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AIG Backs Down from Lawsuit. Is the PR Damage Already Done?

American International Group InsuranceWe recently discussed what appeared to be the glaring hypocrisy of financial/insurance giant AIG. We grew interested after the release of what was supposed to have been a rousing ad campaign thanking American taxpayers for their (non-optional) support during the financial crisis even as the company was simultaneously considering suing the government.

The suit would have claimed that the abnormally high interest rate charged by the fed during the bailout violated the Constitution’s Fifth Amendment, which protects “private property” against “public use, without just compensation”. While AIG ultimately decided not to back the lawsuit (ya think?), the story has already subverted the brand’s we’ve-cleaned-up-our-act message. The damage, as they say, is done.

“The hiccup with the lawsuit issue stole a great deal of the thunder from the ad”, said Bruce Haynes, managing partner of Purple Strategies, a corporate communications and branding management company. “For a moment, it seems they were awash in hypocrisy. Although they made a good decision not to back the lawsuit, it was a communication failure”. That’s putting it mildly — this was one hell of a hiccup. In fact, if we take the hiccup metaphor literally, we think it would look something like this (It’s a cat GIF. You’re welcome).

“I think they are dealing with a business model that’s very siloed”, Ann Green, senior partner at Millward Brown, told AdAge, “Everybody was working well independently, but the entire experience was not consistent”. She went on to offer what we consider to be sage branding advice, saying that in order for a company to convey a strong, consistent public image, it needs to be brand-oriented in every facet of its business, from advertising and marketing to investor relations and legal actions. In other words, a company needs to embody a brand internally before successfully and consistently selling that brand to the public.

Even though AIG has repaid all of its government loans in full (and has even taken actions to simplify its business model and strengthen its balance sheet), America has not forgotten its role in the financial meltdown; While we may be willing to believe positive change when we see it, it doesn’t take much to rekindle our sense of doubt and wariness. Unfortunately for AIG, the disconnect between its ad campaign and its legal actions has deepened the public’s distrust.

“Communication has to be driven horizontally to prevent these kinds of things from happening”, said Mr. Haynes. “The ad in itself was well crafted and was going to be very effective at delivering the message that they had gone back up on their feet”. But now, even we have trouble watching the spot without feeling more than a twinge of jaded cynicism.

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