If the balance of power is indeed beginning to shift, it would mark an end to the virtually uninterrupted rise of American brands since World War II. All international brands are being undermined by two big changes in consumer attitudes: sagging confidence in the future, coupled with a growing tendency to buy local, according to Roper. But American brands suffer from two further blows: disgust with the string of corporate scandals that began with Enron, and the backlash against the war in Iraq. The Roper survey, which was released to corporate clients July 1 and to NEWSWEEK last week, shows that American giants like Citibank, Yahoo and MTV now “dominate the bottom” of the list of global companies ranked on the basis of trust. The companies that are losing brand power include McDonald’s and Nike, which suffered the longest falls (chart).
In Germany, a hotbed of protest against U.S. policy in Iraq, the number of consumers who said they regularly use Nike products fell from 49 percent in 2002 to 29 percent in 2003, and the number who said they regularly eat at McDonald’s fell from 43 to 34 percent. Once firm bastions of respect for American ideals like Hong Kong and Taiwan also showed a sharp turn against Nike, McDonald’s and other American brands. A Nike spokesman responds that “the figures tell a different story”; revenues in the European region surged 24 percent in the three months ending May 31, the peak of the Iraq war, and two new Nike franchise stores opened in Paris within the past six weeks. McDonald’s spokesman Walt Reichert says sales are flat (not down) in Germany due to the recession, attributes any fall in Hong Kong sales to SARS and generally dismisses the idea that anti-American feeling hurts the business. He points out that while three South Korean antiwar protesters got their picture in papers worldwide by climbing the Golden Arches in Seoul last March, they later went inside to eat. “Our ongoing research would identify the effects of anti-American feeling [on sales], and it does not,” says McDonald’s Europe spokesman Mike Love.
This is the standard party line at most companies. Though half the brands in the Roper survey are also clients, they tend to downplay or dismiss the evidence of slippage in their appeal. Indeed, eight of the top 10 most valuable brands are American, as ranked by Interbrand, which measures hard cash flow rather than fuzzy stuff like consumer “affinity” for America. Two thirds of the most valuable brands are U.S.-based, including many of those that appear to be losing traction in the Roper poll. Nonetheless, big companies would not be paying Roper to track anti-American sentiment so exhaustively, including 30,000 hour-long interviews with customers, if they weren’t very concerned about it. American brands are losing allure only at the margins, but in an increasingly competitive global market, the margins are where most of the profit lies, says Miller: “Losing just one percentage point of sales is increasingly a big deal.”
The made-in-America idea of the global brand is to build a name that people will buy on faith, and the pioneer was Coca-Cola. During World War II, Coca-Cola chairman Robert Woodruff pledged that no U.S. soldier would be more than an arm’s reach away from a five-cent bottle of Coke. Thus was born the world’s most famous brand, but not by deliberate plan. In fact, no one talked about building global brands until Harvard professor Theodore Levitt invented the idea in an article for a 1983 issue of the Harvard Business Review, which became a marketing bible for U.S. multinationals propelled into world competition by the deregulation of the Reagan years.
In retrospect, that may one day be remembered as the beginning of the end. The fall of the Berlin wall in 1989 would free millions of brand-starved consumers to snatch up American products as symbols of freedom. Levi’s 501s became a kind of international currency. But as trade barriers fell, and U.S. companies came to increasingly dominate global commerce in the 1990s, resentment spread, culminating in the riotous protest at the 1999 world-trade talks in Seattle. Now, though Levi’s remains one of the world’s most trusted brands, Roper finds its appeal is fading, too.
At the least, American roots are no longer an easy selling point. Through much of the postwar period, U.S. brands could play off this cachet; Levi’s ad campaigns used wholesome themes of boy-meets-girl in a heartland American setting until the early 1990s. And why not? It hailed from a rich country with a reputation for social justice, a land of heroes like John Wayne and Martin Luther King, notes Brandeis University marketing professor Shih-Feh Chen. Not now. “We need to be extremely worried,” says Marian Salzman, an American who is chief strategist at Euro RSCG, a French-owned ad agency based in New York. “Every brand has got to decide how much America is too much.”
This is not news to any of the big brands named by Roper. Spokespeople for Levi’s, Marlboro and McDonald’s all make it clear that they work hard not to come across as ugly Americans, going out of their way to hire locally and tailor products and advertising to local sensibilities. But the Roper survey suggests they may need to go even more local still. It cites as a model Coca-Cola, one of the few American brands that managed not to lose popularity last year, and is renowned for its efforts to work through local suppliers and cater to national tastes in all 200 countries where it bottles its signature drink.
It’s far from certain that the end of American brand dominance is upon us. The notion that American companies have reached the end of an era “is a ludicrous extension of a short-term situation,” says James Root, a managing director for Bain & Co. consultants in New York. If the United States were to get a new president, reverse controversial policies on the environment and find a new Michael Jordan, argues Chen, “who knows? In three years American brands could bounce back.” Still, the early-warning signs are now too strong to ignore. The first likely result: a further fall in the number of companies that are openly proud to be Americans abroad.
