As companies such as Anheuser-Busch and 84 Lumber face political backlash following their Super Bowl ads about immigration, and as Donald Trump supporters call for a boycott of Budweiser beer, the impact on their revenues is likely to be minimal.
The same is true of Nordstrom (jwn), even after Trump’s latest tweet criticizing the retailer for dropping Ivanka Trump's line due to soft sales. Nordstrom's stock is up by almost 3%, even as the #GrabYourWallet campaign—which urges people offended by Trump’s language and actions during his presidential campaign to boycott companies doing business with his family—continues to gain steam.
Even reputational damage, which is traditionally the biggest fallout from boycotts, may be muted, given the sheer number of companies now targeted by both pro- and anti-Trump forces. But there is one major threat that companies face in today’s highly polarized environment: political risks.
Based on Google (goog) Trends data, the number of web searches in the U.S. for “boycott” has nearly quadrupled from a year ago. According to Lexis Nexis, the number of stories about boycotts in U.S. newspapers has increased by roughly 30% from a year ago. (The most common story a year ago was about Hollywood stars threatening to boycott the Oscars. This week, 50% of the boycott stories mention President Trump.)
As research has shown, boycotts typically do little to hurt companies’ revenues, in part because the activists are not typical consumers of their target companies’ goods. For example, animal rights activists who belong to People for the Ethical Treatment of Animals would not frequent the fast-food restaurants they often urge consumers to avoid. In addition, consumers tend to be fickle and unwilling to part from their favorite products and services to support a boycott, even when they are ideologically aligned with its goals.
Investors, too, tend to shrug off these actions, unless the boycott receives sustained media attention. New boycotts start every week, so media attention has become a limited resource. And, as a result, few boycotts manifest any long-lasting investor reaction. For example, last November, food manufacturer Kellogg (k) suffered only a three-day drop in its stock price after it faced a boycott from Trump supporters for pulling its advertising from the right-wing website Breitbart News; then the share price quickly recovered.
The biggest impact from boycotts is a company’s reputation. Companies want to avoid sustained negative attention that comes from a boycott. For that reason, when a boycott captures national media coverage, about 25% of the time this unwanted glare of attention results in some kind of concession from the company.
The real fallout from the most recent spate of boycotts may be in the political risks that boycotted companies face. In today’s turbulent and polarized political climate, companies may shy away from taking what can be viewed as political stands. This reticence is reinforced by the fact that companies with boycott actions taken against them are more likely to lose political contracts and/or have their contributions to politicians returned, as demonstrated in research by scholars at The University of Texas and Wharton.
Avoiding any tarnish on their public image and loss of political capital may keep companies from speaking out, even on topics that reflect their values. The risk of PR storms created by political and consumer activism may simply be too great for companies operating under an unpredictable presidential administration armed with an outspoken Twitter (twtr) account.
Anheuser-Busch (bud), for example, inadvertently stepped onto the immigration battleground when its Super Bowl ad last weekend featured the journey of Adolphus Busch, co-founder of Anheuser-Busch, from Germany to St. Louis in the 1800s. Budweiser reportedly said it was not attempting to make a political statement, and called the timing of the ad with the Trump administration’s immigration policy furor “a coincidence.” But in today’s climate, any statement of social values made by a company, no matter how well-intended or closely tied to their brand, risks being seen as a political stand.
The skirmish over the Super Bowl ads is the latest in ongoing boycotts and activism on both sides of the Trump policies debate. Most recent actions have ignited over President Trump’s executive order to suspend entry from visitors from seven predominantly Muslim countries for at least 90 days. The order, which is currently being contested in courts, also freezes the entire U.S. refugee program for four months and indefinitely banns refugees from Syria.
In the wake of the immigration ban, boycotts erupted on both sides. Trump supporters called for a boycott of Starbucks (sbux) in response to its announced plans to hire 10,00 refugees around the world. Meanwhile, Uber has faced a variety of backlashes, including a protest in Pittsburgh by activists who oppose Uber’s association with President Trump, leading Uber’s CEO to step down from Trump’s economic advisory council.
If there is any bright spot for boycotted companies, it’s the fact that media and consumer attention is diluted by the sheer number of boycotts and actions being taken by both sides. For example, #GrabYourWallet lists more than 80 companies that it recommends people boycott to avoid doing business with companies that have business ties to the Trump family. With so many companies on the pro- and anti-Trump watch lists, consumers may have difficulty paying attention to them all.
But given Trump’s lightning-rod-like ability to attract both supporters and repel critics and his notoriety for lashing out against his critics, more companies may end up on the politically neutral sidelines rather than create unwanted attention from activists and the consumers they target.
Brayden King is a professor at Kellogg School of Management at Northwestern University.