The Business About Boycotts, Read Hearing, and the Greatest Show on Astroturf

Football is back, and that means more than simply trash talking friends’ fantasy football teams. Nike unveiled an ad campaign featuring former NFL player Colin Kaepernick, who has become a divisive figure after kneeling during the national anthem as a form of protest in 2016. The ad campaign sparked an uproar, including a call for a boycott on Nike products. While videos of people burning Nike shoes and cutting off the logo of socks have filled Twitter feeds and news channels, this issue extends beyond one particular company and issue, as there is a growing prevalence of corporate boycotts in the U.S. Here is what you need to know about the business of boycotts before you find your company on trial in the court of public opinion:

• How did we get here? As we have discussed in previous editions, frustrated with Washington politicians and the broken governing process, some companies have taken on the role of activists, taking political stances to sell their products. A recent CapX article applauded companies for being a moderating influence and pushing society forward “one pair of trainers at a time” in what it calls “woke capitalism,” but this type of activism exposes business interests to fraught political and reputational peril. Companies are facing pressures to engage in issues detached from their business and core values, which has led to boycotts from angry customers who hold opposing views. “The great age of boycotts” has arrived, enabled by social media and urging people to boycott companies such as Starbucks, Dick’s Sporting Goods, New Balance, and most recently, the New Yorker Festival.
• What Are The Threats Facing Companies? Boycotts themselves do not alienate customers and hurt a company’s bottom line. Rather, it is what led to the boycott in the first place – the company’s actions, statements, or decisions that offended its core customers and fell outside of what a key segment of the customer base believes or thinks. Nike’s market cap tanked $4 billion in one day following the launch of the Kaepernick ad campaign, and while some of their young, hip customers with disposable income may approve of the campaign, other customers who purchase Nike products were taken aback by the campaign because it did not match the values they thought they shared with Nike. For a boycott to cause lasting brand damage, the offending action needs to offend a meaningful number of people, and time will tell what the impact on Nike will be. Companies can also find themselves the target of wrath even for long-time business practices. California Democrats are attempting to spread a boycott of In-N-Out Burger over its donations to the California Republican Party, but it has backfired because the fast food company has a long history of donating to both Democratic and Republican organizations. Even so, whether purposefully taking on the role of activist or not, a company’s actions will reflect on them, and standard business practices are now vulnerable to political pressure from activists – meaning that firms need to be prepared with an effective response to ensure outrage does not spread and grow over time.
• How Can Companies Protect Their Reputations And Interests? Mixing business with politics is risky. Companies need to proactively determine how they will engage issues and have a plan in place for when they find themselves under attack. With today’s digitized activism, boycotts can go viral on social media in one day, such was the case with #BoycottNike. Described by The Wall Street Journal as “pseudo-boycotts,” today’s corporate boycotts are more about identity politics and posturing in the public arena  than truly changing an opponent’s behavior, making it more important than ever for companies to identify and understand their customers, and proactively prepare for when they find themselves in a public affairs challenge. Because while financial impacts of such challenges may not last or turnoff core customers, wading into politicized issues changes the nature of the business landscape in which a company operates.

Corporate boycotts show no sign of letting up, and indeed, their prevalence has even raised the specter that there may be too many boycotts, as #BoycottBoycotts has become a popular hashtag. Regardless of industry, companies will need to adapt accordingly, or face the consequences of a highly-public crisis.