When Do Scandals Sting?

It's the X factor. Scandals and bad publicity of any sort have evolved into one of lifestyle marketing's biggest mysteries.

"There are so many issues of global gravitas, most scandals and bad pr pale by comparison," asserted Walter Levy, a managing director specializing in retail trends and positioning at Kurt Salmon Associates. "Even Enron and WorldCom are almost off the radar, because there are no indictments yet. When a company’s individual icon gets singled out, it affects their business. Insider trading charges against Martha Stewart didn’t affect the business for a while. Then it became apparent she hadn’t handled it well and it took a toll."

Also figuring in the bad publicity cause-and-effect dynamic, sources said, are:

A brand’s personality. Reebok had more leeway with its NBA bad-boy Allen Iverson shoes this summer when he faced charges of brandishing a gun against his wife and uncle, than did down-home Wal-Mart when a sweatshop scandal hit its Kathie Lee apparel in 1996 and again in 1998.

The nature of a scandal or infraction. Monica Lewinsky boosted sales of M.A.C. cosmetics, following her TV interview with Barbara Walters about Lewinsky’s tryst with President Clinton, while Rosie O’Donnell’s media star sank after she came out as a lesbian.

How closely tied a compromised person’s name is to a brand’s image. The Martha Stewart and Kathie Lee labels have had more at stake than, say, Nike or Gap, when they were found to have sourced in sweatshops.

Timing. Although now regarded as a ground breaker, in the Nineties, Calvin Klein pulled fashion ads that portrayed teen models in poses some saw as too overtly sexual.

Despite such concrete considerations, Weiner said of the potential damage: "It’s not all rational. A lot depends on how personally people take it; how a company handles it, and how involved the government gets."

For example, people remember to this day the false charges of racism made in the late Nineties against Tommy Hilfiger. Hilfiger was alleged to have said he didn’t want African Americans wearing his clothes, a statement that it was said he made on "Oprah" — even though he had never appeared on "Oprah" when those charges were leveled. Hilfiger’s business was unaffected, though, and, in a similar scenario, Calvin Klein’s sales were also unscathed by baseless charges of gay bashing against one of its past celebrity models. When the artist formerly known as Marky Mark was endorsing Calvin Klein products, he was stung by charges of being a gay basher, merely because he was seated next to a gay basher on the couch of a London talk show. "We got hundreds of letters and calls protesting," said Neil Kraft, president of ad agency Kraftworks, recalling the incident that occurred when he was at Calvin Klein. (Kraftworks currently handles Calvin Klein Eternity’s advertising.) By the time the flap reached U.S. shores, the protest dwindled to about a dozen people picketing in Times Square.

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