The dark, rumbling clouds of war are moving rapidly from the east towards European skies, while the corporate debate over brand purpose is reaching new heights: should companies take sides and support Ukraine? Or should they remain silent instead?
Yes. Here we go again. Another post about brand purpose. If brands mom database cannot contribute something positive to the current situation, they should shut up and leave the work to those who can. The debate is raging.
The fact is that the more time passes, the more I see this noisy race of brands trying to find or create new socially acceptable and ethically sustainable purposes.
The (unjustified?) stir generated by Peter Field ’s IPA talk on brand purpose at the end of 2021 is a sign of the heated debate currently taking place across most marketing channels.
However, I can't help but smile every time I hear phrases like: “ Our audience needs to understand our brand's new purpose ” or “ It's time to rethink our direction .”
If you didn't have a brand purpose until today, and you still have a successful business, why should you think about a purpose now?
Field’s analysis, which draws on IPA’s effectiveness database and focused primarily on B2C brands, showed that marketing campaigns geared toward a brand purpose were significantly less likely to generate long-term negative business effects compared to traditional purpose-less campaigns.
Field then went back to the data and selected those brand purpose cases that worked best. If these campaigns were targeted at companies without a brand purpose, the study found, they would bring positive results rather than problems in public perception.
As you can imagine, very few were convinced, as defining a clear brand purpose seems like muddy waters for many.
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 implementing brand purpose campaigns, both to engage their own employees, stakeholders and investors and to drive customer sales. When done well, when it’s genuine and credible, brand purpose can be very powerful.”
The case of Peter Field's research is just one sign of a much broader conversation and the need to consider a paradigm shift.
Companies that have done business, more or less ethically, with more or less success, over the past decades, are now suddenly discovering that having a brand purpose could help increase their profits, especially within the new generations of consumers (millennials and Generation Z ), who are attracted to brands that put purpose at the heart of their content effort, definitely more than my generation.
Byron Sharp, author of How Brands Grow and now one of the most influential marketing academics, has criticized the widespread adoption of social purpose , arguing that it could lead to brands becoming too similar and undifferentiated.
So if the marketing community is successful in teaching consumers that they should only buy brands that donate to charity or are considered good for the world, all streams can easily take over in a very undifferentiated world.
Instead, marketers should be more self-confident and believe in the good that marketing does in the world for its own sake without seeking a higher purpose, he argued.
Faced with this difference of opinion, Kate Smith , a strategic marketing consultant, seems to have a fairly coherent answer: “The problem is not the purpose per se. The problem is how the purpose is developed and used. Is it being used to define what the company does and how it does it, or is it being used simply to create an illusion of social responsibility or simply as the basis for a campaign aimed at millennials.”
“The problem is not purpose per se. The problem is how purpose is developed and used.”
Kate Smith
The race to a purpose-driven brand didn’t start last year with Field’s speech, of course. In 2019, Unilever’s CEO published a report showing that the group’s brands with a clear, articulated purpose were growing much faster than the rest of its businesses.
At the time, the company committed to a future in which “every Unilever brand will be a brand with a purpose.”
Here’s what CEO Alan Jope had to say: “We believe the evidence is clear and compelling that purpose-driven brands thrive. In fact, we believe this so strongly that we are prepared to commit to making every Unilever brand a purpose-driven brand in the future.”
Brand purpose: just appearance or the core of the business?
Today, many brands already have a clear purpose, but is this genuine and associated with their way of acting? There are controversial cases in this regard.
My list is not comprehensive, but it still provides a good overview of companies that are adopting a brand purpose model and the discrepancy with real facts.
Google
“Our mission is to organize the world's information and make it universally accessible and useful.”
Google won't disclose its own revenue or profit figures by country .
It has also not shared its plans for a censored search engine in China . On the other hand, Google+ (social network) has been closed after a data scandal.
And this could be an endless list.
Finally, almost all US states (paywall) and European countries are now investigating the company for anti-competitive behavior in its advertising business.
Volkswagen
The Group's goal is to offer attractive, safe and environmentally friendly vehicles that can compete in an increasingly tough market and set global standards.
Volkswagen then intentionally programmed its turbocharged direct injection (TDI) diesel engines to activate their emissions controls only during laboratory testing, resulting in production vehicles that met U.S. standards but emitted up to 40 times more poisonous toxins in “real-world driving.”
The folks at Volkswagen implemented this software in approximately 11 million cars worldwide from 2009 to 2015. These toxins were partially responsible for the death or disability of hundreds of people.
Volkswagen itself continues to insist that although the eight million cars sold in Europe were fitted with defeat devices, they were not required to pass EU emissions tests and it has therefore not committed any offence in the EU.
Siemens
Siemens' purpose is "Be 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 largest corporate corruption investigations in history when it agreed in 2008 to pay around 1 billion euros in fines and penalties following investigations by US 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 achieve greater diversity on corporate executive teams.
The US government claims, however, that State Streets pays female employees and people of color less than white men (paywall).
Specifically, State Street discriminated against 305 top black female employees by paying them less than men in the same positions and agreed to pay $5 million to settle allegations by the U.S. Department of Labor.
grayscale photo of statue of man
The fearless girl from State Street
Audi
Audi spent millions on a feminist Super Bowl ad in 2018 that proclaimed: “Audi of America is committed to equal pay for equal work.”
In the ad, a father watches his daughter in a downhill car race and wonders if she is being judged based on her gender.
At the heart of the announcement is whether she will be paid less than a man, despite her talents. But… Only two women sit on Audi’s board of management (it was zero, until a few years ago), and its 14-person American executive team has only a few women.
In its press release for the Super Bowl ad, the auto company said it was publicly committed to supporting equal pay for women and noted that half of the candidates for its graduate internship program must be women.
Rather than avoiding the conflict, Audi has responded to the negative comments by drawing even more criticism .
BP
“Our purpose is to reinvent 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 in traditional oil and gas.
Whether or not BP will follow through on these promises remains to be seen, but we’re not holding out too much hope . “While BP’s advertising focuses on clean energy, in reality more than 96 percent of the company’s annual capital expenditure is devoted to oil and gas,” said Sophie Marjanac, a lawyer at ClientEart .
Mondelez's Cadbury
Mondelez's Cadbury launched a new brand purpose in 2018, to “shine a light on the goodness and generosity we see in society” and relaunched its global brand positioning as a “family brand founded on generous principles.”
But... Cadbury manages to pay zero corporation tax for the eighth year running. The company reported a 740% increase in profits for the year to 31 December 2017, with turnover rising from £1.65bn to £1.66bn.
In recent years, Cadbury's corporate owners have consistently managed (legally) to avoid paying any corporate tax.
Alex Cobham, who heads the Tax Justice Network, says Mondelēz regularly engages in "financial engineering which is very sad given Cadbury's long history of working to create value in the communities where they work".
Starbucks
“Inspiring and nurturing the human spirit. One person, one cup and one neighbor at a time.”
Starbucks tells us that its brand purpose is to build community while doing everything it can to minimize its tax payments .
In 2017, Starbucks paid just 2.8% in taxes .
And what do Nike, Zoom, FedEx, Salesforce, Verisign, Xilinx and many other brands have in common? According to the Institute of Economic and Tax Policies (Itep), they paid $0 in Federal Taxes in 2020 .
Should we mention Netflix?
Netflix continues its tax-dodging streak , reporting an effective federal corporate tax rate of 1.1% 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 are facing pandemic-related challenges, Netflix is among the large corporations that are profiting handsomely from the shift in consumer behavior.
However, its UK-generated sales and profits are shifted elsewhere and many are asking whether 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 has (legally) avoided about $5.2 billion in federal corporate income taxes since 2018, despite receiving generous state-level subsidies.
However, I'm not going to waste your time (and mine) on Amazon: an entire book or a series of documentaries will not be enough to list all of its controversies, from poor working conditions to environmental impact... from social challenges to opposition to trade and unions, and then privacy violations, antitrust issues and all sorts of scandals that the company continues to perpetrate .
As Bob Hoffman wrote some time ago: “Taxes may be unpleasant. But taxes are by far the most powerful source of resources for societies to correct social ills. Taxes fund education, housing, health initiatives, social programs. When corporations take extraordinary measures to avoid paying taxes, they are causing extraordinary harm to the citizens who need it most…”
“When corporations take extraordinary measures to avoid paying taxes, they are doing extraordinary harm to the citizens who need it most.”
Bob Hoffmann
The thing is, it’s not illegal to pay zero taxes. But how can we as consumers trust all those powerful purpose statements, commercials, publications and promotions when we know, because we know, that they come from brands that are deliberately avoiding the basic pillars of supporting citizens and their communities?
And yet, there are some brands that are genuinely purpose-driven.
Think of Patagonia, for example, where purpose has always preceded products since its founding.
Mark Ritson estimates that “We [these purpose-driven companies like Patagonia] are about 0.2% of the world’s brands. The rest are commercially driven operations that aren’t necessarily bad and often take a responsible approach to packaging and other business challenges, but they’re not in a position to intervene on major social issues.”
Section of the Patagonia Activism website
Used correctly, purpose is a way for companies to think deeply about what they do, how they do it, and what their impact is on the world as a result.
They 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 done well, it introduces new dimensions to a category so that a brand can differentiate itself in ways it couldn’t before.
A well-designed and executed brand purpose brings a number of benefits that encourage, rather than distract from, profitability:
A more focused strategy with clear priorities. A clear purpose provides guidelines on what a company should and should not do.
Ability to attract and retain staff, and keep them motivated. The desire for more meaningful work (think 'The Great Resignation') will continue to grow, particularly among millennials. In the war for talent, purpose can be a powerful weapon
The ability to attract the best partners.
Increased interest and support from investors
Finally, we have brands that quietly operate with a purpose while choosing not to explicitly position themselves in it through their marketing.
For two decades, Pret a Manger has quietly provided jobs for homeless people and opened shelters for rough sleepers, and taken unsold sandwiches off its shelves and, rather than discounting or throwing them away, distributed them to shelters and food banks.
Pret doesn't talk much about this. Instead, it continues to position itself on fresh, handmade food.
I can give you another example from Rock Content itself . The company was founded “to improve marketing while making a positive impact on the world” and represents marketing that is a force for good, inclusive, and exists primarily for the benefit of others.
“Improving marketing” means connecting brands with top creative talent, adding job opportunities, providing support, educating new marketers, and sharing digital knowledge for free .
Rock Content is committed to donating 1% of its capital to invest in social impact initiatives and grassroots activism 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.
Used correctly, brand purpose is a powerful way for companies to think deeply about their impact on the world.