THE CALCULUS OF CONTROVERSY: Weighing the Pros and Cons of Taking a Stand.

Author:Wade, Jared
 
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THERE WAS A TIME WHEN COMPANIES went to great lengths to sidestep controversy of any kind. Most still do. But, increasingly, more businesses are playing with fire, viewing a successful leap through the flames as a means of enhancing their reputation and galvanizing a consumer base.

In September, Nike presented the most prominent example to date when the sneaker and sports apparel giant launched an ad campaign featuring Colin Kaepernick, the now-unemployed quarterback who sued the NFL claiming he was blackballed by all 32 teams after his on-field protests. Billboards and ads focused on Kaepernick's face and a simple tagline: "Believe in something. Even if it means sacrificing everything."

During his last active season in 2016, Kaepernick began kneeling during the national anthem before each game in silent support of the Black Lives Matter movement, protesting police brutality against black Americans. Many players followed suit, and a national controversy began as many critics condemned the protests, including President Donald Trump, who suggested the NFL fire players who kneel during the anthem. Kaepernick has not played football since, and before this past season, the NFL created a policy mandating that players on the field stand during the anthem or face possible fines.

The backlash against the ad campaign began immediately as #NikeBoycott pledges flooded social media, and financial fallout ensued. The Beaverton, Oregon-based company's share price fell by 3% the next trading day, equating to a $3.4 billion drop in market capitalization and prompting a CNN Money article to proclaim, "Wall Street seems to think Nike just blew it."

On the other hand, Nike was coming off a record-high stock price in June and generated $163 million of media exposure in the campaign's first three days, according to Apex Marketing Group. Online sales also jumped by 31% very soon after its debut, per research group Edison Trends, as the ad was hailed by everyone from world-famous athletes and celebrities to political activists and social rights groups.

Many marketing and public relations experts sang the campaign's praises as well. "If you look at what Nike did, the market initially reacted to that as something that was a mistake, but it was quickly evident from sales data that it was genius for Nike to take a political stance," said Adam Kleinberg, partner and CEO of San Francisco ad agency Traction. In fact, in December, Nike reported that its revenue for the quarter was up 10% over the year before.

TIMES THEY ARE A' CHANGIN'

The success of the Kaepernick ad can be debated, but the underlying question for companies thinking about taking a political stance is not complex: Is it worth it to design an intricate plan to walk through a minefield when they could simply stay out of it?

For those that choose to take a stand, the key factors usually center on today's changing consumer expectations, societal norms and demographics. Millennial and Generation Z look at companies differently than their parents did, and businesses are reacting to this reality more as...

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