The Russian Invasion of Ukraine Has Put a Spotlight on Brand Activism

Brand messaging and operations are under close scrutiny as a majority of Americans want to see companies withdraw from Russia

By Chuck Kapelke

Antiwar demonstrators in front of the White House on February 24, 2022, wave Ukrainian flags to protest the Russian invasion of Ukraine, which launched that day. The resulting war has led to global outcry and sanctions against Russia, and hundreds of companies have ceased operation in the country to protest its actions. A large majority of Americans — 75 percent, according to Morning Consult — support brands cutting ties with Russia. Anna Moneymaker/Getty Images

As of early April — roughly six weeks after Russia's invasion of Ukraine — more than 600 companies had announced that they were taking their business out of Russia, according to a running list compiled by the Chief Executive Leadership Institute, a research center at ANA member Yale School of Management. Following the lead of oil companies, whose divestments in Russia left tens of billions of dollars on the table, brands have taken a range of actions in response to the crisis. Visa, Mastercard, and American Express, for example, ceased operations in Russia. Etsy is forgiving fees for Ukraine-based sellers. Canadian hockey equipment brand CCM is cutting marketing ties with hockey stars sympathetic to Vladimir Putin. Nonetheless, some brands have been tagged for their slow response and others have refused to abandon or are incapable of withdrawing their Russian operations altogether, exposing themselves to reputational and financial risk.

As the war in Ukraine continues, the number of companies pulling out of Russia grows. An ANA survey conducted in mid-March found that 71 percent of respondents currently doing business in Russia were "suspending or reducing media spend" in Russia, compared to 31 percent from a survey conducted just three weeks earlier. (The first survey included 188 respondents and the second had 127 respondents.)

Respondents in the ANA's survey are aligned with the public sentiment in the U.S. According to a Morning Consult survey of 2,200 U.S. adults, 75 percent of Americans support brands cutting ties with Russia, and 8 percent said companies should maintain business ties but issue a statement condemning the war.

"There's real potential danger for brands' reputation if they don't do anything," says Wesley Case, editor for entertainment, brands, and sports at Morning Consult. "Our data showed that only 4 percent of Americans feel that brands should keep doing business with Russia and do nothing in response to the invasion. Most people are turned off by inaction. Making a statement is fine, but it's not enough these days."

No Hard and Fast Rules

How brands have responded to the war in Ukraine provides valuable lessons for marketers navigating an increasingly unpredictable world. The crisis has reinforced the need to be nimble and responsive and ensure that every single part of a company's operation is aligned toward shared brand values.

"You can be confident that none of these brands wanted to shut down in Russia, they just felt the need to move in light of what's happening," says Tim Calkins, a professor of marketing at ANA member Northwestern University's Kellogg School of Management. "Each situation requires a fresh look, and there are no hard and fast rules when it comes to brand response to public events. Brands have to be aware of what's happening in the world around them, but there's not one playbook that's going to work each time and for all brands."

As an example of what an effective response looks like, consider Airbnb. Soon after Russia invaded Ukraine, the homestay company announced that its nonprofit unit, Airbnb.org, would offer free, short-term housing for up to 100,000 refugees fleeing Ukraine.

The company set up a "Help Ukraine" website that attracted nearly three million visitors in less than three weeks, garnering millions in donations. Airbnb's fundraising efforts were bolstered by promotions from celebrities Mila Kunis (who was born in Ukraine) and Ashton Kutcher, as well as supporters from around the world who signed up for homestays in Ukraine as a way of sending money to the country's residents.

"After we waived our fees for new reservations — because we didn't want to profit in a war zone — we noticed a grassroots movement to book listings in Ukraine to support local hosts," says Haven Thorn, a spokesperson at Airbnb. "We're so moved by how our community is using our platform to help others."

Airbnb's response was effective because it aligned with the brand's strengths, and the company already had a refugee support program in place to build upon. "The best examples come from companies who use their core competencies and business operations to effect change," says Dipanjan Chatterjee, VP and principal analyst at Forrester.

Pressure Points

Brands that have failed to act have faced pressure from multiple fronts, including from Ukraine's Ministry of Foreign Affairs, which has called for a boycott of companies still operating in Russia.

But for some brands, pulling out of Russia has been complicated by franchise agreements that give the corporate entity limited control. Burger King, for example, has roughly 800 restaurants in Russia owned by franchisees, and Restaurant Brands International, which owns the Burger King brand, has a controlling stake in none of them.

"Would we like to suspend all Burger King operations immediately in Russia? Yes," David Shear, president of Restaurant Brands International, said in a statement. "Are we able to enforce a suspension of operations today? No." The company has committed to redirecting profits that come from its Russia franchises to the United Nations Refugee Agency, among other actions to support Ukraine, according to the statement.

The lesson? Marketers need to pay close attention to how their business structure could affect their ability to manage their brands, experts say. "Companies thought these franchise arrangements were taking out the risk, but it's actually introduced risk," says Jeffrey Sonnenfeld, senior associate dean for leadership studies and the Lester Crown Professor in the practice of management at the Yale School of Management, who created the Chief Executive Leadership Institute's list tracking business involvement in Russia. "Businesses lose control when they invest in countries that are driven more by the law of rulers than the rule of law."

While public sentiment has been a motivating factor, some brands have taken action regarding Ukraine due to pressure from their own workers.

"Employees have been far more active of late, as we have seen at Google, Netflix, Disney, and elsewhere, in voicing their expectations for their employers when it comes to taking a social stand," Chatterjee says. "At a time of severe talent scarcity, a lost employee may be worse than a lost customer, and companies are extremely sensitive to this risk."

 


 

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