Luis Suarez and another reputational risk issue for procurement to consider

Is that Mr Lecter? Hannibal Lecter? Look, when we employed you to be the brand ambassador for our new toothpaste we had no idea that you had certain, er, culinary preferences. We're going to have to terminate your contract forthwith ...what do you mean we owe you $5 million if we pull out?

Reputational risk comes in many forms. It matters to pretty much any sort of business these days, but we tend to think primarily of examples such as retailers whose products were found to have been made in third world sweat shops. Or maybe food manufacturers using horsemeat - another classic example.

If you are running an online gambling business however, you might think that reputational risk is not that big an issue. As long as you are not found to be cheating your players, no-one is expecting that sort of firm to be paragons of virtue and corporate ethics, we'd suggest.

However, there clearly are limits even to this sort of business. 888Poker, a firm that uses Luis Suarez in their advertising campaigns, have announced that they have cancelled their contract with him following the incident in the Uruguay / Italy match. Suarez allegedly bit an opponent, and has received a ban from FIFA - and this is the third time in his career he has done this.

Suarez isn't the only example of an individual proving to be a source of risk. Another procurement friend told me last week of a firm he worked for who used a very well known, stunning and personable model in their advertising campaigns - fine, until she was pictured in the tabloids with a few grams of cocaine up her nostrils!

So here is another opportunity for procurement to show its worth. What are the contractual provisions that we should have in place to cover inappropriate behaviour by individuals who are providing this sort of marketing service? Do you seek damages or at the very least, recovery of past payments, if they harm your brand or company reputation? What termination provisions should be in the contract? And perhaps more widely, is there an 'alternative supplier' strategy in place, so if your star turns out to be less than shining, you know what the back-up plan involves.

Sponsorship and related endorsement-type approaches are taking a greater role for many firms within the overall marketing mix. That means this is another interesting area for the procurement team to consider. I'm not sure I'd want to be the category manager who has to go and tell Suarez that his contract is being terminated though. You might want to do that over the phone rather than in person ...

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Voices (3)

  1. Sydney Lazarus:

    It ought to depend on the product and the image of the business. I think Suarez’s reputation is just as likely to help as hurt, but being a Suarez fan I’m biased here.

  2. RJ:

    You just need to ensure your contract has some teeth to it (boom! boom!)

  3. b+t:

    Procurement uber alles.

    Also, publicly dropping a celeb may do more good than the endorsements ever did.

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