Early warning approach to brand risk management

On November 27, 2009, at approximately 2:25 a.m., a man drove his car into a fire hydrant. Initial reports notwithstanding, the driver sustained no major injuries and were quickly released from the hospital. Under normal circumstances, the accident might have merited a brief mention in the police blotter of the weekly community newspaper. But news of this particular accident made virtually every major newspaper, broadcast and blog in the world because the driver was Tiger Woods, golf’s most influential player and, arguably, the most famous athlete in the world.

Over the ensuing months, the Woods story unravelled with a series of disclosures about indiscretions and marital infidelity. The exposure of what New York Times columnist Frank Rich described as “the maniacally reckless life we now know [Woods] led” was a turning point in the world of marketing, triggering the meltdown of a seemingly unassailable personal brand and threatening the value of high-profile sponsors whose reputation (and integrity) was closely tied to his. Many of the top brands that featured Woods in their marketing efforts dropped Woods or significantly decreased their reliance on him in an effort to mitigate the damage.

The Woods situation vividly illustrates the phenomenon of brand sabotage and why brand stewards need to be more concerned than ever about unintentional, as well as deliberate, attacks on their brands. With a 24-hour news cycle and omnipresent social media that can turn even small blunders into public relations catastrophes, brand reputation is more precarious than ever, and even the most venerable brands are vulnerable. Developing capabilities to detect threats and respond effectively is key to making seemingly healthy brands truly resilient.

The Tiger Woods situation is not an isolated example. As social media and mobile technologies continue to embed themselves in our lives, brand sabotage incidents will undoubtedly increase.

Four areas may be particularly problematic when it comes to managing brand and reputational risk:

●Product safety and sustainability across extended supply chains, particularly involving outsourced components and third-party suppliers

●Disclosure of confidential customer information

●Inappropriate employee behavior, on the part of senior executives as well as front-line employees

●Disclosure of highly confidential information (as seen in the 2010 WikiLeaks revelations)

Building a great and resilient brand now requires playing aggressive defense, as well as offense. Building the capabilities to detect, respond to and recover from incidents of brand sabotage will increasingly be key to an organization’s marketing and risk management strategy.

Valuable brands can be vulnerable

Increased brand vulnerability seems paradoxical since it comes at a time when brands seem to be more valuable than ever. According to Millward Brown Optimor’s 2010 study “BrandZ Top 100 Most Valuable Global Brands,” the top 10 most valuable global brands account for almost $700 billion of value. The 2009 version of this study states; “... (in) global economic turmoil, when every key financial indicator plummeted, the value of the top 100 brands increased by 2 percent to $2 trillion.”

The most valuable brands would seem to enjoy strong relationships with their customers. But strong customer relationships depend on trust and “trust,” as the 2010 Edelman Trust Barometer notes, “is fragile.”Put another way, an untrustworthy brand is a vulnerable one, and every product defect, every incident of egregious executive behavior, every inadvertent disclosure of confidential customer information and every report about what companies say when they thought that no one was listening contributes to this vulnerability. It’s a short step from losing a customer’s trust to losing their business.

Start thinking like a counterinsurgent

Brands facing random assaults, anonymous enemies using unconventional, but lethal weapons, incidents of friendly fire, and other threats from insurgents may want to consider taking a page from the handbook written for military commanders to wage conflicts with real insurgents. The guidance in the United States Army/Marine Corps Counterinsurgency Field Manual FM 3-24 seems custom-made for brand stewards struggling to contain brand risks.

Deloitte has taken these actions and condensed them into a seven-step program designed for marketers and brand stewards who are ready to embrace and apply the principles of effective counterinsurgency.

Enlist volunteer army in detecting brand risks

Given the rate at which brand saboteurs invent new tactics and the speed at which news travels across globally-connected social media networks, it is unlikely that any organization can completely predict and pre-empt potential attacks. Nevertheless, a brand risk early warning system can be a powerful weapon in the fight against intentional and unintentional brand sabotage.

The explosive growth of online networks in the past decade has created a vast pool of collaborators who share news and opinions, create content and solve problems for free. We see crowd-sourcing at work at news organizations like CNN where we hear not just from CNN reporters, but also from amateur photo journalists via their iReports. Through iReport, anyone with a camera phone can report firsthand from the front line of news. CNN’s iReport has more than 753,000 registered “iReporters,” and iReporters provided much of the footage of the destructive earthquake and tsunami that hit northeast Japan in March 2011.

Like CNN’s iReport, crowd-sourcing can be part of a brand’s early warning system to create awareness of brand sabotage events as they unfold.

Listen carefully

PepsiCo launched Mission Control in April 2010 as part of a larger effort to kick-start sales of Gatorade, which had been on a three-year sales slide. According to an article that appeared in The Wall Street Journal in September 2010, “PepsiCo is trying to breathe new life into one of its most profitable brands by using Internet services to reconnect with teen athletes who snubbed Gatorade when it became ubiquitous — and uncool.”

The facility, located in a glassed-in converted conference room at Gatorade’s marketing offices in Chicago, is manned by four full-time employees who continuously track social media posts and “(produce) a consolidated picture of the brand’s Internet image.”

Mission Control also allows Gatorade to learn more about its customers and get a quick market pulse on new product and promotional ideas without having to rely solely on time-consuming traditional market testing methods. Just by listening, Gatorade is able to “bulk up production of its recovery drinks because of complaints they were selling out” or know “how the new products fare with influential groups” or respond to “Facebook queries such as when to use the new protein drink.”

Link listening to analysis and action

When it comes to early warning systems, the good news is that help, ranging from free services to customizable solutions, is readily available.

There are over 200 tools and platforms in the market for social media monitoring. Services in this nascent market are rapidly evolving from “basic brand monitoring tools to integral technologies that inform campaign measurement, market research, customer support, and sales enablement.”

Not everything that one learns from an early warning system will matter. Understanding “echoes” that come from repeating (or, in the language of Twitter, “retweeting”) content, assessing the true influence or clout of the individual launching an assault with a sharply negative comment, and disambiguating non-textual data and colloquial language are important ingredients in going from information to useful insights. This is also an area where advanced analytical capabilities can serve a major role.

Equally important, however, is a clear line of sight between the insights harvested from a brand risk early warning system and an effective action plan with well-delineated roles and responsibilities.

It’s what you do next that counts

Brand attacks that make it past early warning systems and strong defenses can provide companies with the opportunity to incorporate what they learn into the next generation of brand defenses. Often this requires evaluating what went wrong (and what can be improved) from the customer’s perspective.

Among the developments we expect to see on the rise:

●Integration of traditional and social media monitoring into existing enterprise resource management systems and risk management processes

●Use of advanced analytics to predict potential brand risks and proactively manage these risks

●Incorporation of brand risk management into an overall risk management framework

●Improved training for employees on brand risks and their role in reducing the likelihood of brand risks

●Better tracking of brand risk and brand value metrics, including incorporating these metrics in management and external reporting The battle between insurgent brand saboteurs and counterinsurgent brand stewards will probably only intensify in the coming years. But constructing brand defenses today may well help determine how resilient a brand will be tomorrow.

This article was contributed by Deloitte.