Latest Trends & New Perspectives On Brand Risks

Branding is the core of marketing, yet it is a strategic discipline that has been dramatically impacted by social media in recent years. It has opened the door to a great variety of activism and disinformation and as a result, companies are facing new types of brand risks. In light of this surge of threats to brands, it is important to stay updated with the latest trends and new research that can provide insights to help protect (and ideally build) brands.

A few weeks ago (May 22), Boston University’s Questrom School of Business held a conference on “Risky Business:  Understanding & Mitigating Brand Risk.” The main focus was on whether and how brands should take a position on social, economic and political issues that have polarized our society today. Here are some of the highlights from this conference that show what companies are doing, which can hopefully help managers minimize such brand risks:

Tim Powell (President, The Knowledge Agency) presented findings from his recent Conference Board supported study “Brand Equity Risk: Challenges in the Digital Marketing Era.” The main goal was to determine “the impact of digital and social marketing risks to brand equity.” Tim focused on brand equity risk to emphasize the financial vulnerability of this valuable asset.

As part of this study, Tim identified and tested 7 different types of brand risks to assess the probability of occurrence and the potential impact:

1. Counterfeits Risks– knock-offs described as genuine that are sold on the internet.
2. Brand Safety Risks – typically ads displayed adjacent to objectionable content (e.g. pornography, political extremism).
3. Public Issues Risks – where people perceive the brand to be on the “wrong side” of a polarizing issue (e.g. gun control, LGBTQ).
4. Disinformation Risks –usually a website or social media campaign launched against a brand.
5. Activism Risks– a rising trend where activists use social media to badmouth a brand, even organizing boycotts.
6. Personnel Behavior Risks – key managers behaving in an illegal, unethical or socially unacceptable way, causing adverse publicity.
7. Execution Risks – where the message and/or visual is perceived as inappropriate resulting in consumer pushback.

Some major findings from this study include:

• Brand equity risk is definitely a growing concern at the senior executive and board levels, where the rise of brand risks is commensurate with the increasing dominance of digital marketing.
• The discipline of managing brand risk is still emerging since this a fairly recent phenomenon.
• The types of brand equity risk reported to be the most acute were “public issues” and “disinformation risks.”

Patrick Marrinan, co-founder of Marketing Scenario Analytica, or MSA, which focuses on five types of brand-centric risk events: brand safety, personnel behavior and brand execution (similar to Tim’s), plus customer engagement risks (e.g. adverse interaction between company policies and the public – like Starbuck’s situation) and ESG/Socio-Economic risks.

Patrick moderated a panel of impressive brand risk experts who have noteworthy experience dealing with various threats to brand value. They also showed how many companies are adding anticipatory tools and responsibilities to protect against and more quickly respond to such threats, going beyond crisis management:

• Janet Comenos – (CEO of Spotted, a celebrity data firm offering “disgrace insurance”) commented that “social media has made personal brand crises inescapable.”
• Pen Pendleton– (co-founder of CLP Strategies, a crisis management firm focusing on financial services) pointed out that the 2008 recession forever changed Wall Street, making it more vulnerable than ever to extreme activism.
• Desiree Moore– (partner at K&L Gates and founder of the global law firm’s “Digital Crisis Planning & Response” solution) said companies can no longer just put out a statement to a few newspapers to explain their position, but must be more “artful and diligent” for preparing and widely circulating responses that re-define the narrative for online attacks from whom she called “crazies”.
• Neal Thurman– (founder of the Brand Safety Institute) emphasized the importance of training to prepare for threats to brands and the need to shorten the communication gap between middle management analysts and the C-suite to ensure quicker, more effective responses.

Pierre Berthon (Professor of Marketing at Bentley University), reflecting his article, “Brands, Truthiness and Post-Fact: Managing Brands in a Post-Rational World,” emphasized two trends that have come to dominate social discourse. These include “truthiness,” or the validity of something based on how it feels, and “post-fact,” which refers to taking a position that ignores facts. Both trends have been galvanized by social media.

As the keynote speaker, Thomas Clayton O’Guinn (Professor of Marketing, University of Wisconsin) discussed how the world has become so politicized that it is impossible today for brands to completely avoid being politicized as well.

These conference highlights are important because they reflect the results of comprehensive studies and the conclusions of respected marketing experts. The emergence and seriousness of various brand risks are beyond doubt, but the questions on effective responsiveness are less clear. While many companies state they are prepared for such brand risk events, there is general agreement that companies should be more proactive with responses planned ahead and communicated quicker.