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Intellectual Property Law

: ISinIP

Brand Assassins.

By thomason

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Businesses divide large blocks of time between building their brands, and managing risks. Crunch time comes when unforeseen actions give the brand a black-eye. The case is point is the F1 Grand Prix team of Renault, which like most motorsports teams, runs a car that resembles a rocket-shaped billboard. If you had to choose between the engineers and the sponsors, as to which group ‘keeps the wheels turning,’ it’d be hard not to choose the sponsors.

Consider that due to the massive audience for F1 racing, that the new-entrant Brawn team provided its sponsor with the equivalent of over $90M in TV exposure, because Brawn GP ran at the front of most of the early races. But, the sponsors can suffer when bad actors wearing the logos harm the team, and so too, its sponsors. The Renault team was managed by Flavio Briatore and Pat Symonds, and only a few years ago, won back to back championships. This past year, the team was not getting results. Some of the blame was shouldered by a young driver, Nelson Piquet, Jr. Mid-season he was let go, and unpleasantness ensued. Piquet reported to racing authorities that in an earlier race, he had been told to crash on purpose, so as to advantage his teammate. When the charges came out, Briatore went on the offensive with denials and threats of retributive litigation, and even criminal charges against Piquet.Then the FIA found probable cause, scheduled an emergency hearing to show cause why sanctions should not be imposed. Briatore and Symonds promptly resigned, and bans from the sport were imposed.

Three brands took hits, Renault certainly, but also its key sponsors, ING, the Dutch banking concern and Mutua Madrilena, a Spanish insurer. As a result, both pulled their sponsorship, and their logos were pasted over on the racing car and equipment.

The difficult thing about brand management is that many risks are not foreseeable. Renault employees [allegedly] caused the debacle, but even if they are fired, the brand still is degraded by the bad publicity. On a more basic level, employees can put up a youtube video, e.g., the pizza workers cheese-up-the-nose video, or might post to Facebook some story that may be untrue but still gets into the news.

Brand assassination can result from negligence, from devious acts, or can be the work of competitors or the displeased public. All the goodwill that is carried by a strong brand can be undercut, quickly. Even after the Renault incident was resolved by the racing authorities, Briatore continues action in court, which extends the negative press against the brands.

Without an risk management plan in place, a company’s trademarks and brands can get lots of unwanted public exposure, and can sustain damage that is hard to repair.

Full post as published by ISinIP on November 14, 2009 (boomark / email).