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Major brands like Harley Davidson, Lowe’s, John Deere and, most recently, Molson Coors, continue to take a step back from diversity, equity and inclusion efforts. In general, brands doing so is a shortsighted move that may hurt the brand in the long term as inclusion is necessary for growth, according to industry analysts.
The companies have been removing diversity quotas, required training efforts and DE&I executive roles as well as cutting ties with organizations like the Human Rights Campaign, an LGBTQ advocacy group. The shift follows boycotts against “woke” marketing efforts as well as pressure from a right wing activist investor, Robby Starbuck. The push for companies to walk away from DE&I comes amid softer consumer spending and earnings, which has made it easier for companies to do an about face in the name of the bottomline, according to industry analysts, who say the move is often coming from brands that were starting to dip their toe into DE&I efforts in recent years.
“An election year is when a lot of beliefs, values and policies are being discussed at the table,” said Audrey Chee-Read, principal analyst at Forrester. “Conservative activists are taking advantage of certain rulings, whether it be Affirmative Action or reproductive rights, that are being debated at a national level and bringing that into conversation with companies.”
Chee-Read continued: “This is all coming to a head as companies are also worrying a lot about consumer spend. So we’re seeing these headlines of price sensitivity, layoffs and things like that. So it’s actually a good excuse for companies right now to use it as an excuse to, ‘Deliver things that impact the bottom line,’ when in fact that’s very shortsighted.”
Some of the brands that have pulled back cited a need to focus on the bottomline. In an internal memo obtained by CNBC, for example, Molson Coors execs said that the company was “ensuring our executive incentives are tied to business performance and do not include aspirational representation goals beginning next year.”
Others seem to be conflating DE&I investments as a political issue and a conservative value. Lowe’s, for example, cited the Supreme Court’s affirmative action in July as the time element in which it started reviewing its support structure for its resource groups, according to the Associated Press. John Deere — which seemingly never seemed to have firm DE&I policies doubled down on that strategy online, saying that it would audit training materials “to ensure the absence of socially-motivated messages,” CNN reported.
While the rollback of recent DE&I efforts may hurt long-term growth, according to analysts, who say that inclusivity is key to growth. According to a recent study by the Association of National Advertisers’ Alliance for Inclusive & Multicultural Marketing (ANA’s AIMM), 77% of consumers would either immediately stop purchasing or look to purchase other brands more supportive of their views. The same study, which surveyed 9,000 consumers, found that 76% would not go back to that brand or would only shop that brand again if it “changes its practices.”
“We want the industry to understand that inclusivity is undeniably tied to growth and that growth cannot be maximized without that inclusivity,” said Lisette Arsuaga co-founder of ANA’s AIMM.
For marketers feeling the pressure to pullback on DE&I efforts, analysts suggest finding a way to show C-Suite execs as well as investors that it may damage a brand’s reputation and have long-term impact on sales.
“Gen Z, millennials and younger generations, of course, and some older, are saying they are influenced to support a brand with their dollars when they see not just their own kind of cultural representation, but when they see the brand showing up for other cultures and communities in ways that they haven’t done before,” said Danisha Lomax, evp, head of client inclusivity and impact at Digitas. “If they’re going to choose between brand X and Y, the one that is inclusive in their representation and doubling down on their commitments, they’ll choose to spend there. … That’s the conversation [C-Suites and brand execs] need to be open to having with their investors.”
Of course, brand reputation is not just about sales. The pullback on DE&I efforts could impact talent retention as well as a brand’s fight for top talent, explained My Code’s Chief People Officer Marchelle Johnson Wright, as employees see a “correlation” between a company’s DE&I pullback and its internal culture.
Rather than thinking of DE&I efforts as just HR or marketing, companies that integrate an inclusive approach “adopting a ‘switchboard’ model for inclusivity — that is, where inclusive design, design for diversity and accessibility are integrated as a foundational philosophy, actively operating across departments — achieve higher revenue compared to the average brand on the S&P 500,” according to Marianne Waite, director of inclusivity, global lead at brand consultancy Interbrand. Companies like Adobe, Apple, Amazon, Disney, Google, IBM, Microsoft, Mercedes, Nike and Toyota were assessed as inclusive per the “switchboard” model, per Waite.
“You have to separate the noise from what your consumers actually care about,” said Chee-Read. “You have to understand where the fire is starting and whether it’s actually consumer-led or whether it’s led by a vocal minority and what it actually means to your brand. Knee jerk reactions might satisfy the moment but actually cost you more on the long term. [Marketers need to] separate noise from the reality.”
3 Questions with Nathan Louer, chief brand officer of juice chain Jamba
Jamba could be considered a regional brand, with the bulk of its presence in California. That said, how do you think about the media mix?
We’re on all the social platforms. Creator content is a big thing for us. Also, because of how visual we are, we’re even going back to doing some legacy marketing. I know billboards are a thing of 20 years ago, but I still think the right media mix, for the right areas with the right message, with the right product launch or value play, etcetera, I think there’s a role for a really nice robust media mix.
How does being regional vs national impact media mix?
We just have to be very thoughtful about that because our dollars are not where some of the national competitors are. Because we’re not a true national brand, we’re not just going out there and going to upfronts or NewFronts and getting nationwide contracts for this stuff. We have to be more surgical, so we’re doing things on a market-by-market basis. It’s a lot harder work for our team and our agency, but it’s the right thing to do for our franchisees.
Say more about that. What does it mean to be thoughtful to make dollars stretch in order to compete with national players?
I think of [us] as a challenger brand, even though we are the people that freaking invented this category. One thing that I’m really trying to implement here at this brand, something that I’m very familiar with — in fact, I got my career off the ground in this industry — is sampling and field marketing. We have to work as a brand a little bit harder than the rest to get our products in the hands of potential guests and even current guests to bring them back in more frequently. — Kimeko McCoy
By the numbers
As November’s election day approaches, influencers are playing a bigger role in politics and elections. Apparently, out-of-home (OOH) advertising is too, given political ad spending in OOH is at its highest levels ever, according to the Out of Home Advertising Association of America (OAAA) Q2 report. See key details from the report below:
- Digital OOH, which accounted for 34% of quarterly sales, increased 7.5% from a year ago.
- OOH advertising reached its highest quarterly volume in history, with a 3.4% growth in Q2 2024, totaling $2.78 billion.
- Digital OOH saw a 7.5% spike, with political ad spend quadrupling compared to 2020. — Kimeko McCoy
Quote of the week
“We’re still not very trustful of it, or it’s still not solid enough, where there’s still not a need for a human eye to comb through and make sure that it’s on brand that.”
— Kristin Wanek, vp of operations and client strategy at Stealth Venture Labs digital marketing agency, when asked about AI creative tools.
What we’ve covered
- Meet Judge Leonie M. Brinkema, who’s overseeing Google’s second antitrust case
- DOJ vs. Google: The arguments for and against the defendant’s (alleged) ad market monopoly
- How the elections are shaping influencer marketing, from brand strategies to social media spending
