The Death of a Brand

There is an old saw in marketing and public relations that if you don't quickly brand your company's products and services the public will brand them for you. Whether that brand ends up being good or bad becomes secondary to the fact that you are not likely to ever get out from under the image the marketplace has provided.

The new adage we are likely to see adopted will say something along the lines of, "When the president of the United States starts bad mouthing your brand, it's not going to survive."

AIG's predicament will be studied for years to come in marketing and communications classes. When the company decided to pay out millions of dollars in retention bonuses after seeking billions in bailouts from taxpayers, there was probably nothing the greatest crisis communications expert in history might have ever done to manage the situation. AIG's first step was to insist that it had contractual obligations to pay and this is factually correct. The company had signed deals to keep critical employees in the competitive financial products division. However, the people getting these bonuses are precisely the same individuals who created the nonsensical derivatives that turned America's economy into a stick of butter in a microwave.

If you were consulting the company and were sitting in some of those meetings after the public had learned of the bonuses, what might have been your advice? According to most reports, the checks have all been delivered, even to several people who had already left AIG. The source of the company's money, even though it came from taxpayers, seems to be irrelevant to the legal obligation to pay the derivatives traders. AIG executives had a choice to violate a contract and not pay or to anger the taxpayers who had just given the company a hand. Had they refused to pay they were almost certain to have lost every court case filed against them for contract violations.

The morally correct decision would have been to not pay and then consult with legal advisors for the company and immediately begin discussions with Washington. There may have been job performance language that would have enabled a refusal to pay based upon the failed derivatives markets. Unfortunately, no one had the foresight to make those choices and now the company is faced with a firing squad on the left and a gallows on the right. There is nowhere to turn that does not suggest an ugly fate. There's no spin to be spun.

There is talk in Washington of designing a tax that speaks directly to the bonus structures of these traders in an attempt to return the money to taxpayers through a circuitous route. In one of the bailout bills coming out of the capitol, there was also an amendment that would have prohibited the paying of these bonuses or at least would have taxed them at a level that net profits to the failed derivative traders would have been minimized. The amendment was mysteriously stripped from the bill so nothing has happened preventively, and AIG is doomed.

There is, quite frankly, nothing a crisis communications expert can do to mitigate AIG's situation, which is why you have seen the company and its executives remain decidedly silent. First, they run what amounts to one of the world's greatest financial scams and help send the U.S. economy into a state of collapse and then they ask taxpayers to save their company because it is so important to America and the world that it can't be allowed to die and then they use that bailout money to provide bonuses to the precise individuals who drove the company and the country off a cliff. How can that be fixed, either in reality or perception?

It can't. No matter what a communications expert advises an AIG executive to say, it is too late; actions have outstripped any ability to undo harm. Anything anyone says will be a bit like what Texans describe as "puttin' earrings on a hawg; there's some ugliness there ya just can't hide." Consequently, AIG is dead. The company may continue to exist in some form but the brand must disappear. AIG is a brand that will forever belong to the company that screwed up the economy and then used taxpayer money to give bonuses to the screw-ups. That is their brand through eternity. They will never get out from under that nor will they recover from a president saying bad things about their decisions.

RIP AIG.

Also at http://www.moorethink.com

Comments

[EllaBee]

I work in public relations and watching this mess has really caused me to think about how to handle your image/brand during a crisis. I was just thinking how this situation will be taught in PR case study classes. Great point.

[langej]

Nor can a brand (or any business) survive when every politician, both Republican and Democrat, calls for its contracts to be unilaterally abrogated at will.

It was hard enough to trust AIG contracts when they were just in financial trouble - now that the government owns 80% and seems willing to sway with the wind of public opinion, AIG contracts are not worth the paper they are printed on.

Sell. Large.

[rf dude]

Indeed - Google " Ayds ".
--

[CTC123]

Consider the Connection to:
Arrogant. Irresponsible and Greedy (AIG)
The miss-use of taxpayer money, to build a house of cards.
Taxpayer money should be used to build a strong economy!!!
Please visit: www.hattiesburgamerican.com
Screen name CTC123 PROFILE-PH­OTOS-BLOG-­COMMENTS

[DickieD]

I wish there were some way to black list the executives of AIG who have caused this mess. They should not be allowed to hold any job in the financial sector for the rest of their lives. not even that of a teller in a small town bank.
Now, having vented, nobody seems to be talking about the real problem that this fiasco illustrates. NO COMPANY SHOULD BE ALLOWED TO GET SO BIG THAT THEY CAN JEPORADISE THE WELL BEING OF THE COUNTRY. With all of the mergers and acquisitions that have occured in the last 25 years, the economy is walking a tight rope. What ever happened to the anti-trust laws.

[twincats13]

The anti-trust laws went the way of the dodo somewhere in the Reagan/Bus­h41/Clinto­n/Bush43 years when it was known as "government regulation" and regarded as evil.

[mickeydougal]

I know I'll get trashed for saying this. But let's not forget that a whole lot of people took out mortgages that they could not afford. Many of them had to lie on their applications to be able to qualify. The couple that bought my house in 2006 was already struggling to pay a $900 per month rent with 5 jobs between them. Their mortgage payments would START OUT at $1150 dollars per month. You don't have to be a financial genius to see that's not going to work! They've since been foreclosed on and the house is vacant.

The point here is that blame lies at both ends of the spectrum, not just the lender, but the borrower as well. This couple is typical of many. They simply got into something they should never have entered into, and it has bitten us all. They weren't forced, they just made bad choices. I feel sorry for them, but they need to take their share of the blame for their problems. This is the problem in this country, we want things we can't afford, so we just borrow up to our eyeballs, all the way from the individual level up to the govt.

[patricksmom]

Mickeyk,
If this crisis were only about people taking on more mortgage than they could afford it would not be a crisis. The crisis came out of deriviatives and ponzi schemes.

[den1953]

The only way to stop greed and corruption is to stop feeding the sharks soon they will dry up and die, point is no matter what happens to AIG there basically done there are to many other good insurance companys out there. The trouble with insurance is they want to make money but they are hard to pay out legal claims which should bring regulators of insurance companys to the front of the problem no one regulates them. On top of all this economic turmoil is you have insurance , banks, big oil all contibuting to politics, old addage money talks BS walks. Something needs to change with our political system and give the chance for anyone to compete in politics!

[traveler501]

unfortunately, as I read this...all I could think of was Arthur Anderson....a little time, a new name, maybe a spinoff or two...presto! back in business...*sigh*

[alumtrix]

The enitre time I was reading through this story, all I could think about was Fannie Mae, Freddie Mac and our Congresspeople. I really don't see a whole lot of difference between any of them. We've got Freddie and Fannie NOW getting their bonuses on top of those sitting in office backing them up and saying their business was sound. There's lots of money flying around in all of these businesses whether it's campaign donations or bonuses. The auther failed to mention that Chris Dodd had an amendment in the bailout that made these bonuses legal but now claims that someone sabotaged it and changed it. And that Dodd was the recipient of the largest campaign donation from AIG of anyone in Congress. Like they say, "follow the money".

[patricksmom]

Hey alum,
While there is blame to go around, massive deregulation and greed that was championed by Raygun and continued since then has allowed financial services companies (some) to put our country on the brink. Get with the program and look at facts.

[ObamacratInCA]

This is fixable. The CEO needs a backwards baseball cap and some sunglasses. Michael Steele has expertise in hip hop makeovers. They need to talk.

[rich misty]

The sad thing is that the taxpayers will have to come up with the money for the funeral.

[gr8ness]

Well done. Very interesting.

[anothervoice2]

Blackwater became Xe.
AIG becomes Ze?!!

[jackwaddington]

Mr. Moore, The reality here (that no-one seems to have caught onto) is that money and the cloak money hides under: economics) is what is in collapse. There will be no studies needed to see why it all fell apart. It was a symbol to start off with and was supported with theories cunjured up by economist who were soley trying to figure how money would circulate. That is/was tantamount to fortune telling. We've come to the end of the road and what we are now going to have to devise is how to transition to a world without this insane symbol , money.

There are ways and they were thought out/through some centuries ago and have been resuscitated several times since then, but the capitalist, via economics, kept tweaking it till it finally collapsed of it's own weight--ignorance.

[kahapeterson]

So does anyone just turn up to work and do a good job without a "bonus"? Or is that old fashioned?