In 2016, everyone got political. It was a charged year. It turns out (and you can probably recall), major companies were far from shy in expressing their views this year. That brings up a very interesting question: do political statements hurt or help business? We’ll look at some survey statistics and prominent examples to craft an answer.
Public Opinion
In the last few years, extensive research has looked into how political stances affect businesses. Qualtrics and the Global Strategy Group have published some telling results. Across the board, Americans are 8.1 percent more likely to buy from a company that aligns with them politically and 8.4 percent less likely to buy from a brand that has publicly spoken against their political alignments.
While that already sounds like a compelling reason for companies to avoid politics, it gets more convoluted. Shoppers of an age between 26 and 35 raise each of those numbers by an additional 20 percent, indicating that political stances will be more important for consumers over time, and negative alignment is still the bigger factor in shopping decisions.
This gets scarier for businesses when you consider that no political platform has successfully polled for more than 50 percent of the U.S. population, making it almost impossible for a company to please the majority with a political stance.
The final, ultimate catch 22 is that 56 percent of Americans say that companies should be more politically active. These numbers suggest an unmanageable minefield for major businesses, so let’s look at some real-world examples.
Political Business Scandals
The heated nature of the 2016 election led to some harsh new boycotts from both sides. Whether the boycotts seem justified or not, the end result has been revenue losses for each of these companies.
First up is Kellogg. When they publicly pulled their advertising from Breitbart in protest against Trump, it ignited a war between the brands. The staunchest Trump supporters have completely boycotted the cereal maker, and while it won’t put them out of business, it has created a noticeable drop in revenue.
On the other side of the table, leftists have taken to social media attacks on New Balance. The shoe maker keeps all of its production domestic, and when asked, the CEO supported some of Trump’s plans to boost more domestic production.
If you look back farther than 2016, it’s easy to remember the protests against Chick-fil-A and Hobby Lobby. In all of these cases, the protests have not killed business, but they have hurt revenues. These examples also pale in comparison to the biggest player.
Apple Inc.
It’s been a rough year for Apple. Early in the year they took a strong stance against the FBI. Backlash was strong against the company, but they ventured further into the political arena through the summer and fall. Tim Cook became an avid opponent of the Trump campaign, and the company followed his example.
Their fight against the President-Elect was so staunch that Cook even issued a company-wide email after the election, consoling workers for the hardships of their loss. While it seemed a little ridiculous, the message spoke clearly of Apple’s position.
Despite the political forays, Apple has been the recipient of great fortune. Their greatest rival, Samsung, has all but imploded this year in the wake of exploding phones and a number of other major product recalls. With all of this happening right before the launch of a new iPhone, it seemed reasonable to expect big numbers for the year, and this is where we really get to see just how negatively politics can impact a major brand.
Despite sales circumstances favoring Apple like never before, iPhone 7 sales were down. The company is still profitable, but they have now posted three consecutive quarters of year-over-year profit declines. In their iPhone launch quarter, shares hit $1.67 as compared to $1.96 for the same time in 2015. This comes from a revenue decline that dropped from $51.5 billion to $46.9 billion. Ultimately the loss stems from a 5 percent decline in iPhone sales, despite all of the favorable conditions.
Final Verdict
Apple’s profits are still in the billions, and the other companies mentioned are still in healthy shape. Political statements alone are rarely enough to tank a business that operates effectively.
That said, despite the public’s desire for companies to be more political, it is a statistically dangerous prospect, and the biggest brands have the most to lose, especially when they bet on the wrong horse.
Regards,
Ethan Warrick
Editor
Wealth Authority
