Tragedy Marketing, A Highly Profitable Business Model
April 20, 2013. From PR Newswire:
Boston, MA. Adidas Inc. (NADDAQ:ADDYY) today announced record revenues for the month of April, sending its share price soaring. Sales of “Boston Stands as One” t-shirts have boomed (http://bit.ly/11z91xv), and because of incredible interest Adidas is extending the product line to include branded “9/11 Forever” branded T’s. Adidas will also donate 100% of the profits (author’s note: not “revenues”) to a charity that supports victims. This new business model is proving highly attractive to Adidas, who is expecting record profits in Q2, driven both by renewed interest for its brand and by a $627m reduction in brand marketing budget, down from $1.22bn in 2012. Asked whether slashing marketing spend would impact long term revenues, Hermann Deininger, Addidas’ Chief Marketing Officer, commented “Our marketing team has developed a new, highly effective social media marketing model that no longer requires traditional branding expenditures. Social media marketing, through the virality of our humble tragedy-related marketing activities, has allowed us to cut expenses significantly.” At the close of trading on the NYSE Adidas shares were up 12% as a result of this news. The company’s top executives are set to benefit handsomely: Erik Staminer, President of Adidas Inc., is expected to net an additional $4.2m from stock options. Asked whether he intends to contribute all or part of that gain to the Boston Marathon’s victims: “No comment. That’s a personal matter”.
Tragedy Marketing has been a boon not only corporations, but also to politicians. Massachusetts Governor Deval Patrick and Boston Mayor Menino’s ratings have both soared since they announced the formation of “The One Fund Boston”, which is seeking not-for-profit status to receive Adidas’ T-shirt sales “profits” and other donations. The politicians’ high-paid jobs are assured now for another few years with re-election in their pocket.
From corporations to politicians, and down to government entities in which citizens instill a huge amount of trust, the perception of generosity and concern in the wake of tragedy has proven to be hugely beneficial, financially and in terms of ratings – far more so than what could be achieved through any amount spent on traditional marketing, or in a political campaign. Even the FBI’s approval ratings have soared, with their show of force, authority, and coordination in capturing and killing the suspects. One has to wonder whether someday, this magic mix of business, political, and national security establishment profiting from tragedy may lead these actors to turn a blind eye to, or, god forbid, collude in the instigation of terrorism. Some have already alluded to this (google “fbi staged terror attacks”). Just sayin‘.
On a side note, Boston’s “The One Fund” has highly dubious backing. A Whois search reveals that the domain name onefundboston.org is registered to one “sidearmjohnny” whose Twitter profile does not instill trust https://twitter.com/sidearmjohnny
While the media has been all over the positive aspects of the Mayor and Governor creating a charity fund, has anyone dug into what that fund is, who is on its payroll, what portion of donations will actually go to the victims, and what rules have been established to govern it?
This author is concerned about whether the victims of the Boston Marathon bombing are the true beneficiaries of the widely publicized generosity from corporations and politicians, or whether Tragedy Marketing has become a highly profitable business model, especially in this period of economic downturn.
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John M. Bolton, Senior Editor, PRNewsWire *Blog
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