29 June 2023

Corporates should beware the sugar-rush of identity politics

By

For big corporations looking to signal their ‘values’ to consumers, the banner of identity politics has proven a remarkably snug fit. Rather than employing an expensive, well thought out advertising campaign featuring half-naked models or highly paid celebrities, companies can simply pump out platitudinous social media content about their steadfast commitment to women’s rights / gay rights / trans rights (delete according to which market they are operating in).

While corporate virtue-signalling might once have felt like a simple exercise, the ideological terrain has become altogether more fraught in recent years. Sure, brands can still generate the sugar-rush of quick publicity by jumping on a passing bandwagon, but they may turn off a sizeable chunk of their existing customer base if they do so.

The case of Bud Light is a salutary example. Its marketing campaign featuring trans influencer Dylan Mulvaney led to a widespread US boycott and a pronounced slump in sales that saw it lose its position as America’s best-selling beer. Cue a grovelling statement from a senior executive at parent company Anheuser Busch about how ‘we never intended to be part of a discussion that divides people’. Closer to home, the chairman of DIY giant Wickes prompted a similar backlash when he described gender-critical customers as ‘bigots’ and suggested they would ‘not be welcome in our stores’. The company’s share price duly took a hammering, with a fall of 7% in the space of just five days.

All of which will have left plenty of companies wondering if it’s worth their while wading into highly charged political issues. Increasingly, the answer appears to be ‘No’. According to a recent report in The Wall Street Journal, ‘finance chiefs and other executives have significantly quieted down in public settings about their environmental and employee diversity efforts’ with a refocus on their ‘operations’. What’s more, executives at US-listed companies apparently mentioned politically-associated issues 31% less in boardroom discussions than this time last year.

So what is the alternative? How can brands still support a societal conversation whilst minimising financial risk?

There are two options here: the economic route, or evolving the values-lead route.

In a world of rising bills and spiralling mortgage payments, the dictum ‘it’s the economy, stupid’ has rarely felt more apposite. That means that companies who can keep their offer focused firmly on the bottom line, while acknowledging the problems their customers face, can generate broad, deep good will while avoiding political pitfalls.

Take John Lewis, who recently made the decision to redevelop some of their retail space into a thousand rental homes to make inroads into the UK’s housing crisis. Or Deliveroo, who have provided millions of meals for food banks during the cost of living crisis and rising inflation rates. Such campaigns prove their value to the public through tangible contributions towards tackling problems, which is ultimately much more impactful than flimsy words and political statements.

That does not mean, however, that genuinely heartfelt and effective campaigns are no longer possible. Take, for example, the women-focused campaign by Sports England ‘this girl can’ which sought to build confidence in women to do more sport without fear of judgement, with great success.

But where companies still want to tread the narrowing ledge of values-led marketing, the current approach needs to change.

The key lesson is to stop chasing the latest trendy issue on social media – where nuanced debate has been increasingly crowded out by hyper-partisan activists and amplified American-style student politics – and return to the core values that their customers care about.

Take for example Cadbury’s endeavour to increase sales and support local economies by getting more people down to their corner shops, and providing prizes for them, with their ‘The Big Win-Win’ campaign. This type of campaign focusing on valuing local community, still engages everyday people in a more tangible way, whilst providing an opportunity to link to wider news agendas. But where there are difficult topics that still need broaching, better to act as a facilitator of conversation and reconciliation than picking one side over the other.

Whatever the issue, it is essential that companies try to understand the views of all sides, rather than assuming that Twitter is an accurate barometer of wider public opinion. Otherwise, as political debate continues to heat up and shows no signs of cooling, companies will keep finding out the hard way that they can no longer carelessly wade in without getting burned.

Click here to subscribe to our daily briefing – the best pieces from CapX and across the web.

CapX depends on the generosity of its readers. If you value what we do, please consider making a donation.