Eliot Spitzer’s loss in his attempt to become New York City comptroller proves that brands still matter. His brand disintegrated in about the same way as BP PLC’s (NYSE: BP) did. One or two huge mistakes, and the chance for brand improvement is over.
Spitzer did what many companies try to do with broken brands — spend their way out of the problem. He invested several times more on the election than his boring rival Scott M. Stringer. Every dollar was wasted. Cash cannot fill in a deepening hole.
Spitzer made two assumptions that corporate managements do. The first is that the public has a short memory. The second is that a new design can convince consumers that a beaten brand is different. Consumers often are underestimated. They cannot be fooled as easily as that.
It is not too much of a stretch to compare Spitzer to other badly broken brands, particularly ones that were once wildly successful but lost the public’s confidence because of flaws brought on by bad decisions. BP and Goldman Sachs Group Inc. (NYSE: GS) can be put on that list. Each shattered its relationship with the public, and neither may ever recover it. A series of annual Interbrand studies spread over several years shows the brand values of this pair of companies have imploded. Neither could rebound from brutally negative news. As a matter of fact, after the Deepwater Horizon disaster, some experts believed that BP actually had negative brand equity, if such a thing exists. Even though the incident happened more than three and a half years ago, BP has not recovered much. And the oil company has not been helped by ongoing legal battles about the leak that covered the Gulf of Mexico, nor the impression people have that BP is too cheap to compensate all those whose lives or businesses where damaged.
Spitzer tried to make the case that his “good past” was better than his bad one. He had saved the public from Wall Street. Apparently, not many people felt they needed saving. If they did, their affection for Spitzer was overwhelmed when he resigned as governor of New York. Even with five and a half years of separation from that, people recalled it as if it happened just days ago.
When business school professors need lessons in how a collapsed brand rarely recovers, they can use the Spitzer disaster and his failed comeback as he ran for New York City comptroller, just as well as they can the collapse of Goldman Sachs or BP.
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