Going Negative

Some of the biggest names in business are taking a page out of the political handbook, “going negative” in advertising against competitors. Specifically, there is a new emphasis on the character issue, with TV spots increasingly playing on customer fears and doubts.

This is a logical outcome of two prominent forces: The recession has been starving companies, and they are now highly motivated by hunger. And the wave of scandals that began with Enron and Arthur Andersen and moved on to Tyco, WorldCom and Merrill Lynch has predominantly involved giant business-services firms. For unsullied competitors, this has created opportunity.

In a recent IBM ad from Ogilvy & Mather’s campaign built around the metaphor of a basketball team, the owners and coaches are saddened, though frankly not surprised, that the chalkboard-diagramming “expert” charges them $4 million, and he’s not even sticking around to see his recommendations through.

Meanwhile, Charles Schwab’s ad from GSD&M depicting a brokerage firm hyping stocks to unsuspecting customers (“Let’s put some lipstick on this pig”) was deemed so negative that CBS refused to run it. Other networks have given it plenty of airplay.

Now, as leading financial brands like Merrill Lynch, Citigroup and J.P. Morgan Chase get battered and scramble to comply with new laws, the Charles Schwabs of the world will surely kick them while they’re down.

IBM’s approach is less overt than Schwab’s, which makes sense. The competitors from which IBM hopes to win share are the accounting-firm consultancy spinoffs, whose brands are in even worse trouble than the Wall Street brands targeted by Schwab. IBM figures clients are already looking for reasons to distance themselves from the Big Five; it simply provides a helpful rationalization for making the safer choice.

The Big Five spinoffs have been scrambling to rename themselves, mostly to sidestep character concerns. Andersen Consulting paved the way, changing its name to Accenture long before the Arthur Andersen scandal; PriceWaterhouseCoopers’ PwC Consulting was planning to give itself the name Monday (before agreeing last week to be bought by IBM for $3.5 billion); and KPMG Consulting and Deloitte & Touche Consulting both plan to change their names by year’s end.

IBM now has a TV spot showing nervous suits keen to create an advertising jingle that will distract customers from their company’s terrible customer service and financial condition. A mocking caricature of corporate America by a Fortune 10 company shows how much has changed.

Conventional wisdom typically counsels against going negative because it tends to turn customers off. But in a recession, the only way to grow is to take share away from someone else, which makes business feel a lot more like politics.

Large-scale, conspiratorial, institutional scandal has become a cultural phenomenon, and marketers have always been keen students of cultural context. Schwab and IBM have shown that playing the scandal phenomenon back to us can work. Expect to see more of it.