under by today’s political currents.
As social politics press in harder, particularly in this uneasy year of a record number of national elections worldwide—many with high stakes—brands must decide whether to get involved. Which circles back to the question of the moment: Are politics good for brands? That is the focus of this thought-piece.
Risks
In many ways, this question is being answered already. Corporate leaders have become more circumspect about ESG. During Q2 2023 earnings calls, only 61 S&P 500 companies mentioned ESG, well down from 2021 when over 150 firms mentioned ESG in three of the four quarters that year. This was paralleled by a sharp drop in 2023 of net new deposits in sustainable investment funds.
Another tracking of earnings calls by U.S.-listed firms shows that the May 2020 George Floyd incident sparked a three-fold rise in mentions of DEI and ESG. But compared to the Q1 2022 peak, mentions in Q2 2023 were down 40 percent. Add to this anecdotal reports of companies veiling DEI with euphemisms.
DEI jobs listed on ZipRecruiter dropped 63 percent in 2023. Additionally, many big-name companies have slashed DEI budgets and staff over the last couple of years.
Litigation risks are a big reason for these concerns, especially for ESG. Such as investor groups bankrolling lawsuits against companies over unfulfilled environmental pledges. Or complaints filed by nearly two dozen state attorneys general that ESG funds intentionally sacrifice financial returns. Or lawsuits like those brought by Rockefeller heirs against Exxon. Or regulatory pressures like the SEC crackdown on greenwashing.
The Supreme Court decision striking down affirmative action for university admissions has put companies on edge about DEI. It has long been impermissible to use race in hiring, advancement and compensation. But legal risks for DEI initiatives related to recruiting, mentorship, fellowships, scholarships and accessibility are less clearcut even with EEOC reassurances. Lawsuits are growing in number and some recent rulings have been handed down against company initiatives.
Boycott risks are growing, too. Historically, boycotts don’t work. However, the recent LGBTQ+ –related controversies affecting Bud Light, Target and Planet Fitness ticked all the boxes it takes. It doesn’t take a full-blown boycott to matter, though, as Chick Fil-A and Cracker Barrel discovered from outcry over their employee and customer care policies.
ESG-related boycotts cut the other way. Surveys find anywhere from half to two-thirds of people say they are willing to boycott or are currently boycotting brands that do not practice sustainability or that engage in greenwashing. These boycotts disproportionately hurt reputation.
Culture At-Large
Add cultural shifts to this whiplash of litigation and boycotts. Consumer sentiment is trending away from the decade-long spike in activist politics following the financial crisis. The 2024 U.S. MONITOR reports a “selfward” turn among consumers, with more interest in self-care and less about the world at-large.
Other marketplace observers have called out this shift in the dominant cultural ethic. George Mason University economist Tyler Cowen cites electoral reversals for blue candidates in blue strongholds, a shift of political views among immigrants and minorities, and the retirement of older faculty at universities. New York Times columnist David Brooks postulates that what’s happening is the predictable watering down of radical activism into a thinner soup of corporate catchphrases and cultural fripperies. Economist and blogger Noah Smith has argued on several occasions that the prevailing social tenor is fast becoming less tolerant of unrest and more conservative in outlook. Smith likens this to the 1980s after the tumultuous 1970s and 1960s.
One bit of data cited by Smith is the change in attitudes about policing reported by Pew. In 2021, the percentage favoring a decrease in police funding—a cause célèbre following George Floyd—dropped dramatically from 2020. The 2020 pluralities among African Americans and Democrats favoring a funding decrease flipped in 2021 for both groups to a plurality favoring an increase.
The next generation is shifting this way as well. A recent survey by Stanford researchers found a sizable year-over-year drop in interest for ESG funds among investors 40-and-under, with less willingness to sacrifice returns for values. A July 2023 CNBC survey found only 32 percent feel it’s appropriate for brands to take social stands. Among 18-to-34-year-olds, it was higher at 43 percent, yet way down from 62 percent in 2018 and 70 percent in 2019 for this age group.
The climate for brand activism and advocacy is no longer as favorable as it has been in the recent past. The risks are greater. The culture has shifted. Nevertheless, surveys of executives find continuing interest in ESG and DEI. For every Bill Ackman or Elon Musk in opposition there is a Mark Cuban or Larry Fink in support. Particularly for internal operations.
Internal Operations
Companies are less fretful about ESG and DEI when it comes to internal policies and practices. Business leaders recognize that running a business with social awareness, empathy and support is critical for recruiting top talent, especially younger talent, and for building teams that excel at innovation and creativity (under good leadership).
Not to mention that, by and large, corporate leaders feel a duty to operate their companies in keeping with principles like sustainability and inclusivity. It’s the face-in-the-mirror test that management guru Peter Drucker believed secured business ethics.
ESG and DEI make sense to corporate leaders as internal guiding precepts for culture, behaviors and processes. Thus, the biggest, most successful companies tend to be built in keeping with these values. But internally does not mean externally. Public-facing communications alliances, and tactics require a different calculus, one in which risks play a big part. Externally is where politics crash into brands. The balance is shifting. As in the message to investors late last year from Unilever’s new CEO that it will stop ‘force-fitting purpose’ to its brands.
Value
Unilever’s new approach to purpose reflects a recommitment to the fundamentals of building value, and thus a more exacting assessment of activist social politics as a value-creating growth engine.
Only in the rare case is the founding purpose of a brand tied directly to social causes. Such as oft-lauded examples like Patagonia and Ben and Jerry’s. But these are exceptional brands, and precisely because of that, poor exemplars for the typical brand which must layer on support for social causes.
Advocacy won’t get clothes cleaner or make food taste better or provide better insurance coverage. Support for social causes is additional, not foundational. It must measure up on a business yardstick.
At the heart of every brand is a commercial mission to solve a problem for people. This commercial mission must be inviolate. A brand cannot be an ally or advocate of anything unless it is a going concern. The bottom-line comes first, even in a view of capitalism that prioritizes stakeholders over shareholders.
The unambiguous priority of business performance provides brands with a failsafe way of deciding about politics. To wit, a business case for brands and politics that adds value without adding risks. Risks are mounting, so politics must add enough value to justify these risks.
Social politics must resonate, motivate and activate, just like every element of a brand’s proposition. To pay its way, politics must be a good solution to a real problem, not merely performative.
Brand growth comes from a meaningfully different proposition that attracts more consumers. This growth trajectory can be accelerated in three ways. Predispose more people—boost likelihood to buy across a greater number of people. Be more present—increase visibility and awareness. Find new spaces—identify new domains and applications.
Politics and Predisposition
More predisposition means making a brand attractive in meaningfully different ways that will make more people more likely to buy it. The takeaway for brands and politics on this growth accelerator is mixed. – There is a stubborn value-action gap. The biggest learning from sustainability marketing is the difficulty of predisposing people to buy based on social causes. This is known as the value-action gap. Or the unbridgeable chasm between the social values espoused by people and the products they buy.
Time and again, research has found the same set of barriers to buying based on sustainability—price, quality and convenience. The fact of such barriers is itself evidence that social politics are shaky ground for predisposition. Because strong predisposition is also the willingness to pay a premium. If social values really boosted predisposition, these barriers wouldn’t be barriers at all. They’d be a ‘premium,’ so to speak, happily paid.
- Social attitudes are frequently mushy. One reason for the value-action gap is that attitudes about social politics are often not firm.
Decades ago, public opinion expert Daniel Yankelovich worried that public policy might be misled by survey results that reflected little more than easily changeable, often contradictory surface-level responses. To guard against this, he developed a four-item Mushiness Index that gauges how firmly people hold opinions.
In a Kantar survey of environmental attitudes conducted years ago in 2007, we gauged the mushiness of opinions about severity and public policies. It turned out that these opinions were mushy, meaning unstable and ill-considered. No surprise, then, that there is a value-action gap. Mushy opinions are too weak and wobbly to strongly influence predisposition (at least in that research from years ago).
- Lack of personal involvement hurts resolve. For topics that people don’t know much about or haven’t discussed with others, opinions will be unsettled and fluid. But people will not learn and reflect enough for their opinions to firm up unless they feel personally involved or affected.
The good news is that this points to a way to close the value-action gap—highlight personal impact. But practically speaking this is a Catch-22. Without the involvement sought, people are unlikely to pay attention to a message about impact. Which is why sustainability ads that highlight losses or that make appeals about the future tend to fall flat.
- Values affect consideration. There is another side to the predisposition coin. Market research finds a value-action gap because, typically, it analyzes checkout, not the entire shopping journey. Social politics may not matter at the cash register, but ESG and DEI often determine what gets considered for purchase.
Brands with a strong fit on the values that matter get considered. Social politics are influential because many people rely on politics to filter what gets considered for purchase.
This is exactly how boycotts work—brands get removed from consideration. It’s also how categories change. When something gets firmly embedded, the category tilts, affecting not just a single brand but consideration for all brands. Which is seen already with table – stakes factors like recyclable packaging, inclusive casting in ads and energy-efficient designs.
It is less work for consumers not to buy than to buy based on social politics. Obviously, not buying and buying are the same physical act of shopping and a shift in brand choices is required either way. But buying because something aligns politically means social criteria must take absolute precedence over every other consideration, which is a break in routine requiring extra effort, concentration and willpower.
Whereas leaving something out of consideration simplifies the cognitive load. It’s easier to forget than to remember, and the ensuing purchase can be guided by the same category criteria as always.
The better predisposition objective for brands and politics is consideration. Which is to say, consideration as the way of strengthening predisposition. But this is harder work. Brands must outperform competition across more criteria at more steps in the process—not only category criteria at checkout but social criteria for consideration as well.
Messaging and positioning must be a notch or two better because winning at consideration on social politics and then again at purchase on category criteria entails multiple points of meaningful difference at multiple points of contact.
In sum, the growth accelerator of predisposing more people is mixed for brands and politics. It’s difficult for social politics to be consistently effective at predisposing more people. But social politics can get brands into consideration, and even keep competition out.
Politics and Presence
More presence means making more people aware of a brand, particularly at point-of-sale. The takeaway for brands and politics on this growth pillar is challenging.
- Politics is different. Brands are not built for politics. Politicians win with one more vote, so divide-and-conquer makes sense. Whereas brands win by selling to as many people as possible.
Sometimes brands can build presence in political ways without any downside. Nike’s 2018 campaign featuring Colin Kaepernick hurt sales initially, but a bump came quickly thereafter. Nike’s ranking in Kantar’s BrandZ equity tracking has held its own.
Following the 2018 Parkland High School shooting, Dick’s Sporting Goods began lobbying for stricter gun control and quit selling assault rifles. In Q4 2023, Dick’s posted its biggest sales quarter ever.
In 2019, Netflix moved production of its forthcoming series “Outer Banks” out of North Carolina because of a new law about public bathrooms aimed at transgender people. This series has been a huge hit and will soon enter its fourth season.
But most brands lack the infrastructure, goodwill, leadership and financial reserves that Nike, Dick’s and Netflix can command. Building presence by playing politics requires more of everything—time, money, attention. It also means banking a brand’s future on the upside available with just one side of divided consumers. And it means making a bet that sympathetic consumers will rally to a brand in sufficient numbers to offset any backlash, which can’t be presumed, as Bud Light found out.
- Confrontational consumerism is the bigger context. Politics are playing out amidst a lot of consumer aggravation. The Customer Rage Survey finds almost half of Americans enraged with some company over the course of a year due to frustration with getting a
Takeaways
Social politics entail growing risks in a changing cultural climate with little to no offsetting assurance of value and growth.
That said, a commitment to purpose can be important for internal culture and operations. Internally, sustainability and inclusivity make sense. But for externally facing communications and marketing, prudence should prevail over politics. To put it another way, purpose not advocacy. If brands opt for advocacy, preparation and support are a must as well as contingency plans for backlash.
The alternative to mixing brands and politics should not be turning a blind eye to the realities that underlie social politics. Brands must face up to demographic changes, environmental crunches and smart technologies. Three closing thoughts on the approach for brands to take.
- Invest behind human-centric values, not politically centered values.
Human-centricity is about solving problems for people. This is the essence of marketing.
A human-centric proposition is inherently universal. Brands cannot get big unless they are built on the cross-cutting potential of solving problems for everyone. Big brands do this as a matter of course, as evidenced by their success in appealing to people of all politics and persuasions.
Brands segment, of course, but not by rallying people in divisive ways. Segmentation is about targeted appeals, not wedge issues or partisan provocations.
An inclusive, human-centric proposition may be harder than ever, but brands cannot afford to summarily wall themselves off from half the market. Brands must seek out common ground, not stake out territory.
- Seek culture not controversy.
People want to ‘see’ themselves in a brand. Kantar U.S. MONITOR finds the vast majority want brands that align with their values. It takes culture for consumers to see an alignment and feel an emotional connection. But these days, culture frequently comes with controversy. And controversy is no friend of brands.
There are always ways to resonate culturally without courting controversy. For example, as COVID-19 vaccines rolled out in 2021, problem fixed. Up from well under a third at the turn of the century. Expectations spiraled up into belligerence after the pandemic when everybody took stock and reset priorities. Add in economic strains, sensitivities about COVID mandates, and more ways than ever for problems to vex people. Such as social media for customer service giving scam artists new ways to rob people. Even if a brand is doing a good job, frustrations with other brands put people on edge.
Brands have enough to do without adding politics to the mix. Nor in this context of confrontation will yielding to one political side or the other keep brands out from under the microscope. Which saddles brands with the expense of doubling down to keep consumers steadfast when controversy arises.
In sum, the growth accelerator of more presence is challenging. Building presence through politics is not optimal. And politics add another irritant in an already uptight marketplace.
Politics and New Spaces
New spaces mean expanding in directions that unlock new domains or applications for a brand’s assets and solutions. The takeaway for brands and politics on this growth pillar is nuanced.
- Consumers want brands to be brands. A new theme is unfolding with ads celebrating brands for just being brands. Making new spaces looks a lot like back to the future. More brands have begun touting their commercial mission instead of their social politics.
Brother’s New Zealand campaign emphasizes what its printers won’t do—save lives, change the world, save the environment or solve climate change. The tagline reads, “It just works.” – PNC Bank brags that it is “Brilliantly Boring” because getting the job done is what makes special things like great vacations and a comfortable retirement possible.
SeatGeek aired a TV ad with a cheeky narrator promising to “bore you” by showing off a ticketing app that “just does what it’s supposed to do.” The tagline goes, “Expect the expected.”
State Street Global Advisors features Annika Sörenstam and Tony Finau in a mock golf tournament played without the middle of their bags—only drivers and putters. Unsurprisingly, their scores are poor.
Which ties to the value of State Street’s workmanlike yet profitable mid-market strategy.
- Purpose is poorly served. When social issues are added to a brand’s portfolio, such causes are not always well-served. The learning curve is steep. Distractions build up. Brands must speak to new audiences, respond to new feedback, and become attuned to political currents not just marketplace trends.
These challenges put politics and purpose at risk. Because anything not central to making money will always take a back seat. When a brand takes politics under its wing, it becomes just another financial consideration and less of a superseding moral imperative. Brands are inherently fickle stewards of social causes.
Brands are designed for one thing. It takes all that brands can muster up to do that.
Social causes deserve better. In sum, the growth accelerator of new spaces is about reinvigorating commercial mission. The new spaces are the old spaces. Krispy Kreme offered a free doughnut for the rest of the year to anyone with a stamped vaccination card. The CEO addressed the ensuing outcry by assuring people it was about “generosity” not taking sides, and it was in keeping with its practice of giving doughnuts away as treats on special occasions.
Consumers want brands to be better brands. Kantar U.S. MONITOR found a few years back that eight in ten agreed, “Brands should focus on providing the product or service they are meant to deliver instead of getting involved in social issues.”
A brand is not better simply because it has taken a stance on politics. Brands are better when they do right by what people need, not because they are more upright.
The best way to sell a sustainable brand, say, is to sell a better brand that is also sustainable. Especially if sustainability is the reason that a brand is a better solution.
Many studies find that the highest performing companies also do best on ESG and DEI. No surprise since strong companies throw off more surplus earnings that can be redeployed in other ways. But don’t confuse the cart with the horse. For the most part, these companies got big and then were able to do good.
As was the case for CVS Health in 2014 when it quit selling tobacco products. Similarly for L.L. Bean, which now pauses all social media during May in support of Mental Health Awareness Month and encourages people to join it by spending more time outside, which ties to its core proposition. – When core to the commercial mission, politics are good for brands.
Contributed to Branding Strategy Insider By Walker Smith, Chief Knowledge Officer, Brand & Marketing at Kantar
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