Target in June drew outrage for its Pride Month merchandise on display in its stores, which then devolved into harassment and intimidation against some employees. The backlash hammered its way into company earnings. Target reported that comparable sales during its second quarter fell 5.4% compared to last year, with the number of transactions and average check size declining in the quarter.
Following a similar boycott ofBud Light (BUD), which continues to suffer financially, companies face a volatile political climate and a tribal consumer base emboldened by the success of online campaigns that have damaged premier brands. The two companies now serve as cautionary tales within marketing circles of seeming to not know their audience and bumbling corporate responses in the face of fierce negative publicity.
“This speaks to the risk of treating all of this as a relatively shallow branding exercise,” said Alison Taylor, a professor at New York University, whose research focuses on business ethics and social impact.
Target in June drew outrage for its Pride Month merchandise on display in its stores. (Justin Sullivan/Getty Images) ·(Justin Sullivan via Getty Images)
Bud Light is still reeling from the conservative-led boycott in opposition to an Instagram post by transgender influencer Dylan Mulvaney endorsing the beer during the March Madness basketball tournament. Bud Light sales dropped more than 25% for the week ending Aug. 5, according to Nielsen data, with volumes tumbling nearly 30%. The attack on Bud Light, owned by Anheuser-Busch InBev, has also dragged down the company’s portfolio of beers. Shares have fallen 6% in the past six months while the S&P 500 (^GSPC) has gained 8%.
“No business has any interest in alienating half of their consumers,” said Taylor. “But because of extreme polarization, that neutral middle ground has become fraught. It is really difficult for companies to stay out of the fray.”
Companies targeted by these campaigns can make the problem worse too, she said, by appearing to back down, which then draws criticism both from the customers who oppose the actions and from those the brands were originally trying to appeal to. Bud Light and Target have stumbled into this double bind.
Bud Light, made by Anheuser-Busch, sits on a store shelf on July 27, 2023 in Miami, Florida. Anheuser-Busch InBev announced it will lay off hundreds of corporate employees as its Bud Light beer sales continue to struggle. (Joe Raedle/Getty Images) ·(Joe Raedle via Getty Images)
As executives in corporate America have studied the recent controversies, she said, it’s likely they will pursue a more cautious approach. But she pointed to Disney’s steadfastness against Florida Gov. Ron DeSantis, who signaled this week he is ready to end his feud with the company, as a different example of a brand sticking through conflict.
"Businesses are paying attention and I really believe the controversy with Bud Light led to Target," said David Johnson, CEO of Strategic Vision PR Group, based in Atlanta. Johnson said that when conservatives saw how effective their online messaging and organizing was against Bud Light, and how much traditional media attention they were pulling in, it motivated them to pursue other campaigns.
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Bud Light in particular, he said, was perceived as a right-leaning brand, not one typically associated with progressive values. The clash between public perception and a marketing effort to shift its brand identity fueled the backlash, he said. "If they are going to go down that route they need a coherent communications strategy of rolling it out and defining the stand that they took," he said. "They looked like they were reciting popular buzzwords on social media."
Several experts said that brands should be better prepared to handle politically driven attacks, and ready to defend and explain their diversity and inclusion practices in public.
One way for marketers to differentiate themselves is to layer in an ideological point of view that speaks to people’s values, said Americus Reed, a professor of marketing at the Wharton School of the University of Pennsylvania. Reed pointed to Nike (NKE), which has weathered political controversies, as an example of a company that knows its customers and has successfully balanced public opposition with an awareness of its own identity. "The theory is I might lose some people but the point is that net-net I’m going to gain more people not just because of the stuff I sell but because of the beliefs."
Another strategy for brands that want to embrace a more inclusive identity without sparking outcry from its more conservative customer base is to pursue media partnerships with established groups, said Matt Skallerud, president of Pink Media, which specializes in LGBTQ online marketing. While most organizations now connect directly with audiences online, that carries the possibility of immediate pushback. But intermediaries doing the outreach on behalf of the brand, and within their own dedicated communities, offer expertise, a buffer, and less risk, he said.
Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.