Beware! When Brand ambassadors go astray

Nike has been linked to a series of high-profile sportspeople who have fallen foul of moral and legal codes in recent years. Think Tiger Woods, Lance Armstrong and the most recent example of Oscar Pistorius. Has Nike's misfortune been down to bad luck or bad risk management? Well, it can be convincingly put down to sheer bad luck. Beattie Communications director Chris Gilmour says that "when you are using brand ambassadors you are dealing with a human being who has faults and failings… Brands should research the individuals as much as they can, but there are certain things that just can't be predicted". The Oscar Pistorius case is a prime example of something that was very hard to foresee.

From the moment such a crisis hits, the way in which a brand reacts reflects directly on its core values and ethos in the minds of consumers, says Professor Vince Mitchell of Cass Business School. Risk managers need to act quickly and decisively in response. The longer indecision goes on, the more damage a brand's reputation is likely to suffer. Indiscretions that hit the press for a week but then disappear are not of great concern. However, as in the Pistorius case, a trial can run and run. New revelations come to light and the story remains in the public eye. It is extremely difficult to mitigate against such a risk. Perhaps the only course of action is to cut the ties between the brand and the brand ambassador as quickly as possible.

In the wake of scandals with ambassadors, some companies choose to suspend their contract rather than immediately terminate it. Professor Mitchell believes this is a dangerous strategy. "This is about not having a Plan B. You can ride the wave of a brand ambassador going astray if you are willing to hedge your bets. Some think the problem might just be a flash in the pan. Not having a Plan B means they are left thinking "We have no-one to replace this ambassador, so let's hope the problem passes". The two things are interlinked, and it gets to the issue of indecisiveness".

Companies are willing to take the risk of using brand ambassadors despite understanding there are risks attached, because they are seduced by the combination of power and talent. Professor Mitchell says "The greater the endorsing power and the longer you have the ambassador, the longer your reputational risk. This is because they become intertwined with the brand". He suggests shorter contracts to mitigate risk to reputation; two to three years for example. After that he suggests finding someone of equal stature, but moving onto another personage will keep the brand association lighter.

It is also advisable that risk managers work more closely with marketing when brand ambassadors are being discussed and touted.

The popularity and widespread use of social media has meant that brands are vulnerable to repeated and prolonged attacks on their reputation. Although only a small proportion of brand ambassadors do transgress, the power of social media connectivity means the likelihood of them being caught out has increased enormously. The message to brand managers is "Beware!"

A version of this article first appeared in StrategicRISK (April 2013).