Are brands compromising profit for purpose?

Can brand purpose actually help sell more stuff? A perennial question for the marketing and advertising industry that came into sharp focus once again when fund manager Terry Smith recently slagged off Unilever and its purpose driven agenda that underpins its business. He ridiculed what he called an obsession with “publicly displaying its sustainability credentials”, criticising the policy of having a purpose per brand.

The fund manager went on to criticise Unilever CEO Alan Jope for flaunting sustainability credentials at the expense of running the business. “A company which feels it has to define the purpose of Hellmann’s mayonnaise has in our view clearly lost the plot,” he wrote. It is fair to add that there's a reason why Terry Smith is peeved off with Unilever. He holds a reported £888 million of stock. And today he's launched another attack on the FMCG behemoth, calling the company’s rejected bids for GSK’s consumer health division a “near-death experience”.

Back to brand purpose. When businesses define brand purpose in a product-led way to drive growth, not just drive a sustainability agenda - is that not a good thing? Are profit and purpose always mutually exclusive? And has corporate purpose really lost the plot?

Marketing and advertising experts share their views.

And Terry Smith might just learn a few things.

Has Corporate Purpose Lost The Plot?

Mark Evans, managing director, marketing and digital, Direct Line Group

The whole purpose conversation comes down to whether a brand is acting opportunistically or with congruence to what it stands for.

Building purpose into a brand doesn't have to be self-sacrificial, nor does it have to be a fig leaf, the sweet spot is where there is alignment between what a brand does successfully and a bigger need in the world. 

As an example, Direct Line is a brand that stands for fixing problems. There is no doubt that climate change is a knotty problem to fix. In launching our market leading "Making Electric Easy" Electric Vehicle insurance proposition we aim to speed up the process of EV adoption.

We would certainly hope to get an increase in our share of the emerging insurance market as a result so the win-win is evident.

Deb Caldow, global brand, sustainability and sponsorship director, Costa Coffee

I think the best current narrative on purpose, profit and the balance of short versus long term business resilience, is from our friend Larry Fink, CEO of BlackRock, in his annual letter to CEOs. I love his quote: “Putting your company’s purpose at the foundation of your relationships with your stakeholders is critical to long-term success.”

I don’t think that the challenge for businesses is as black and white as putting purpose over profit - it’s much more nuanced than that. Plenty of companies are proving-out that purpose and profit are not mutually exclusive when there’s a clear business strategy where they can co-exist.

At Costa, our purpose gives us clarity over the choices we make and therefore where we focus our resources to drive profit. In the last trading year we’ve delivered strong business performance whilst also focussing on the consumer and our teams, trading through turbulent times and investing in big bets that will set us up well for the future. We’ve made some significant strides with our social purpose and sustainability agenda. In particular we’ve made some focussed investments in circular economy initiatives, some of which have returned profit - like food waste programmes - and helped fund other initiatives which cost us - like trials with rental cup schemes powered by Blockchain. We’ve had the most successful fundraising year for our Costa Foundation in its 12 year history. Amazing, when most of our stores (where we capture fundraising activity and donations) have been suffering with reduced footfall during lockdowns and consumers disposable income has been squeezed. We will be able to build four new schools and educate 3,000 more children on this activity alone, thanks to the passion of our stores teams and the generosity of our customers.

Harjot Singh, global chief strategy officer, McCann

I find it problematic that we are even asking this question.

This question presupposes that we need to defend the case for creativity as a force that helps brands move forward and move the world forward.

It questions the legitimacy of our craft when we know that 77 per cent of people globally believe that brands have more power to make a positive impact on the environment than government.

A major shareholder has a go at one of the largest advertisers in the world, then proceeds to equate its purpose to a product attribute.

This isn’t just about trivialising what purpose means and is meant to accomplish. It is about using financial muscle to cloud and confuse the issue.

It is reductive, shrinks the discourse, stripping it off the nuance it deserves.

Advertisers like Unilever have proved how, over the long term, their best performing brands are those with a well-defined and well deployed sense of purpose embedded in their operating strategy.

Brands serve people. People live on this planet. No planet, no people. No people, no business. No business, no brands. It’s that simple. Sustainability and purpose are fundamental to business performance. It’s just common sense.

As we navigate radical, new distribution models, activist investors, acquisitive private equity firms valuing and financing companies on factors linked to their ESG progress, brands are faced with a combination of challenges that are forcing them to meet high performance benchmarks across the triple bottom-line that extends to and across people, planet, and profit. That’s just business sense.

Insinuating and reductive questions like this are symptomatic of the short termism that threatens to plague the creative industry. Questions like this, when unchallenged, confuse and conflate the business we are in forcing us to act and respond like we are in the business of financial risk management more than we are in the business of generating and delivering value through creativity, moving the market by moving people.

The question we ought to be asking of ourselves should be more expansive.

Unlike financial risk management, creativity is expansive business.

Rather than question the legitimacy of purpose as a contributor of brand success, we should be asking how we can use a values-based asset like purpose to drive differentiation and elevate brands when improved product quality is cost of entry.

We should be asking how we get better at identifying and aligning purpose in a way that’s authentic to the brand’s values and mission, and lends even more credibility to the brand’s business, its acts, and ads.

We should be asking how we can create even more learning on how purpose drives effectiveness and long-term equity growth in more ways than we have measured so far.

We should really be asking how purpose can reimagine business and create and deliver more value in more ways.

Philip Almond, executive director of marketing, fundraising and engagement, Cancer Research UK

Purpose is powerful.  It can give strategic clarity, motivate employees and inject focus and power into how you communicate your brand.

My last 2 gigs have been in purpose-driven organisations:  the BBC (“Inform, Educate, Entertain”) and Cancer Research UK (“Bring forward the day when cancer is beaten”).  These purposes have the benefit of being what the whole organisation was founded to do - and not being invented by the marketing department.

I know little about the spat between Terry Smith and Unilever, nor of what Unilever’s brand purpose statements actually say.

But I will say this: if the purpose of (say) Ben & Jerry’s connects closely to what ice cream does for people and how you can make money from it, then Unilever should stick to their guns. 

If it doesn’t, it will fail the basic test of accurately reflecting what the organisation is set up to achieve — and why Terry Smith invests £888 million in it.