38 Ways Brands Generate “Badwill”

Mark Di SommaJanuary 1, 20144 min

I’ve just been re-reading parts of Matt Haig’s Brand Failures: The Truth About The 100 Biggest Branding Mistakes Of All Time. While the edition I’m looking at is now close to ten years old, its ideas are a timely reminder that though the purpose of brands is to generate goodwill and margin, failure to deliver on expectations and the subsequent “badwill” that engenders is never far away.

As Haig observes in his opening chapter, “The process of branding was developed to protect products from failure … Brand identities were designed not only to help these products stand out, but also to reassure a public anxious about the whole concept of factory-produced goods … Fast forward to the 21st century and a different picture emerges. Now it is the brands themselves that are in trouble. They have become a victim of their own success.”

Badwill is a term that investment analysts use to describe the effect of bad behavior on investor sentiment. It is of course the converse of the goodwill that stocks depend on to help lift their market price above their net book value.

Investopedia defines badwill as “The negative effect felt by a company when shareholders and the investment community find out that is has done something that is not in accordance with good business practices. Although typically not expressed in a dollar amount, badwill can play out in the form of decreased revenue, loss of clients or suppliers, loss of market share.”

The concept applies equally to brand equity, where the disappointment also springs from behaviors or attitudes but can manifest itself directly in lost revenues, lost clients, loss of market share and a whole lot of bad publicity.

It’s easy to see how stocks can be affected by factors that are beyond their control but given the tight control that brand professionals have over their assets, what do brands do to generate badwill or actually fail? According to Haig, they succumb to one or several of “the seven deadly sins of branding”:

  • Amnesia – brands forget what they stand for and quickly run into trouble.
  • Ego – brands can over-estimate their own importance and capabilities and this can cause them to stay in a market where the tide is going out or to attempt to enter markets for which they are clearly unsuited.
  • Meglomania – brands can be too ambitious. They can attempt to be into everything and to be everywhere and that can cost them dearly.
  • Deception – brands can market their products in ways that bear no resemblance to the reality. Haig calls this “brand fiction”.
  • Fatigue – brands can lose interest in what they’re doing, then the energy to innovate evaporates.
  • Paranoia – brands become over-reactive. They run themselves to a standstill with lawsuits, brand relaunches and desperate me-too actions
  • Irrelevance – brands fail to keep pace within a dynamic category and are overtaken.

I’d add several more – Distraction, Inattention, Impatience, Insensitivity and Isolation. In the rush to be edgy and competitive, it’s easy, perhaps too easy, to dismiss or even fail to notice ideas or ways of behaving that damage a brand on a daily basis, or to believe that providing customers with the levels of service and attention they feel they deserve is an unnecessary cost and inconvenience to the brand.

Of course badwill is not generated by the action itself, but by perceptions of the actions. And those actions are often as much the result of bad judgment calls as bad behaviors per se. A brand can be behaving in good faith and with good intentions and still engender badwill. And of course market scrutiny of brands is not just multi-channeled but also multi-faceted – from what they say to what they show to how they react, brands are always-on.

If customers believe any of these things about a brand, chances are that brand is under-performing in the marketplace and in terms of its intangible equity:

  1. They’re arrogant
  2. They’re insensitive
  3. They’re stupid
  4. They’re careless, even dangerous
  5. They’re ruthless
  6. They’re exploitative
  7. They lie
  8. They don’t deliver value for money
  9. They’re awkward
  10. They refuse to take responsibility
  11. They’re slow
  12. They’re inefficient
  13. They stereotype
  14. Their stuff doesn’t work
  15. They don’t offer what people want today
  16. They disappoint
  17. They’re embarrassing
  18. They’re offensive
  19. They’re deceptive
  20. They’re tasteless
  21. They’re greedy
  22. They’re annoying
  23. They’re clumsy
  24. They’re rude
  25. They say they can do things that they can’t
  26. They’re embarrassing
  27. They’re disingenuous
  28. They’re political (or their actions are interpreted politically)
  29. They don’t move with the times
  30. They hurt people
  31. They’re confusing
  32. Their own people hate working for them
  33. They’re inconsistent
  34. They’re obsessed with policy
  35. They don’t listen
  36. They trivialize things that matter
  37. They’re passive (aggressive)
  38. They’re boring

So who got it wrong in 2013? By way of interest, here’s who Ad Week judged the biggest brand failures in terms of marketing communications. And some nice insights from Bruce Turkel here on 2013 business blunders.

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  • Hilton Barbour

    January 2, 2014 at 8:36 am

    Great call outs mate. Interestingly I’d contend that some of these actions are directly in the eye of the beholder. Certainly across demographics, and perhaps even geographies, certain actions can be deemed offensive for one and irreverent for another group. While there’s never an excuse for jokes/actions that are gender, race, sexual orientation, ageist – there are actions that might have one group applauding and another group shaking their head.

  • Sandra Pickering

    January 2, 2014 at 9:02 am

    Great list, Mark.
    Matt Haig’s Brand Failures book is one of my favourites (alongside his Brand Success!)and, while Hilton is right to point out differences in percpetion and evaluation, many if not all of your 38 points are about(not)caring for the customer – always fatal.

  • Mark Disomma

    January 2, 2014 at 1:35 pm

    Hilton and Sandra – Thanks for your comments. I think external perceptions (and lack of perception from inside) about how a company behaves are the key issue here. As I said in the piece, “A brand can be behaving in good faith and with good intentions and still engender badwill.” Companies don’t usually set out to offend, but they can certainly cause offence – as many of the Adweek examples prove. They can also fail to care because their viewpoint is myopic.

    I’ve always loved that cautionary thought – if you find yourself looking in, look out … (a perception and an action actually).

    Thanks again.

  • James H.

    January 2, 2014 at 2:01 pm

    Wow, perfect timing for this post in regards to Snapchat’s hack!

    They ignored their fans’ security concerns and now they’re paying the price for dismissing their worries. I think you can say they were definitely guilty of a few things on your list, especially being arrogant and careless.

    Thanks for sharing! This post is spot-on!

  • Mark Disomma

    January 3, 2014 at 1:18 am

    So true James. Thanks for your kind words. Mark.

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