What Every Company Should Learn From Nike’s Pacquiao Response

This article originally appeared in Fortune on Feb. 25, 2016.

By Derek D. Rucker and Tim Calkins

When boxer Manny Pacquiao made anti-gay comments during a TV interview in the Philippines last week, Nike dissolved its relationship with him the next day, calling his comments “abhorrent.” It’s a sensible move for Nike— an aspirational and inclusive brand that doesn’t want to be pulled down into the mud of discrimination. But Nike’s decision to distance itself from Pacquiao raises a pivotal question every brand must ask about its external-facing image: Is it a good idea to use a spokesperson?

There are two ways to answer this question. Spokespeople provide an easy way to catch consumers’ attention and break through the proverbial boredom barrier in advertising that results from both an overexposure to advertising and consumers’ ability to tune out information. In today’s technological age, spokespeople can foster positive social media buzz and serve as means to personify a brand’s image and emotional appeal. Nike, for example, is about aspiration and performance, and top athletes are perfect symbols of these qualities, so it makes sense for the company to pair with athletes it thinks represent its core values.

But using spokespeople comes with risks. Put simply, spokespeople can engage in behavior that undermines the values and characteristics a brand wishes to embody. Pacquiao’s dissolution with Nike is just one example among many. A number of brands have found themselves in the wake of celebrity scandal. Subway suspended its business relationship after Jared Fogle was charged with having sex with minors and possessing child pornography last year. Dell terminated Ben Curtis in 2003 shortly after he was arrested on marijuana charges. And, in 2010, Gatorade, among others, severed its relationship with Tiger Woods as his infidelity blanketed the popular press.

In today’s modern era, the need for caution by brands is likely greater than ever before. This is not surprising for one simple reason: technology. Innovations in social media platforms have increased both the speed by which communications can spread and the opportunities for spokespeople errors. For example, in 2011, Aflac spokesperson and comedian Gilbert Gottfried tweeted jokes about the tsunami in Japan. He wrote, “I was talking to my Japanese real estate agent. I said, ‘Is there a school in the area.’ She said, ‘Not now, but just wait.’” The company quickly fired him. One inappropriate tweet by a spokesperson can be forever emblazoned and shared on social media. It provides consumers with a gateway to ask questions with immediacy, and consumers expect answers. 

How can brands balance the rewards and risks of spokespeople? First, diversify. Brands need to make sure their equity isn’t centered around a single spokesperson. When a brand has multiple spokespeople, or external communications without spokespeople, it can more easily severe a tie with a spokesperson.

Second, do your homework. Brands should invest ample time in knowing their spokespeople preferences and whether they align with their values. Of course, not everything is predictable (e.g., Tiger’s extramarital affairs), but the more a brand has vetted a candidate, the more it can guard against unwanted behavior.

Third, brands should work to build a strong, coherent, and transparent image. The clearer the brand image, the easier it is for consumers to realize when a brand has been misled by a spokesperson, as opposed to not caring. And if disaster strikes, despite best efforts, brands must get out in front of the storm, seek to get factual information about what happened and, once this is determined, share the facts. If the facts suggest a spokesperson’s image is no longer right for the brand, it should dissolve the relationship with speed and transparency. In today’s era, that means using social media to respond to and disseminate knowledge to the consumer.

Spokespeople can be powerful brand allies, but if not managed properly, they can be serious pain points. As a brand manger, the question to ask is how thorough a spokesperson’s risk assessment was, and whether that risk is worth the potential rewards. Because when a spokesperson and a brand align, the rewards can be huge—for both sides.

- Derek D. Rucker is the Sandy and Morton Goldman Professor of Entrepreneurial Studies in Marketing at Kellogg School of Management at Northwestern University. Tim Calkins is a clinical professor of marketing at Kellogg.