Adidas blew the Kanye controversy, but your brand can avoid the same mistakes

By Jeff Beer

October 30, 2022

“I can say antisemitic things and Adidas can’t drop me. Now what? Now what?”

 
 
 

That was Kanye West on the Drink Champs podcast on October 16 daring Adidas to react to his recent behavior.

Ever since West—now known as Ye—signed on with Adidas in 2013, the artist has been the cultural story at the brand. That fact took a dark turn over the past month, as West has been criticized for antisemitic comments, leading the brand to cancel its landmark deal with him on October 25.

In its statement, Adidas said the company “does not tolerate antisemitism and any other sort of hate speech. Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.”

The company also said that it expects this move to have a short-term negative impact of up to $246 million on the company’s net income in 2022. According to Morningstar analyst David Swartz, the Yeezy brand makes nearly $2 billion a year for Adidas, or 10% of its overall revenue.

 
 

Adidas reportedly put its relationship with Ye under review on October 6, a full 20 days before cutting ties, and after other companies like Balenciaga and CAA had already done so. Now, of course, this is a massive piece of Adidas business, and a move like this would impact not only the bottom line, but also many employees and operations. One cannot just decide to dump $2 billion of your revenue with a Thanos-like snap.

But even accounting for that, this was a glacial pace. To put in context, it took Adidas 12 days after Russia invaded Ukraine to announce it was suspending sales across its 500 stores in Russia, cutting 1% from its expected revenue growth this year. British Petroleum—not exactly a cuddly brand overly worried with being “woke”—took about three days to announce it would be offloading the nearly 20% stake it had in a Russian oil company, worth about $14 billion.

Adidas’ silence over those 20 days was deafening enough for social media to call for its boycott, resurface company history about its founders’ involvement with the Nazi party, and for employees to speak out.

 

The Business of Fashion reported that an employee who identified themselves as Jewish wrote in a post on Adidas’ internal communications platform on October 10, “There has been no distancing ourselves as a company, no condemnation, and perhaps most importantly, no reaching out to those like myself.”

And in a LinkedIn post, U.S.-based Adidas employee Sarah Camhi wrote, “It’s been 14 days since Kanye started spewing anti-Semitic rhetoric and adidas has remained quiet; both internally to employees as well as externally to our customers . . . . We need to do better as a brand. We need to do better for our employees and we need to do better for our communities.”

My colleague Mark Wilson wrote earlier this week, that Adidas moved slowly, and indecisively, for a reason: “Yeezy has been absolutely essential for the successful turnaround of the $20 billion publicly traded shoe giant . . . . And Adidas is stalling to plan its way out.”

 

The uncomfortable truth is that Adidas should already have had that plan. The brand knew West could be mercurial and provocative when it entered into its relationship with him, but also knew—at that time—that his clear talent and design point of view were worth the risk. It was valuable enough that it stuck with Ye after he said slavery was a choice back in 2018. Kanye reportedly regularly expressed admiration for Hitler, and wanted to initially name his 2018 album after him. After all that, Adidas had to know that this past month was possible. No one pays for house insurance expecting their house to burn down. They do it just in case.

Iconic, traditional companies such as Adidas “misunderstand how quickly a crisis can damage a brand, that consumers want transparency and access to information in a way that they haven’t in the past,” says Kristi Piehl, founder of the PR firm Media Minefield, who has seen this outdated mindset around crisis communications from older companies.

Piehl adds that this could have brands reconsidering whether to go all-in on a single celebrity or artist collaboration. “It may be good not to put all your eggs in one basket,” says Piehl. “Companies also need to think about this when it comes to leaders. CEOs are out there on social media, are public figures, and the things they say can easily damage a brand in ways that they didn’t used to.”

 

This past summer, I spoke to McDonald’s global CMO Morgan Flatley at Cannes Lions about the impact that Travis Scott’s 2021 Astroworld concert tragedy had on the brand, because Scott was the first face of the brand’s massively popular Famous Orders campaign.

Flatley told me that because McDonald’s built the Famous Orders platform with a number of celebrities after Scott—including BTS, J Balvin, and Saweetie—it diluted any brand impact that the tragedy may have had. She said if Scott was the only celebrity involved in the campaign, the disaster “would have become synonymous” with the brand. “My advice to marketers would be don’t just take this risk once, take risks over and over again,” she said. “Because then you do open the brand up.”

As we explored in the current controversies surrounding Skittles, the basic brand crisis playbook, as articulated by Wharton School marketing professor Dr. Americus Reed, is to show action by presenting a plan to address the problem. Another is to control the narrative. By not saying anything, that void gets filled with stuff that is completely out of your control. Like, say, floods of social posts highlighting your company’s founders being card-carrying members of the Nazi Party.

 

Adidas could have halted Yeezy sales while it was reviewing the relationship. It could have committed to donating sales in that time to the Anti-Defamation League or another organization fighting antisemitism. It could have just given regular updates into why the review process takes so much time. It even could have acknowledged Ye’s struggles with mental health in recent years and chosen to not abandon a partner in a time of need, and advocate for accountable empathy. But what we got—silence—sounded too much like cowardice. More “let’s see if this blows over,” than “let’s make a decision based on our values.”

The brand’s lack of ability or will to tell its own story through this crisis is also concerning when we look at the giant, Yeezy-sized hole left not only in its bottom line, but also its cultural impact. Chuck Welch, cofounder of Brooklyn-based brand strategy consultancy Rupture Studio, says that Adidas is now faced with somehow finding a way to tell its story without its main character. “Especially to a young generation of sneakerheads who follow the business as much as they do the sneakers,” says Welch. “The story and behind the scenes is just as important as the sneaker. That’s what Kanye gave Adidas, that story. “

That narrative is what differentiates brands more than anything, and for most of the past decade, West was a living, breathing version of that for Adidas. Now, Welch says, “they have to figure out a new story to tell.”

 

The blank page awaits.

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