Branding is an essential part of modern business, enabling companies to distinguish themselves from their competitors and build strong connections with their customers. However, when truth takes a back seat to profit, it can have disastrous consequences for brands and their customers.

One of the most infamous examples of the dark side of branding is the case of Volkswagen. In 2015, it was revealed that the company had installed software in its diesel cars that enabled them to cheat emissions tests. The scandal rocked the automotive industry and severely damaged VW’s reputation. The company faced billions of dollars in fines, lawsuits, and lost sales. The fallout from the scandal also led to the resignation of several high-ranking executives and tarnished the reputation of the entire automotive industry.

Another example of a brand that put profit over truth is Enron. In the late 1990s and early 2000s, Enron was one of the largest energy companies in the world. However, it was later revealed that the company had been engaging in fraudulent accounting practices to inflate its earnings and conceal its debt. The scandal led to the collapse of the company and the imprisonment of several of its executives. Enron’s downfall also had far-reaching consequences, leading to tighter regulations and greater scrutiny of corporate accounting practices.

Closer to home, the Australian banking sector has also seen its fair share of scandals in recent years. The Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry, which concluded in 2019, uncovered widespread misconduct by the country’s largest banks. The Commission found that many of these institutions had engaged in unethical and illegal practices, including charging customers for services they never received, providing misleading financial advice, and failing to disclose conflicts of interest. The revelations damaged the reputation of the banking sector and led to calls for greater accountability and transparency in the industry.

These examples illustrate the dangers of putting profit over truth in branding. When companies prioritize short-term gains over long-term sustainability and ethical practices, they risk losing the trust and loyalty of their customers. Consumers are increasingly savvy and informed, and they are quick to call out brands that engage in unethical or misleading practices. In the age of social media, it only takes one viral post or tweet to bring a brand to its knees.

The consequences of putting profit over truth can be far-reaching and long-lasting. In addition to financial losses, brands may also suffer reputational damage that can take years or even decades to repair. Consumers may lose faith in the brand and switch to competitors, or they may boycott the brand altogether. The negative publicity generated by a scandal can also attract the attention of regulators and government agencies, leading to fines, lawsuits, and increased scrutiny.

It’s not just the financial and reputational consequences that brands need to worry about. Unethical practices can also have a profound impact on the people and communities affected by them. For example, the VW scandal had serious implications for the environment, as the cheat devices enabled the cars to emit far more pollutants than they were legally allowed to. The Enron scandal also had real-world consequences, as the company’s collapse led to the loss of thousands of jobs and millions of dollars in pension savings for its employees.

So, what can brands do to avoid the dark side of branding? Fundamentally, they need to prioritize transparency and honesty in their marketing and communications. Brands should be open and upfront about their products and services, and avoid making misleading or exaggerated claims. They should also be willing to admit to mistakes and take steps to rectify them, rather than trying to cover them up. This really is the only way to maintain the mission critical trust required of brands in these increasingly transparent times.