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3Qs: What the Lochte saga can teach us about branding

Olympic swimmer Ryan Lochte lost all his major sponsors shortly after his scandal at the Rio de Janeiro Games went global. But, as The New Yorker reports, brands weren’t always so quick to pull the plug on athletes who misbehaved or broke the law.

clark_bruce_125We asked Bruce Clark, asso­ciate pro­fessor in the D’Amore-McKim School of Business, who studies marketing strategy and managerial decision-making, to weigh in on the changing nature of the endorsement economy. Here, he discusses social media’s effect on celebrity spokespeople; Lochte’s “second chance” to right his wrongs; and the inherent complexities of managing brand representatives in the digital age.

James Surowiecki of The New Yorker argues that Twitter, Facebook, and Instagram have expanded the reach of athletes who use these platforms well, making them more effective spokespeople than they would have been before the rise of social media. How, in your view, has social media changed the way that brands leverage the existing fan bases of celebrity representatives to build credibility and expand exposure to their products?

Brands hire spokespeople to try to get beyond the clutter of traditional advertising and engage with the spokesperson’s fan base in a more personal way. I agree with the article that the awareness and reach of athletes—and other spokespeople—has sharply increased in a social media age. One consequence is that it’s easier for lesser-known spokespeople and brands to find a broader audience if they provide compelling content. Campaigns built around a spokesperson can expand awareness for both the brand and the spokesperson. A big challenge is that all of this is happening at light speed. Corporate sponsors and spokespeople need to figure out how to jump quickly on good items and deal quickly with bad items. This is why some larger firms have invested in social media “command centers” to keep track of everything being said about their product.

Lochte recently signed a new endorsement deal with Pine Bros. Softish Throat Drops, whose CEO defended the partnership by saying that he wanted to give Lochte a “second chance.” What factors do you think this company considered before choosing to give him another shot? How much of a role might the severity of his offense in Rio have played in its decision?

When scandal hits a spokesperson, brands immediately have to figure out (a) how long-lasting it will be and (b) whether its customers and the larger world will care. Several of Lochte’s brand sponsors have repudiated him, and Pine Bros. has leapt into the breach. I have no private knowledge of what they were thinking, but they have an idea for a campaign built around forgiveness: “Pine Bros. Softish Throat Drops: Forgiving On Your Throat.” This is a potentially clever angle: Americans do love to forgive, especially if a celebrity appears genuinely remorseful for his or her actions, and Lochte certainly should be on his best behavior in the immediate future. As a lesser-known brand, Pine Bros. may also calculate that it has relatively little to lose by building awareness in this fashion—we are building Pine Bros awareness at this very moment in this Q&A. At some level, they must have calculated that the scandal will not be very damaging. I’m not sure I agree. Lochte appears to have actively lied about a criminal event and reinforced the theme of the Ugly American overseas. Depending on court proceedings and his ongoing status with U.S. Swimming or the U.S. Olympic Committee, this may last a while.

Studies show that millennials want to work for companies that align with their values. When it comes to who their spokespeople should be, how much stock do brands put in the beliefs and opinions of non-customer stakeholders, including employees, investors, or even regulators?

Companies are increasingly thinking through the values their brands represent, as can be seen in myriad corporate social responsibility efforts. Spokespeople are part of that overall message, and in a highly personal way. I’m not aware of statistics in this area, but I do think advertisers should be paying more attention to non-customer stakeholders. It used to be that a company mostly worried about its customers, and, in fact, sometimes there was some cache in having a spokesperson that your customers liked but others didn’t. The ease with which news travels in a social media age means it is now much more likely that non-customers will be aware of a spokesperson’s association with a brand. Employees and potential employees are especially likely audiences, as they are already aware of the company and have an interest in following it. Similarly, investors try to assess the impact of an endorsement deal on the underlying value of the firm. Regulators are only likely to be engaged if a company-spokesperson deal somehow crosses a line, e.g., a spokesperson makes unsupported health claims about a product.