Marketing Doctor John Tantillo’s Winner and Loser of The Week
Winner: (The Rise of) The Planet of the Apes
Loser: Standard & Poor’s
This week’s winner is just a brief, tip of the hat in the direction of an esteemed movie franchise that is enjoying a brand revival.
I’m talking about Planet of the Apes, the 43-year-old classic sci-fi movie that has provided the “brand base” for this weekend’s James Franco picture: The Rise of The Planet of the Apes.
Bottom line, when you have brand that has legs and a Target Market that genuinely appreciates it, you have something that can last while also being able to change with the times.
The CGI magic of this summer’s movie goes far beyond what was possible in the original, but it was the fundamentals of the concept and story telling that allowed another quality movie to be added to this legendary franchise.
As you probably know by now, Standard & Poor’s, the ratings agency, downgraded U.S. debt, stripping it of its Triple A status. This has never happened before in our country’s history. It is a huge blow during these already tough times.
Standard & Poor’s argues that the government just wasn’t working fast or effectively enough to tackle our enormous debts and the downgrade was inevitable.
Well, Fitch and Moody’s, the other ratings giants, don’t think so –their Triple A’s are staying put.
But S&P was adamant about the move –despite the fact that a furious Treasury Department found a two-trillion dollar error in the company’s calculations. Here’s a company that’s essentially scolding the U.S. government for not watching its dollars and cents, missing trillions.
As one government commentator observed, the S&P move is a “facts-be-damned” decision.
I would argue that this decision came directly out of S&P thinking about its own brand and deciding to use this moment in history to bolster its brand position. Unfortunately, for the U.S. and for S&P this is terrible brand management because rash moves –even moves that seem in keeping with your brand— do damage.
Obviously from a brand perspective, a ratings agency must sometimes do things that upset governments and people. By following the rules and sound accounting and assessment protocols, there will simply have to be times when the verdict issued by a ratings agency will be painful. If this wasn’t the case, then the ratings agency would lack credibility and its brand would be diluted.
And this is where S&P’s problem actually lies. Like the other ratings agencies, S&P’s warnings and sound assessments were nowhere to be found before the global financial crisis. The crisis seemed to catch them as unawares as everyone else when they were the ones who should have been keeping watch. Not only that but the perception cast them as co-villains in the crisis, rubber-stamping financial instruments with their approval that ultimately didn’t deserve it. Let’s face it, these agencies were responsible for telling bondholders that bonds they held were essentially risk free only to have them default.
So the story of the last few years for the ratings agencies has been one of re-asserting their credibility. But the funny thing is, their business is such that despite the egg on their faces from the global financial crisis, there was no one else who could take their place. This meant that even though they didn’t deserve the credibility and the power, they maintained it. That’s why they’ve continued to wield power over the world and each new debt crisis has seemed to hinge on some new pronouncement from the ratings agencies.
This brings us back to S&P’s brand and it’s terrible move on Friday. Fact is, it looks like S&P was trying to repair its brand damage by unfairly inflicting damage on an obvious target –the U.S. is the prize trophy of the big game ratings world. And over the summer, the U.S. has become especially vulnerable because of all the attention to its deficit and financial situation –thanks in part to a dithering Congress and administration.
So the S&P basically had a vulnerable target in its sights with huge brand boasting rights. In one fell swoop, it looked like the company could restore its reputation for toughness and impartiality.
Wrong. Let’s ask a basic question. Why has U.S. debt never been downgraded before? There’s a reason and it goes far beyond our current deficit and difficulties: we’ve always paid our debts. I’m not an economist so I won’t go too far down the road of actually assessing U.S. debt, but after World War II our debt was more than 100% of annual GDP and we still kept our Triple A.
But, again, let’s stick to the brand strategy. Basically, S&P has gone out on a limb and is trying to look bold, courageous and truthful. But they will probably end up looking reckless and opportunistic and very bad at math.
As another Treasury official said: “A judgment flawed by a $2 trillion dollar error speaks for itself.”
Bottom line, S&P’s bad move might even bring the entire ratings agency edifice down. After all, many investors, corporations and governments are getting tired of the fact that they are forced –yes, forced—by legislation to use the services of these agencies in the buying and selling of debt and other financial instruments. Even after years of big mistakes and few consequences to these agencies (mandates still mean they’re paid even when they mis-rate).
This might just be the excuse everyone needs to re-examine the ratings agencies’ protected status.
So to sum up: yes, always keep your brand in mind, but never think that your brand can be repaired or re-positioned on the back of one big move. Brand development takes time and it is always founded on the core qualities of the kind of work that you do. For S&P and the other ratings agencies, this means simply getting consistently better and developing practices with greater integrity.
The general rule of thumb for financial gatekeeper brands is this: boring is good; exciting and unpredictable very bad.
And, remember, it’s always easier when you keep marketing and branding in mind.
TODAY’S TANTILLO TAKEAWAY – Brand damage can never be repaired in one fell swoop.