Should Business Take A Aspect In The Ukraine-Russian Conflict? A Dialogue About Brand Function

Dark and rumbling clouds of war are quickly moving from the East toward European skies while the business debate about brand purpose hits new heights: should businesses take a side, and support Ukraine? Or should they be silent instead?

Yes. Here we go, again. Another post about brand purpose. If brands cannot add something positive to the current situation, they should shut up and leave the job to those who can. The debate is on.

The fact is: the more time passes, the more I observe this noisy race of brands trying to find or create new socially acceptable, ethically-sustainable purposes. 

Deepening the discussion

The (unjustified?) uproar generated by Peter Field’s talk for the IPA on brand purpose at the end of 2021 is a sign of the hot debate currently in progress in most of the marketing channels. Yet I cannot hold back a smile every single time I hear sentences like: “Our audience has to understand our new brand purpose” or “It’s time to rethink our North Star”. If you had no brand purpose until today – and still run a successful business – why should you think about a new purpose now?

Field’s analysis, which is based on the IPA’s effectiveness database and mainly focused on B2C brands, demonstrated that the average purpose-driven marketing campaigns were significantly less likely to generate long-term business effects when compared with traditional non-purpose campaigns. 

Then Field went back to the data and picked those brand purpose cases that performed better; at that point, he demonstrated that they perform better over the whole set of non-purpose campaigns. As you all can imagine, very few were convinced.

Field says: “What these findings show is that we shouldn’t dismiss brand purpose out of hand. There can be considerable benefits for companies in deploying brand purpose campaigns – both for engaging their own employees, stakeholders and investors as well as for driving customer sales. 

When it is done well, when it is genuine and credible, brand purpose can be very powerful.” As Mark Ritson pointed out, “his intent was not to defend purpose, but to make a case for it”. 

The case of Peter Field’s research is just a sign of a much wider conversation – I should probably use debate instead. 

Enterprises that have done business, more or less ethically, more or less successfully, in the last decades, are now suddenly discovering that having a brand purpose might help with boosting their profits, especially within the new generations of consumers – millennials and Gen Z – who are attracted by brands that put purpose at the center of their content effort, definitely more than my generation was.

Byron Sharp, author of the seminal book “How Brands Grow”, and currently one of the most influential marketing academics, has been critical of the widespread adoption of social purpose; he argued that it could lead to brands becoming too similar and undifferentiated. So, if the marketing community succeeds in teaching consumers they should only buy brands that donate to charity or are seen as doing good for the world, all labels can easily take that over in a very undifferentiated world. Marketers should instead have more self-confidence and belief in the good marketing does in the world by itself without seeking a higher purpose, he argued.

As Kate Smith, a strategic marketing consultant, says, “the issue isn’t with purpose, per se. The issue is with how purpose is being developed and used. Is it being used to define what the business does and how it does it, or is it being used merely to create an illusion of social responsibility or just as the basis for a millennial targeted campaign”.

“The issue isn’t with purpose, per se. The issue is with how purpose is being developed and used.”

Kate Smith

The race to a purposeful brand didn’t start last year with Field, of course. Back in 2019, Unilever’s CEO published a report showing that brands of the group with a clear articulated purpose grew much faster than the rest of its businesses. Back then the company committed to a future in which “every Unilever brand will be a brand with purpose”.

This is what CEO Alan Jope said: “We believe the evidence is clear and compelling that brands with purpose grow. In fact, we believe this so strongly that we are prepared to commit that in the future, every Unilever brand will be a brand with purpose.”

Brand purpose in appearance or at the business’ core? Let’s take a look at some brands

It’s not just Unilever. Let’s have a look at some of these purposeful brands. My list is not comprehensive;  but still, it provides a good scenario about enterprises that are embracing a brand purpose model and the real facts; just have a look and judge for yourself.

Google 

“Our mission is to organize the world’s information and make it universally accessible and useful”. Google won’t reveal its own revenue or profit figures at a country level. 

In addition, Google has not disclosed its plans for a censored search engine in China. 

In addition, Google+ (social network) has been closed following a data scandal. And this could be an endless list. Finally, nearly every US state (paywall) and European country is now investigating the company for anticompetitive behavior in its advertising business.

Volkswagen 

The Group’s goal is to offer attractive, safe, and environmentally sound vehicles which can compete in an increasingly tough market and set world standards in their respective class. 

Then Volkswagen intentionally programmed it’s Turbocharged Direct Injection (TDI) diesel engines to activate their emissions controls only during lab testing, which caused the vehicles’ output to meet US standards, but emit up to 40 times more poisonous toxins in “real-world driving”. 

The folks at Volkswagen deployed this software in about 11 million cars worldwide from 2009 through 2015. These toxins were partially responsible for the death or disability of hundreds of people. Volkswagen itself continues to insist that although eight million cars sold in Europe were fitted with defeat devices, they were not required to pass EU emissions tests and therefore it has committed no crime in the EU.

Siemens

Siemens‘ purpose is “Being Responsible – Excellent – Innovative”, with responsible interpretation meaning that the company is committed to ethical and responsible actions. 

Siemens will be remembered for one of the biggest corporate corruption probes in history when it agreed in 2008 to pay about 1 billion Euros in fines and penalties after investigations by U.S. and German authorities into bribes it paid to win contracts.

State Street

State Street created the ‘Fearless Girl’ sculpture and told us its mission is to get more diversity into corporate executive teams. The US government is claiming instead that State Streets pays female employees and people of color less than white males (paywall). 

Specifically, State Street has discriminated against 305 top female black employees by paying them less than men in the same positions and has agreed to pay $5 million to settle the U.S. Department of Labor’s allegations.

State Street’s fearless girl

Audi 

Audi spent millions on a feminist Super Bowl spot in 2018, which proclaimed: “Audi of America is committed to equal pay for equal work”. 

In the ad, a father watches his daughter in a downhill cart race and thinks about whether she is being judged based on her gender. At the core of the ad is whether she will be paid less than a man, despite her talents. But… Only two women sit on Audi’s Management Board (it was zero, until a few years ago), and its 14-person American executive team only has a few women. 

In the press release for the Super Bowl ad, the car company said it was publicly committed to supporting women’s pay equality and pointed out that half of the candidates for its graduate internship program must be female. 

Rather than avoiding the conflict, Audi has responded to negative comments generating even more criticisms.

BP

“Our purpose is reimagining energy for people and our planet. We want to help the world reach net zero and improve people’s lives”. Currently, around 96% of BP’s capital expenditure is on traditional oil and gas. 

Whether or not BP will keep to these promises remains to be seen, but we’re not so hopeful. “While BP’s advertising focuses on clean energy, in reality more than 96 per cent of the company’s annual capital expenditure is on oil and gas,” said Sophie Marjanac, a lawyer at ClientEart.

Mondelez’s Cadbury

Mondelez’s Cadbury launched a new purpose positioning in 2018, to “shine a light on the kindness and generosity that we see in society”; it re-launched its global brand positioning as a “family brand founded on generous principles”. 

But… Cadbury manages to pay zero corporation tax, for the eighth consecutive year. The company recorded a 740% jump in profit for the year to 31 December 2017, with turnover rising to £1.66bn from £1.65bn. In recent years, Cadbury’s corporate owners have consistently managed (legally) to avoid paying any corporate tax. 

Alex Cobham, who runs the Tax Justice Network, notes that Mondelēz regularly carries out “financial engineering that is very sad given Cadbury’s long history of working to generate value in the communities where they work”.

Starbucks 

“Inspire and nurture the human spirit. One person, one cup and one neighbor at a time”. Starbucks tells us its brand purpose is to build community while doing everything it can to minimize its tax payments. In 2017 Starbucks paid only 2.8% of taxes.

And what do Nike, Zoom, FedEx, Salesforce, Verisign, Xilinx and many other brands have in common? According to the Institute on Taxation and Economic Policies (Itep), they paid $0 Federal Taxes in 2020.

Should we mention Netflix?

Netflix continues its tax avoidance streak, reporting an effective federal corporate income tax rate of 1.1 percent in 2021 on $5.3 billion in profits. The company avoided more than $1 billion in taxes in 2021 alone. 

At a time when many small businesses face pandemic-related challenges, Netflix is among large corporations that are handsomely profiting from changing consumer behavior. 

Yet, its sales and profits generated in the UK are moved elsewhere and many ask if and when the company will start paying any corporation tax.

And I won’t write about Amazon 

The company recently reported record profits of more than $35 billion; but it (legally) avoided about $5.2 billion in corporate federal income taxes since 2018, despite receiving copious subsidies at the state level. 

I’m not going to waste your (and my) time on Amazon, though – an entire book or documentary series won’t be enough to list all its controversies, from poor working conditions to environmental impact, from social challenges to opposition to trade unions, and then privacy infringements, antitrust issues, and all other manner of scandals the company keeps perpetrating.

As Bob Hoffman wrote a while ago: “Taxation may be unpleasant. But taxation is by far the most potent source of resources for societies to redress social ills. Taxation funds education, housing, health initiatives, social programs. When corporations take extraordinary measures to avoid paying taxes, they are doing extraordinary harm to citizens who have the greatest need…”

“When corporations take extraordinary measures to avoid paying taxes, they are doing extraordinary harm to citizens who have the greatest need”

Bob Hoffman

The thing is: it’s not illegal to pay zero taxes. But how can we consumers trust all those powerful purpose statements, commercials, posts and promotions when we know – because we know – they’re coming from brands that are deliberately avoiding the basic pillars to support citizens and their communities?

And yet, there are some brands that are genuinely purpose-driven

Think of Patagonia, for example, where the purpose has always preceded the products ever since its foundation. Mark Ritson estimates “they (these purpose-driven companies like Patagonia) consist of about 0.2% of the world’s brands. 

The rest are commercially driven operations that are not necessarily evil, and often take a responsible approach to packaging and other business challenges, but are not in a position to intervene on major societal issues”. 

Patagonia’s Activism website section

Properly used, the purpose is a way for businesses to think deeply about what they do, how they do it, and what their impact on the world is as a result. It can be part of the essential shift from profit maximization to value creation. 

As Field confirms “the great thing about brand purpose” is that when it’s done well, it introduces new dimensions to a category so a brand can differentiate itself in ways it couldn’t before. A well-crafted and executed brand purpose brings a raft of benefits that encourage, rather than distract from profitability:

• A more focused strategy with clear priorities. A clear purpose provides guidelines for what a business should and shouldn’t do
• An ability to attract and keep staff, and keep them motivated. The desire for work to be more meaningful (think about the ‘Great Resignation’) will continue to grow, particularly amongst millennials. In the war for talent, purpose can be a potent weapon
• An ability to attract the best partners
• Stronger investor interest and support

Finally, we have brands quietly operating with purpose while opting not to position explicitly upon it through their marketing. 

For two decades, Pret a Manger has quietly provided homeless people jobs and open shelters for rough sleepers; in addition, it has taken unsold sandwiches off its shelves and, rather than discounting or dumping them, distributed them to shelters and food banks. Pret doesn’t talk much about this at all. It continues to position on fresh, handmade food instead.

I can give you another example from Rock Content itself. The company was founded “to make marketing better while having a positive impact in the world” and stands for a marketing that is a force for good, inclusive and that exists primarily for the benefit of others. 

To “make marketing better” means connecting brands with the best creative talents, adding work opportunities, providing support, educating new marketers, and sharing free digital knowledge.

Rock Content commits to donating 1% of its equity to be invested in grassroots activism and social impact initiatives and encourages employees to be a force for good by donating 1% of their work time (at least 3 days per year) to give back to the community. 

We rarely promote our social impact initiatives; the launch of the annual social impact report probably represents one of those few cases.

Properly used, brand purpose is a powerful way for businesses to think deeply about what their impact on the world is. But again, it can’t (and it shouldn’t) be used merely to create an illusion of social responsibility or, even worse, as a way to boost company profits.

References:

Peter Field makes strong case for potential power of brand purpose campaigns: https://ipa.co.uk/news/power-of-brand-purpose/

Criticism of brand purpose is ‘naïve and unjustified’, claims Peter Field: https://www.marketingweek.com/peter-field-criticism-brand-purpose/

Good purpose, bad purpose – Mark Ritson on Marketing Week: https://www.marketingweek.com/mark-ritson-good-purpose-bad-purpose/

Brand purpose & brand signalling: https://www.linkedin.com/pulse/being-purpose-led-rather-than-signalling-kate-smith/

Hmmm, Danone: https://nickasbury.substack.com/p/hmmm-danone

In defence of brand purpose…sort of: https://slightlyrandom.uk/blog/in-defence-of-brand-purpose-sort-of

A Friedman doctrine – The Social Responsibility Of Business Is to Increase Its Profits: https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html

About brands and the Ukraine-Russia conflict: https://www.thedrum.com/news/2022/03/01/media-agencies-struggling-keep-brands-advertising-around-bleak-ukraine-news-cycle https://www.businessinsider.com/advertisers-are-avoiding-hard-news-during-russia-ukraine-war-2022-2?r=US&IR=T