companies that go woke actually do go broke it could be a billion dollar investment opportunity
that all the biggest hedge funds in the world are ignoring there are no consequences for going super
woke in terms of trying to appeal to the far left wing in this country and then Bud Light puts out
this remember it was a March Madness advertisement and it just keeps getting worse and worse you know
we showed it to you yesterday and it was Pepsi's controversial commercial that starred Kendall
Jenner and the ad even caught the attention of Martin Luther King Jr's daughter Bernice she
tweeted this photo If Only Daddy would have known about the power of Pepsi companies going woke is
the trend of their Communications products and advertising materials aligning their brand with
Progressive or liberal values and ideas people who have noticed these Trends have also noticed that
companies perform worse financially after these branding changes as a brand manager alienating a
share of your customer base with advertising materials and tweets that contradicts their
beliefs is not a good move especially when they are highly invested in the issue it's now common
to see customer backlash and product boycotts over ideological issues like anheuser-busch's now
Infamous Bud Light partnership with Dylan Mulvaney the paid Instagram and Tick Tock posts from their
activists promoting the beer sparked backlash from conservatives who boycotted the brand in protest
in a desperate attempt to win those customers back anheuser-busch's CEO in an earnings call
meeting said this we need to continue to clarify the facts that this was webcam one influencer one
post and not a campaign and repeat this message for some time this attempt to distance themselves
from the controversial marketing campaign backfired when Progressive customers also
started boycotting the product really prided ourselves in working with brands that like to
support the lgbtq plus Community more than just putting rainbows on cans this was a rare case
where a brand was too woke and simultaneously not woke enough but it did show that customers would
be lost from both sides of the political aisle on the one side the more conservative Community
is annoyed about the sponsorship on the other side uh you know the LBGTQ Community is annoyed
because Bud Light didn't come back and rally behind and take a stand one way or the other
so this video should really be called do brands that pick sides and divisive issues lose market
share but that doesn't rhyme sorry I'm sticking with my choice since the post was first made Bud
Light sales slumps 23 in May compared to sales the year before costing Anheuser-Busch roughly
60 million dollars in just 31 days bud lost those sales to competitors like Miller Lite Coors Light
and Modelo Especial which overtook Bud Light as America's best-selling beer in the very same month
customers are also becoming more aware of social messaging from companies so even if advertising
is in line with your beliefs you can still respond negatively to it because it comes off as pandering
by a company that only wants your money but if companies actually do exist exclusively
to maximize returns of their shareholders and ideologically align decisions like this can
have such enormous Financial consequences then why the final Branch just shut the [ __ ] up and stop
making their products a political statement well there are three reasons why companies seem to be
making this terrible mistake and three reasons why investing based on wokeness is a terrible idea the
first reason that companies seem to be making these terrible PR mistakes is their failure to
adapt their marketing to new platforms that allow for unpredictable audience engagement both good
and bad user-generated social media and content platforms have become an important tool in any
direct-to-consumer marketers Arsenal marketing Through official online advertising platforms
like Google Google AdSense or meta's Facebook ads is significantly cheaper on a pay-per-view basis
than Legacy advertising channels like television radio or newspapers online advertising can also
be done by writing on the back of exposure given to influencers on similar platforms through paid
posts the reason that Bud Light paid Dylan Mulvaney to promote their product is because
they had 11.5 million followers across Instagram and Tick Tock so their product would be seen by a
lot of potential customers both forms of online advertising have the benefit of being able to
directly call customers to action by providing a link to a website where they can sign up for
a service or make a direct purchase advertising through influencers has the additional feature of
aligning a brand with an inbuilt audience that has an inherent level of trust in the person
selling the product themselves endorsements of bad companies can be highly damaging to an audience
particularly when they are watching an influencer for advice on a particular subject to brands that
trust is an asset and it lets them select Their audience less indiscriminately than if they
were advertising through Legacy advertising channels the Bud Light Marketing Executives
that green light the dill Mulvaney campaign certainly knew you that the campaign would
Clash with a large share of their customer base but they probably expected that those customers
would not be looking at these videos in the first place product Executives use Market segmentation
based on geographic demographic behavioral and psychographic divisions all the time the best
marketing campaigns can promote a product to two opposing groups without alienating either
when Apple advertises its iPhone to children and young creatives they focus on its cameras
the App Store and exclusive blue text boxes so the customers friends know they are part of the
crowd when Apple advertises the same product to white collared professionals that the young hip
crowd wants nothing to do with they focus on data security reliability and compatibility
with other business tools the example of apple has much lower Stakes because nobody is going
to boycott the iPhone just because it appeals to the opposing group but the company still has to
be careful about where it places its adverts so it doesn't waste its marketing budget when companies
take a bigger swing on a more controversial topic it can go horribly wrong if marketers Target the
wrong market with the wrong message Procter Gamble the makers of Gillette Racers launched
the best a man can be advertising campaign in early 2019 the short film showcased scenes of
men demonstrating negative behavior such as bullying sexism and toxic masculinity the
messaging was overwhelmingly received negatively by the company's target audience which was men
even though it received praise from groups that were not in the market for Men's Grooming products
whenever you take a stand you always risk losing a few people and if nothing else they're going to
be buzzed about they're going to be talked about this is going to get a lot of attention and that's
always good for a brand that's what happens when marketers pick their wrong audience but the viral
nature of Internet messaging can make it hard to control who sees a message when advertising
through influencers marketers have less control over segmentation because any poster video can go
viral and get the attention of the part of their customer base that they didn't want to see it
under normal circumstances the Bud Light post would have just been shared to the influencer
supportive audience Anheuser-Busch would have sold some beer to a new group of customers and
everybody would have quickly forgotten about it and that's the first reason why trading on
the goat go broke investment philosophy is not going to work work this one example ended badly
for the brand but there's no way to reliably predict which missteps are going to go viral
and which ones are going to be ignored like respond to the things that are meaningful for
you not because it's a great marketing moment but because it's real because you actually believe it
even the Bud Light incident which is probably the most serious case of customer backlash against an
advertising campaign only resulted in a 15 stock drop a large movement but still well within the
usual trading volatility of the company even if you were able to accurately predict the next
major marketing fail your games could be wiped out by normal Market movements but that's just
short-term speculation the real play is to find companies that have changed their entire product
offering to Pander to one group at the expense of the wider audience and there are plenty of
companies doing this too so it's time to learn how money Works to find out if companies that go
woke actually do go broke and why they insist on doing it anyway this week's lesson was sponsored
by blinkist blinkist is a convenient app that distills the essentials from countless
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going to blinkist.com forward slash how money works the second reason that companies pick
sides on divisive issues is because it works but just not for the companies there are companies
that go beyond altering just their advertising and actually change their entire business offering to
cater to a particular Market segment this involves changing not just marketing strategies but also
product offerings and hiring practices as well even if hiring based on identifiable features is
illegal in America and most other countries there are easy ways around these rules that
companies can use to their advantage Disney is frequently called out for putting a heavy
emphasis on Progressive messaging in their films and TV shows and for casting actors and actresses
based on race or identity the company now has declining viewership in its largest franchises
Marvel and lucasfilm and their live-action remakes of Legacy films ideological issues
are also the basis for the company's disputes with the governor of Florida the state home to
Disney World and the Disney cruise lines the mistake here is thinking that a company with
over a hundred and eighty thousand employees can always stay aligned on issues Hollywood
has a progressive culture and Studio Executives can issue responsibility for bad decision and by
saying an audience didn't like a movie because their biases towards a particular group staying
in line with the culture of Hollywood also makes securing talent easier for big studios a big name
actor or director will reliably bring in more viewers than are lost by making sure they can put
their spin on the production ideological hiring is also a great excuse for companies looking to
get the cheapest possible Talent the tragic recent story of the Ocean Gate company and their Titan
submarine exposed some unfortunate corporate decisions made by the company and its founder
stocked in Rush one that's coming under a lot of scrutiny in hindsight was the company's decision
to only hire young free-thinking Engineers because they quote didn't want to hire 50
year old white guys to Pilot and engineer their sub a gentleman who were ex-military submariners
and they you'll see a whole bunch of 50 year old white guys I wanted our team to be younger to be
inspirational and I'm not going to inspire a 16 year old to go pursue Marine technology it's very
difficult for a career professional to defend 50 year old white guys without attracting labels that
could hurt their career and so so the practice of woke hiring can continue unabated the reality of
this company and others like FTX theranos and wework is that they wanted employees that were
cheap to hire an overwork or employees that didn't have the experience to point out shortcomings in
the company's operations since poorly managed companies can't say they are doing that they
instead say they have a young and disruptive Workforce which makes them almost impossible
to criticize without being called a hater or worse it's not good for the company but it is good for
the decision makers who need to avoid being fired or exposed for their ineffective management the
problem with betting against these companies is markets can stay irrational longer than
you can stay solvent if you believe that Disney changed its product offerings to be more socially
Progressive at the expense of quality when would you have entered a short position Disney stock is
down 60 from its all-time high in 2021 but it's up from when it supposedly went woke analysts
unanimously agree that recent declines have mostly been caused by problems with the company streaming
services company leadership changes and declining viewership that third Factor could be the result
of wokeness but the conclusion of major franchise series is more likely to blame confirmation bias
is very important to consider when doing any type of investing Disney's stock drop can easily affirm
any belief that investors have about weaknesses in the company when it was really more likely
just coming off an exceptional rally the third reason that companies do this is that if they get
it right it does result in higher Sales brand loyalty and staff retention the best way you
can combat confirmation bias is to intentionally seek out information that disproves your theory a
report by the chartered Institute of marketing an article by Rolling Stone and a survey of
ESG listed companies found that businesses with strong social alignment with a customer segment
outperform companies that remained neutral Keurig United Airlines Carhartt and Chick-fil-A have all
taken strong positions on divisive topics and yet they are still performing well despite calls
from different groups to boycott their product Keurig acquired Dr Pepper Snapple in 2018 for
18.7 billion dollars forming Keurig Dr Pepper Incorporated which is now the third largest
beverage company in America the company's annual gross profits have increased every since reaching
7.3 billion in 2022 a nearly 5 increase from the previous year which outperformed the industry
standard in 2021 United Airlines planned for half of its incoming pilot trainees to be women and or
people of color this prompted calls for boycott but United later reported fourth quarter 2022
profits of 843 million dollars beating investor expectations Chick-fil-A has been very open
about the company's conservative values which has caused opposing groups to call for boycotts but
Chick-fil-A is still outperforming in the highly competitive fast food market if companies get
these messages completely wrong it can hurt their brand but it's shown to be a bet worth making
a handful of angry customers will typically be outweighted by positive press unfavorable examples
can always be picked out some were just bad ideas but most had more serious issues that social
messaging was just a cover for good investing is about accounting for long-term trends which
means unfortunately cringy corporate messaging is not going anywhere but there is one more thing
that you should consider and that's ignoring the performance of companies that never even pretend
to be the good guys to find out why you shouldn't write off evil companies in your portfolio go and
watch my video on why ethical investing is bad investing and if you want to get these videos
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