How do brands bounce back?

How do brands bounce back?

Please note this article was published in 2018. For up-to-date information on the coronavirus outbreak and how it's affecting marketers, check the Exchange homepage for the latest content.

The past few years have been marked by a series of high-profile mistakes from the world’s biggest brands: VW, Facebook and Apple. To varying degrees, each has been able to bounce back. Why is it that some brands are able to regain the trust of customers, when others struggle to recover?

VW: ‘Dieselgate’

In 2015, it emerged that around 11 million VW cars had been programmed to provide false readings during emissions testing. On the road, the vehicles emitted up to 40 times more pollutants than officially recorded. In other words, the world’s largest automaker had been systematically defrauding customers on a grand scale.  

Research conducted in the wake of the scandal suggested the emissions could have resulted in 45,000 life years lost to disease, disability or early death (DALYs) in Europe and the USA, with health costs estimated to be in the region of $39bn. Certainly, the group has paid a heavy financial price; estimates put the automaker’s legal costs relating to the scandal at around $30bn.

What it did next

VW began damage-limitation activities almost at once. A few months after the scandal broke, Germany celebrated 25 years since reunification between East and West. VW took the opportunity to place adverts in Sunday newspapers, pledging to “do everything to win back the confidence of its customers”.

Since then, it has invested in a major project named ‘Strategy 2025’ to electrify its portfolio of vehicles. Early indications suggest this goes far beyond marketing gloss: as of May this year, the group has committed $48bn to securing car battery supplies, and plans are in motion to outfit 16 factories to build electric vehicles by 2022.      

Meanwhile, the group has sought to remind the public of its long history, through a TV and online video spot featuring some of its classic models, beginning with the iconic Beetle.

And the indications suggest the car-maker is shrugging off the scandal, having almost doubled its operating profits for 2017. However, this throws up some interesting questions around public perception of scandals of this nature. Although the falsification of emissions is clearly dishonest, the public may not view it as a ‘critical’ issue, on the same level as build quality and safety, two areas in which VW cars are thought to excel.


A reckoning for Facebook

After a decade of eye-watering growth, Facebook has hit something of a blip. In the past 18 months, the tech giant has fought a running battle against one crisis after another – from the Cambridge Analytica data breach, to fake news and Russian interference in the US presidential election. 

In a matter of months, Facebook’s persona seemed to shift from a ‘gigantic but harmless’ social media platform, to the focal point for all society’s frustrations with digital culture. Moreover, threats by mega brands such as Unilever to pull advertising from the site mightily spooked investors, as advertising revenue is the platform’s lifeblood.

Any doubts about the scale of Facebook’s woes were dispelled in July, when the company suffered the most significant share price decline of any company in US stock market history in the wake of its worse-than-expected earnings report.

How it responded

In the wake of the Cambridge Analytica scandal, the hashtag #deletefacebook began to trend on Twitter. A survey conducted in April by Tech.pinions suggested 10% of US users had deleted their accounts. However, today, the platform boasts a staggering global membership of 2.23 billion monthly active users (as of mid-2018) – more than a third of the world’s population. As well as investing heavily in infrastructure, the company has stepped up its activities to try to rebuild the public’s trust.

At the start of this year, Facebook launched a cross-channel campaign with Wieden & Kennedy to champion small businesses, many of which use the platform as a growth tool. Elsewhere, Facebook sought to remind users about the journey of the business, emphasising the elements that made the platform so popular, while admitting some of the problems it has faced. This has been backed up with out-of-home executions in cities throughout the world, with posters proclaiming: ‘fake news is not our friend’.

Whether or not these measures will be successful in rebuilding the trust of users and advertisers, only time will tell, but this movement by Facebook to acknowledge its image problem is an interesting development for marketers.     


Apple: ‘Batterygate’

At the end of 2017, the most profitable company in the world was forced to make a rare admission of guilt. For years, consumers had noticed a ‘slow down’ in the performance of their iPhones that roughly coincided with the launch dates of new models. However, any suspicions that this was a deliberate ploy to promote sales remained unproven. Until, that is, data was published online by a third party that appeared to confirm that this was indeed a deliberate strategy, carried out by Apple through software updates.

Apple was forced to admit in a public letter to its customers that it was purposely ‘throttling’ iPhone performance and battery life to prolong the life of phones – although it notably denies this is to encourage users to buy new models. In a gesture to its customers, Apple has reduced the cost of replacing the battery in phones to around £25 until the end of 2018.

However, some commentators have pointed out that this falls far short of making amends, and that Apple, as the world’s most profitable company, should give batteries to customers for free. And it hasn’t prevented customers around the world launching a wave of lawsuits against the firm.  

The good news for Apple is that, so far, the crisis hasn’t hurt business -- far from it. This week, the business became the first public company worth $1 trillion dollars. However, it could be significant that sales of the new iPhone X rose by only 1% over the same period.

Perhaps the impact of ‘Batterygate’ hasn’t yet filtered through. But certainly, Apple faced accusations of duplicity, and many in its die-hard fan base felt betrayed.


The lesson for brands

Of the three brands covered here, Facebook’s crisis of trust appears to be the most significant. For a company with a business model based on the willing participation of the public (specifically, the ‘attention economy’), this is particularly concerning; unlike VW and Apple, Facebook cannot claim to manufacture a product that is fundamental to the economy, or how we live our lives.

The lesson for marketers seems simple: the way that a brand responds to a mistake is as – if not more – important than the fact that a mistake occurred in the first place. Organisations that take the opportunity to reassert brand values in crisis comms and reengage customers who might have lapsed over the years, will find that customers generally have short memories, and are willing to forgive and forget.

To achieve this, the business must work collaboratively across functions to ensure that everyone is aware of the situation – and the required processes – when does crisis does strike. After all, marketing can’t do its job if it’s not in the loop.


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