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Brands and politics: Does joining the fray hurt or help the bottom line?

By Matt Wilson | Posted: December 3, 2012
Few people really need a reason other than appetite to enjoy a pizza, but on Nov. 16, a group that opposes President Obama's health care reform law had another, very different reason.

According to organizers, around 20,000 participants agreed to buy a pizza from Papa John's for "Papa John's Day" in support of statements from CEO John Schnatter's comments that the Affordable Care Act will force him to raise the price of the chain's food and cut employee hours. Groups who support the health care law (often called Obamacare) have threatened to boycott the pizza chain.

The rally around the Papa John's brand is similar to the one Chick-fil-A experienced after its COO, Dan Cathy, made controversial statements about gay marriage.

Fan-created events like Papa John's Day certainly help a company's sales for one day, but do they help in the long run, particularly since they result from divisive politics? Some experts say they just might.

Sea change?

"Chick-fil-A has confused all the experts by not only not experiencing severe brand damage, but actually benefiting in terms of sales, loyalty, and advertising awareness as a result of the controversy," says Gerald Baron, principal at Agincourt Strategies. "If Papa John's experiences a similar situation of seeing sales increases, we may very well see a trend developing. "

That doesn't necessarily mean all bad publicity is suddenly becoming a boon to brands, Baron warns. Lance Armstrong's recent troubles are evidence of that, but not all flare-ups have led to great harm.

The lawsuit over the meat content of Taco Bell's beef didn't seem to hurt it too much, nor did a YouTube video of Domino's employees behaving badly. (Taco Bell issued a statement defending its products, saying bluntly, "The lawyers got it wrong." Domino's fired the workers and issued a strong, albeit tardy, response.)

But what about socio-political stances?

"There is already some indication that some of similar situations where brands are put in a bad light and go viral are actually manufactured for the sake of gaining that exposure," Baron says.

Branding expert Rob Frankel agrees. The protests against Papa John's will only bring more attention to the brand that will "garner Schnatter and Papa John's free media, most likely worth millions."

"In this respect, the protesters are actually helping, not hurting the franchise," he says.

Risky business

Though Papa John's and Chick-fil-A may have gained some initial boosts in the wake of political statements from executives, Jonathan Bernstein of Bernstein Crisis Management says there are lots of reasons for executives to avoid rocking the boat.

"I think there are many ways that Mr. Schnatter could have expressed his political opinions without cheapening them by using a marketing ploy and risk alienating the majority of Americans who voted for Mr. Obama," he says. "The negative effects from his comments and tactics potentially outweigh the positive of fan-led events like the one Friday. So why take the risk?"

At least one chain, Denny's, seems eager to avoid such risk.

In the days after Obama was re-elected, one franchisee threatened cutting staffers' hours, as well as imposing a surcharge to customers, beginning in January 2014 when Obamacare takes full effect. The company's corporate office issued a statement that said the franchisee's opinion did not reflect that of the brand.

"We will continue to monitor the developments of the Affordable Care Act and any other legislation that may impact our team members, franchisees, employees and guests, and will do the right thing as individuals, as a company and as a brand," the statement says.

Frankel says Denny's probably did the right thing.

"By taking that tack, Denny's assures itself the time and rationale for taking appropriate reaction based on reality rather than demagoguery," he says.

Data vs. conviction

Tripp Frohlichstein of MediaMasters Training says people may be rallying around Papa John's, but he also has neighbors who have sworn off the pizza chain.

"Someone needs to try to measure if these things even themselves out," he says.

Baron says the partisan divide in the United States provides brand leaders an opportunity to benefit, however. What matters is whether they mean it.

"I suspect that both Chick-fil-A's COO and Papa Johns' CEO spoke on these matters because they matter and because they care about these topics," he says. "I'm guessing that neither one of these ultimately care that much about the backlash because they spoke out on something they believed in."

On the other hand, the Susan G. Komen Foundation ended up in deep trouble because it took one stand, then went back on it, Baron asserts.

Matt Wilson is a staff writer for Ragan.com.

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