Brand damage: Recovering from a crash with everybody watching
One way to get a sense of what a brand is really worth is to look at what it takes to repair a damaged one.
Brands are ephemeral beings to start with. Their equity or value consists entirely of the perceptions that customers and the general marketplace have of them. It's an emotional currency built around trust, loyalty and desire to own.
But a shift in perception can send a brand to the shop overnight. And when your brand is worth millions or more, a little bodywork can still be a big chunk of change.
The classic case of damage control and successful repair was the infamous Chicago Tylenol murders in 1982. Tylenol acted quickly to pull its product from the shelves, before it was even clear what the source of the poison was. Tylenol quickly developed tamper-evident packaging, replaced its capsules with gelcap technology and reintroduced the product 10 weeks later.
The cost to pull the product and recreate its packaging was estimated at $100 million, but it saved the brand. And because the makers of Tylenol were victims of a criminal act from outside the company, that aided in its recovery in the public eye.
That case is the opposite of brands whose damage is self-inflicted. Brands such as BP, Toyota and even Tiger Woods come to mind.
BP has spent billions to pay for actual damage to the Gulf of Mexico and tens of millions more on repairing its image in this country. Toyota saw its sales hammered by the unintended acceleration problems of a relatively few cars. Profits disappeared, but the company is now mostly recovered two years later.
Tiger? Well, Tiger admitted his wrongdoing and appears to be rehabilitated, but he has not come close to the levels of success he enjoyed on the course or as an endorser. Like most brands in trouble, he can't buy his way back to the top.
And that really is a key to fixing a battered brand. Money and mea culpas can't solve all problems; it often takes specific actions to turn around perceptions. Two brands of late, though completely different, illustrate this well:
Penn State University
The actions of a few men within the university have instilled a national outrage that is affecting millions of loyalists to the brand, its alumni, its students and the employees of the institution. The $60 million dollar fine imposed by the NCAA is the most tangible price tag, but negative perceptions have tarnished the university, not just the football program.
After mishandling the early days of the scandal, the university has responded well by initiating its own investigation, accepting the NCAA sanctions without quibbling and seeking to move forward from an unimaginable series of events.
At this year's first football game, the school introduced a new brand concept aimed at its still-loyal fans and supporters called OneTeam. The concept is that Penn State athletics — its players, fans and financial supporters — consist of one all-encompassing team that can pull together and move forward.
Before the game, members of every Penn State sports team joined together on the field to represent the new thinking. OneTeam T-shirts were already being worn among the faithful fans. Penn State has shrewdly begun its rebuilding process based on the core audience of its brand, and it appears to be having success with recent reports that alumni giving to athletics is higher than last year.
The social media juggernaut's brand deficit can be measured by its stock price, which has dropped $50 billion in market value since its IPO in May. Zuck's brainchild was the loser in the collision between wild enthusiasm for a breakthrough product and the actual fiscal reality of justifying its value to the publicly traded market.
The fascinating aspect of the Facebook brand is that its users are relatively unaffected, for now, by the outrage of the investors who feel shortchanged and even ripped off by the IPO process. After all, Facebook's 1 billion users don't pay anything for the service, and their digital socializing continues unabated.
But Facebook's brand is damaged in the eyes of investors, and there is tremendous pressure on its management to deliver more value. Like Tiger, Facebook can't buy its way out of this.
Advertisers, who can provide the revenue the investors are clamoring for, are making demands of their own. They want to see their ads have greater impact than Facebook has been able to demonstrate and are asking for larger displays, more interaction and the ability to interrupt the user, which has been the classic trade-off of traditional advertising for a century or more.
Facebook and GM got into a tiff over this issue, which led to GM proclaiming it was pulling its $40 million ad budget just days before Facebook stock hit the open market with a thud. GM and Facebook have since made up, but the fact remains that the revenue that investors seek could very likely have a direct effect on the user experience as well.
The common factor in all the damaged brands discussed here is a high level of public outrage over specific actions or circumstances surrounding those brands. Outrage is the Kryptonite of brand loyalty, and it can take years to restore lost equity and perceptions.
Even brand loyalists may feel compelled by peer pressure to avoid a brand they love.
Monday-morning quarterbacks and brand pundits are fond of saying that companies respond too slowly, but imagine being in the firestorm of a scandal, a product defect or even a criminal act against your brand and still being able to think straight.
Establishing crisis management plans for predictable events should be standard procedure (and a spot where Penn State could have been far better prepared), but imagining every contingency is impossible.
Despite all possible precautions, some brands will eventually take a hit and find themselves in damage control. Accepting blame and re-establishing a positive brand experience are keys to finding the way back, but it can be a long road to recovery.
David Taylor is president of Lancaster-based Taylor Brand Group, which specializes in brand development and marketing technology. Contact him via www.taylorbrandgroup.com.