State Farm Handles Clippers Controversy Correctly

State Farm’s reaction to the controversy over former owner Donald Sterling’s racist comments has earned the brand high marks in consumer perception, according to YouGov BrandIndex.

The main reason appears to be tied into the power of sponsorships, both backing out and stepping in. With the former, it’s taking “a pause” as a Los Angeles Clippers sponsor since the controversy around Sterling surfaced in the media, and for the latter, being the title sponsor of the forthcoming annual NBA Draft.

Standing behind or stepping away from a sponsorship can be a tough call for a brand, YouGov BrandIndex CEO Ted Marzilli tells Marketing Daily.

“The perceived severity of the issue, the level of certainty that the allegations are true and the court of public opinion all play a role in determining the right course of action,” he says. “In the case of Donald Sterling, all three of these suggest that stepping back would be the smarter move for any brand. That said, once the sale of the team occurs and new ownership is in place, it could be an even smarter move to step back in as a show of support to the 'new L.A. Clippers.'"

After State Farm paused their sponsorship, the insurance company saw three of their key consumer perception metrics rise significantly for the next 30 days: Buzz ("If you've heard anything about the brand in the last two weeks, through advertising, news or word of mouth, was it positive or negative?"), Word Of Mouth ("Which of the following brands have you talked about with friends and family in the past two weeks -- whether in person, online or through social media?"), and Purchase Consideration ("When you are in the market next to purchase items in this particular category, from which of the following brands would you consider purchasing?”).

Of particular importance is the last score, Purchase Consideration, which is directly tied in with potential sales and revenue. Since the beginning of the month, the percentage of consumers who would consider buying State Farm when they are in the market for insurance rose from 20% to 25%.

Equally notable is that State Farm’s scores in each of these three metrics is the company’s highest in 2014 so far. Currently, State Farm leads the consumer insurance category on all three metrics, ahead of Allstate, Farmers, GEICO, Liberty Mutual and Nationwide.

Perhaps also contributing to State Farm’s across the board ascent is its sponsorship of the forthcoming NBA Draft, which takes place on June 26, 2014. Much of the online discussion regarding the draft has mentioned that it is “presented by State Farm.”

YouGov BrandIndex measured Allstate, Farmers Insurance Group, GEICO, Liberty Mutual, Nationwide and State Farm. All respondents in the research are adults age 18 and over. Around 12,000 people were interviewed for this research with a margin of error of +/- 2.5%.

The controversy began when audio of Sterling telling a female friend that he didn’t want her bringing black people to his games was posted on the Web site TMZ on April 25.  Nearly 20 brands suspended or terminated their sponsorships of the Clippers after the release of the recording.

After NBA Commissioner Adam Silver banned Sterling from all games, issued a $2.5-million fine and moved  to strip him of ownership,  a few companies -- including Samsung , Adidas, Kia Motors America, Yokohama Tires and Red Bull -- resumed their sponsorship of the Clippers. But most, like State Farm, continued to withhold sponsorship, including Sprint, Burger King, Corona, Virgin America and CarMax.

Sterling’s wife Shelly Sterling signed a deal to sell the team for $2 billion to former Microsoft Corp. Chief Executive Officer Steve Ballmer last week. However, Donald Sterling’s lawyers have indicated they will sue the NBA as a result.

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