While branding creates distinct advantages, such as brand loyalty and recognition, branding also has disadvantages. Certain areas of branding require extensive monitoring, as well as posing high costs and certain risks. When a brand becomes associated with a person or group, negative events surrounding the person or group have the potential to “rub off” on the brand itself.
Certain costs arise in branding. For branding to be effective, the maximum number of potential customers must be exposed to it. This costs money. One inexpensive method is by going viral, in which word of mouth and the Internet provide momentum for the company. However, viral exposure is unpredictable; no foolproof method for going viral exists.
Branding is effective for commercial products. Branding in a commercial environment, while expensive, passes costs to the consumer in terms of higher prices. However, branding suffers when applied to social industries. When branding takes place in a social arena, the costs get passed to the donors, resulting in the organization's being less effective fiscally.
When an individual or group is associated with a brand program, problems arise if the image suffers. When pro football player Michael Vicks was arrested on charges of dog fighting and illegal gambling, the Atlanta Falcons cut him from his contract. Due to his behavior, the team (as well as the National Football League) suffered a blow in public perception. By the same token, when one person becomes associated completely with a brand, that person's departure from the company could cause it to suffer. For instance, when reports came in that Steve Jobs of Apple was dying of cancer, shares of stock took a hit.
In order for a brand to succeed, much effort must be expended in maintaining the brand presence. On a small scale, a single individual may shoulder the responsibility for maintaining the brand, but larger companies need a brand division. Maintaining a brand entails tracking stories and comments about the brand in question, answering and addressing all concerns. Finding the right balance between maintaining the brand and being heavy-handed is important.
For example, in order to protect its brand trademark, McDonald’s sues any and all businesses using the McDonald’s name or variation of the name. A restaurant bearing the name “Little Mac” changed its name when McDonald’s corporate lawyers threatened legal action. Actions such as this have the potential to tarnish a brand image.