when the power of branding is abused.

When the power of branding is abused: 9 examples we can learn from.

Austin Franke - November 4, 2019


Branding and marketing are powerful tools. We have all witnessed their power to influence our buying decisions, but abusing this power can severely effect your bottom line. Not to mention, It's just an asshole move.

The key objective of all branding and marketing is to build trust. When this power is abused, we feel lied to. Don't contradict your brand by making the following mistakes.

1. Charity is not a marketing tool.

Char•i•ty | \ˈCHerədē\ - Businesses pretending to help those in need so they can look good and make more money.

Whether willingly or unwillingly, this seems to be the definition of charity that some companies have written for themselves.

We are especially disappointed when a company manipulates our desire to make the world a better place, in order to make a profit. When a company tells us a good story about how they are impacting the world, we want to believe them.

Many companies genuinely feel they are making a difference when, in fact, they aren't. Other companies invest in charity out of a sense of obligation or guilt. Still others know exactly what they are doing and simply don't care.

"Purpose-driven branding" is the future. Companies are touting their target market's values in hopes of building brand loyalty, but what happens when companies don't follow through on these values internally?

Don't start a charitable business without the proper research.

Don't start a charitable business without the proper research.
If you owned a pair of Toms shoes before 2013 (which is probably most people who own them), you should be a little disappointed. Why? After TOMS commissioned an outside research team in 2010 to study the impact of their model on the poor, they found that their "Buy One, Give One" approach to poverty wasn't helping. Here's why:
* If you prefer a video, watch this clip from the never funny, but usually informative TV show, Adam Ruins Everything.

1. Shoes can't be eaten.
Electricity, malaria, and clean water are among many issues that far outweigh the priority of shoes. TOMS has been accused by its critics for using "poverty porn" (the tactic of showing the most extreme and rare cases of poverty) to distort your conceptions about poverty in Africa. The truth is, most villages in Africa don't have a shoe problem.

2. Investing in the local shoe economy is far more effective than giving out free shoes.
The idea here is quite simple. When you hand out free shoes, the local shoe industry isn't able to sell shoes. This inhibits a long-term sustainable solution to the shoe problem. Real improvement comes when you invest in local economies and local entrepreneurs.

3. When it comes to charity, services are more valuable than commodities.
You have heard the old adage, "teach a person to fish." That's essentially what the "Buy One, Give One" model is missing. Many "Buy One, Give One" models have emerged since TOMS that give money to local organizations that help support local economies, instead of handing out free commodities.

4. The "Buy One, Give One" model emphasizes the person helping over the person being helped.

This model assumes that poor people are helpless without us. But who are we if we have never experienced extreme poverty? What makes Blake Mycoskie, the Founder of TOMS (and former reality TV star), the expert? According to TOMS lore, he visited Africa and was struck by the shoe problem. "Visited" is the key word here, he never LIVED the shoe problem. Or the hunger problem.

5. TOMS makes a huge profit with every shoe they produce.
On average, a pair of TOMS shoes cost $60 to buy and $4 to make. This means that $52 of every shoe equals profit for TOMS. In 2014, Blake Mycoskie sold his share of the company for over $600 million. I want to be clear here. I don't believe that making a profit by solving societal problems is wrong. According to Harvard business professor, Michael Porter (Fortune magazine's "most influential business professor who has ever lived"), it may be the most effective way to solve societal problems. I will let you decide how much profit seems appropriate when you are solving a largely obsolete problem.

There's nothing wrong with buying trendy shoes. Just don't assume you're helping the poor by buying them.

How you can avoid this mistake.
TOMS waited 5 years before conducting research to find out if their company was having any impact. What if they had conducted this research in the beginning? There are plenty of resources out there that would have informed Blake Myscoskie that his business plan wouldn't be effective in helping the poor.

I encourage you to make a profit by positively impacting the world. Just make sure you are actually have a positive impact first.

TOMS has since changed their business plan. They have developed other products to solve more pressing problems and they now produce their shoes in some of the communities they serve.

don't profit off a crisis.

Don't profit off a crisis.
Nestlé makes billions of dollars bottling water it pays nearly nothing for. In Evart, Michigan, 2 hours away from the Flint water crisis, Nestlé Pays Only $200 to take 130 million gallons of Michigan’s clean water every year. Then they turn around and sell that water for $1 a bottle. Nestle bottles 4.8 million waters a day in Evart alone. In 2018, Nestlé gave 6.5 million of those bottles away to residents of Flint.

I want to be clear, Nestlé doesn't have an official obligation to support the Flint water crisis with free water, despite the fact that they are pumping clean water out of Michigan 2 hours away.

However, they have received a lot of backlash from Flint residents claiming the water giant is profiting off the crisis with an ad stating they still care about Flint when everyone else has forgotten. As a brand strategist, I agree with the critics. Imagine the recognition of a brand that has been giving you free water for years? What happens when that company stops giving you free water, and starts charging you? Your likelihood of buying their water once they start charging again goes way up.

I don't want to make the claim that they are intentionally profiting off of the crisis, but the positive benefits of giving away free water for a water company during a water crisis can't be overlooked.

How you can avoid this mistake.

What if Nestlé invested in the water infrastructure of Flint instead of giving away bandaids to the problem? What if they provided their free water without their name on the label?

If there is a crisis in your area, figure out the most effective way, within your means, to help the community. If you can do it anonymously, even better. A crisis should never be considered a marketing opportunity. I'll let you decide if Nestlé is guilty of this tactic.

2. Branding can ruin lives.

Don't put branding before the horse.

Don't put branding before the horse.
Fyre Fest is all the rage right now with Hulu AND Netflix documentaries highlighting the epic fail. If you have seen one or both of the documentaries, just skip to the solution.

For the rest of you who are wondering "What the hell is Fyre Fest?" You probably don't watch a lot of TV. Nevertheless, here is what happened.

Fyre Fest was a music festival on a "private island" in the Bahamas that targeted rich millennials. Billy McFarland, CEO of Fyre, wanted to throw an epic music festival to promote his company, which allowed the wealthy to hire famous musicians for private performances.

Billy brought on rapper Ja Rule (yea, he's still around) to promote and run this festival. How did they plan to run their first ever music festival?

Step 1: Invite a bunch of super models onto the island, film them, and have them advertise the festival on social media.

Step 2: Hire a juggernaut marketing agency.

Step 3: Pay Kendal Jenner $250,000 for one post to advertise the festival.

Step 4: Deceive investors.

Step 5: Sell insanely expensive tickets.

Step 105: Actually plan the festival.

That's right, McFarland put branding before the horse. By the time the festival rolled around? Billy McFarland had convinced 5 thousand people to pay between $500 and $15,000 a day for this...

Fyre festival grounds. Cheap tents are set up with trash everywhere.A picture of the food that Fyre fest attendees were served. Bread, cheese, and some arugula.

Not only did Billy McFarland deceive attendees, he left hundreds of local workers holding the bill and even asked one employee to perform a sex act on a local customs officer who was holding back water for the festival days before it began. Thankfully, the customs officer was a human being and refused.

This was not just some joke on rich millennials, watch this heartbreaking clip of a local restaurant owner who lost $5o,000 of her savings catering the festival. When the festival ended in disaster, Fyre never paid her for providing food to attendees.

Billy McFarland didn't end there. After the festival, he tried to scam attendees into buying fake tickets for events using the email list from the festival. One of these events was the Met Gala, which is invite only and doesn't even sell tickets.

How you can avoid this mistake.
If you don't want your company featured in a Netflix documentary, don't put branding before the horse. Product development comes first. In this case, Billy McFarland just had an island once owned by Pablo Escobar (which fell through since he advertised this fact after being told not to), a once famous rapper, and supermodels as a product. Not a planned festival.

A picture of Elizabeth Holmes holding a tiny vile of blood standing in front of a Theranos poster.

Don't brand an empty product.
Theranos is a startup founded in 2003 that claimed to have invented technology that required between 1/100 to 1/1,000 the amount of blood that was normally required to test for diseases and illness. It was the Fyre Fest of the medical field. Where does branding and marketing come into play? By using media to create the emperor's new startup, Elizabeth Holmes became the youngest self-made female billionaire in history.

In the end, Theranos would not only ruin Elizabeth Holme's life, but many patients are seeking lawsuits claiming that inaccurate test results from Theranos ruined their lives as well. One former employee and whistleblower of Theranos was even shunned by his own grandfather, a board member for the company, after refusing to believe his grandson.

Holmes started with a brand promise, really believing she could invent a product that delivered on that promise. Instead of spending time and resources on expert scientific advice that would have informed her that her brand promise was impossible, she manipulated investors and Walgreens to APPEAR that it was already delivering on this promise.

If you are interested in learning more, you have to check out the podcast, The Dropout and HBO documentary, The Inventor.

How you can avoid this mistake.
It's one thing to start with a brand promise. This is a great place for your company to start! The issue is when you don't know if your brand promise is actually achievable. Holmes put critical research on hold to raise capital using slick branding and design. She repeatedly fired scientists who told her the product wouldn't work and hired veteran brand strategist, Patrick O'Neill, as her Chief Creative Officer to boost the Theranos brand.

Part of this is on Patrick O'Neill. As a brand strategist, I refuse to work with companies that just want a slick brand facade without a valuable product to back it up. However, I wonder if Elizabeth's charm deceived O'Neill and even Erroll Morris (beloved documentary filmmaker) into genuinely believing in the ability of Theranos to change the world.

Regardless, the lesson here is to never brand an empty product. It will always come back to bite you on the ass in the end.

3. False claims will always come to light.

Don't lie.

Don't lie.
In September of 2015, the EPA issued a notice of violations that a "defeat device" was installed in Volkswagen's diesel engines. The agency found that Volkswagen intentionally programmed Turbo Charged Direct Injection diesel engines to only activate emissions controls when the engine detected emissions testing. This allowed them to pass U.S. emissions tests. They deployed this programming in 11 million vehicles worldwide.

On June 28, 2016, Volkswagen agreed to pay $15.3 billion to settle various public and private civil actions, stock prices fell 39%, and sales in the U.S. declined by 24.7%.

How you can avoid this mistake.
When you make false claims, they always come to light. The question is, are you willing to spend the money to make these claims a reality? Volkswagen wanted to compete with low emission diesel engines, but they didn't invest the money to actually do it. As a result, they lost billions of dollars.

Red Bull won't give you wings.

Don't assume people won't sue you for dumb things.
Ok, I wouldn't call this an example of abuse, but there is a lesson here. Words are important. This is a really silly example of how a playful tagline can cost you $13 million to settle a class action lawsuit. Everyone knows that Red Bull doesn't actually give you wings. Right? You do know that, Right? In 2014 Red Bull was actually sued for false advertising since the energy drink doesn't actually give people wings.

Yes, this is ridiculous. Red Bull thought so too when they released this statement, “Red Bull settled the lawsuit to avoid the cost and distraction of litigation. However, Red Bull maintains that its marketing and labeling have always been truthful and accurate, and denies any and all wrongdoing or liability.”

Why would someone bring a class action lawsuit against a company with a clearly exaggerated tag line? You might assume that some poor soul out there tried to fly after drinking Red Bull. Fortunately for humanity on the whole, you would be wrong.

This law suit was brought to fight energy drinks in general. After claiming that Red Bull doesn't give wings, the suit went on to talk about the real issue the plaintiffs had with the drink. Which was that Red Bull isn't as effective as a cup of coffee...

Here's their statement:
“Even though there is a lack of genuine scientific support for a claim that Red Bull branded energy drinks provide any more benefit to a consumer than a cup of coffee, the Red Bull defendants persistently and pervasively market their product as a superior source of ‘energy’ worthy of a premium price over a cup of coffee or other sources of caffeine."

If you believe you are entitled to $10 because Red Bull didn't give you wings (and you live in Canada), get that money back here. Please report back to me when you get that sweet cash.

How you can avoid this mistake
What can we learn from this?
1. Messaging is important.
2. People are dumb, but we have to take that into account.
3. The FTC actually offers guidelines that you can follow to prevent the same mistake.

3. With a great brand comes great responsibility.

BP Oil spill

Don't half-ass safety.
Most people remember the BP oil spill. Despite all the oil giant's efforts to suppress our memories with a new logo, the spill happened. On April 20, 2010 BP's oil rig, Deep Water Horizon, exploded in the Gulf Coast. 11 workers were killed (which doesn't get talked about enough), but the real scandal was the spill's profound negative impact on the Gulf Coast ecosystem. 4 million barrels of oil spilled over the course of 3 months. Louisiana, Mississippi, Alabama, and Florida were all effected by the spill. According to one study, in the end, the spill cost the oil giant $144.89 billion. This included expenses directly related to the spill, various fines and penalties to be paid, reimbursements and recoveries from other parties, securities‐related charges, and hidden costs.

What caused the spill? Faulty wiring in two places, a dead battery, and a bent pipe...
When your company can cause this amount of damage, you better be spending more money on prevention than anything else.

Bob Bea, an expert in catastrophic engineering failures and a former BP consultant who worked with them for decades, said the disaster was a "classic failure of leadership and management". In 2007 (3 years before the incident), he wrote them a warning stating "You still don't get it. Process safety is deadly serious and now you've turned it into a traveling road show." He blames a culture of "Every dollar counts" on the disaster and claims BP had a safety system known as the operating management system (OMS) that executives described as the "cornerstone" of their safety practices. This safety system (the cornerstone of BP's safety practices) was never applied in the Gulf Coast.

How you can avoid this mistake.
Look, I'm not a business management expert, I'm a brand strategist. I'm not equipped to advise you how to spend your money outside of branding.

What I do know is this. Adding value will always be the most effective branding fundamental. Before messaging and design, you have to have a quality product. You will have to make some sacrifices on quality to run a profitable business, just make sure those sacrifices don't kill 11 people and damage an entire ecosystem.

Save your money in the long run by investing in the right safety measures.

Don't skimp on security

Don't half-ass security.
Ya(who?) has failed to be relevant in decades. However, they aren't giving up hope just yet. Their latest attempt to turn the tables was a recent rebrand with one of the most accomplished design agencies in the world, Pentagram.

In August of 2013, Yahoo's attempt to be a player again may have contributed to EVERY SINGLE YAHOO EMAIL BEING HACKED!

Yup, that's right! If you set up a Yahoo email account as a tween, IT'S BEEN HACKED. If you are like me, and you set up a Yahoo account in college to trick Netflix into yet another free trial, YOU HAVE ALSO BEEN HACKED. If you are a baby boomer who set up a Yahoo account long after Yahoo was relevant because you still associated Yahoo and AOL with the internet, YOU HAVE BEEN HACKED.

Who was responsible? Two Russian spies, two hackers, and Yahoo President and CEO, Marissa Mayer...

It's insane that people don't know this! If you are one of these people, don't beat yourself up. Yahoo took 3 years to tell the public about every one of their email accounts being hacked because it threatened a Verizon buyout of the company.

For the whole story you have to check out the podcast, Breach! I binge listened to this thing in one sitting. The profound stupidity of Yahoo in their attempt to become relevant is staggering!

So here's what happened...

May, 2011 - Yahoo and Google are both hit by Chinese military hackers. Google makes the attack public, Yahoo doesn't.

July 2012 - CEO Marissa Mayer (Former VP of User Experience at Google and creator of Google's search interface) is hired and denies requests from her security team for additional security measures. Her reason? She didn't want to scare away the dwindling number of Yahoo email users.

August, 2013 - Every single Yahoo email account is hacked. Around 3 billion users.

February, 2014 - Yahoo, still hiding the hack from the public, hires security expert Alex Stamos as its Chief Information Officer. Stamos requests an automatic password reset for all Yahoo accounts, a standard procedure after a hack. Marissa Mayer denies the request, still fearing it will scare away email users.

Late 2014 - Yahoo is attacked AGAIN. This time 500 million user accounts are attacked.

September, 2016 - Yahoo announces the 2014 breach of 500 million users

December, 2016 - Yahoo announces the 2013 breach and affirms that every Yahoo account was hacked.

January, 2017 - Marissa Mayer steps down as President and CEO of Yahoo.

How you can avoid this mistake.
Customer acquisition can't come before corporate responsibility. You must take into account the impact your company has on your employees, stakeholders, and most importantly your customers.

Yahoo is also a cautionary tale of aggressive competition gone wrong. When you focus too much on your competitors rather than your customers, you tend to be blind to your customers' needs. In this case, Yahoo was so focused on keeping users from switching to Gmail, they sacrificed security.

Conclusion

Branding is the gut feeling a person has about your product or service. There are many ways you can cheat the system by artificially creating this feeling. However, when you are eventually exposed (and you always will be) for abusing the power of branding, you will loose money.

Business can change the world for the better, but only when added value trumps profit. By all means, make a bunch of money and grow your business, just do it by actually providing something your ideal customers want or need.

Photo of the Artifex Branding Founder, Austin Franke
ABOUT THE AUTHOR
Austin Franke is the Founder and Brand Matchmaker for Artifex Branding, a Milwaukee based branding firm specializing in brand strategy and identity design. When he's not working, you can usually find him in a Catholic Church, challenging social norms, or introducing his fiancé to his favorite films.
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