It is axiomatic in a capitalist economy that firms try to maximize profits and survive. Nobody wants to be the next F. W. Woolworth. Nevertheless, in today’s race-obsessed world, this venerable axiom, the very essence of capitalism, may have become obsolete. Judging from recent TV ads, at least some major corporations now seem determined to lose market share by embracing wokeness.
The willingness to undermine profitability has been particularly visible in TV ads for luxury automobiles, notably Lincoln, Cadillac, Audi and Lexus. Historically, the people featured in these advertisements resembled potential customers. They were nicely dressed, white, clean-cut and probably country clubbers. The marketing strategy was aspirational—buy a Caddy and display your social prestige. Celebrity endorsements featured people potential buyers admired—think the golfer Arnold Palmer’s long association with Cadillac. Conversely, great care was taken to ensure that the product avoid a down market image that would frighten status conscious potential buyers. Luxury cars generated fat profits and lent prestige to the firm’s entire car line-up, and thus deserved protection.
The two 1950s era Cadillac ads below perfectly illustrate aspirational marketing and there can be zero doubt about what a Cadillac signified.
To be sure, it is unlikely that most Caddy owners of that era lived in the portrayed mansion of the first ad though most probably could afford (though not necessarily at a young age) the full-length mink of the second. Still, for the already affluent intent on moving up yet further, the Caddy was a ticket up the ladder.
A similar aspirational strategy was employed beginning in the early 1960s when the general use credit card—Visa, Mastercard, Dinner’s Club. American Express and Discover Card—first made their debut. This plastic largely replaced local department store cards, and the initial pitch stressed exclusivity. A solid credit rating was essential to receive these early cards, and so taking them out for the restaurant or hotel bill demonstrated one’s superior social standing. The Mastercard slogan “you cannot be turned down” was decades away. Exclusivity also made perfect financial sense—the rich card holder could afford the payments though he might occasionally pay interest to defer payment.
Below are examples of advertisements from the 1960s for credit cards. Both feature well-groomed women and note the pearls, the Waspish hairdo and other outwards signs of status. Ads typically stressed conveniences—a single card was better than a thick cash-stuffed wallet and far safer when traveling, especially overseas, two consideration unlikely to appeal to the poor. For many, no doubt, receiving one’s first AmEX gold card signified achieving financial worthiness.
Things have changed, and corporate wokeness has clearly influenced the marketing of both luxury cars and credit cards. In the case of Lincoln, Cadillac, Audi and Lexus, all the recent TV ads that I’ve seen feature youngish black women and in the case of the Audi ad, a vampish black women with striking blond hair tooling around in the latest etron model (priced from \$67,000 to \$91,000). Tellingly, the Lincoln ad also features a clumsy white male struggling with a garden hose while the cool lady of color conspicuously parks her sleek Lincoln. Meanwhile, ads for both Well Fargo and Chase Bank Credit cards prominently feature somewhat youngish blacks living it up, assumingly, due to holding the right credit card. The over-riding theme of this marketing campaign is that this card is the gateway to effortless consumption. No mention is made of interest rates or, as in past credit card pitches, the prestige that comes from owning the card. There is an almost magical get-the-stuff quality about these cards. Keep in mind that the average credit card interest rate in 2021 was 16.2%.
Hard to discern the economic basis underlying these pitches. The old adage that one goes duck hunting where the ducks are must be unknown to those greenlighting these commercials. How many young black women rich enough to afford a Lincoln Navigator, typically priced at around \$61,000 plus taxes, interest payments, and mandatory insurance in high-risk neighborhoods. Actually, these base prices are deceptive since blacks are easily pressured into expensive but unnecessary extras such as extended warranties and higher interest rates.
Recent economic data tell a story at odds with TV portrayed reality. As for the car ads, black women are at the bottom of the pile in terms of their median incomes. Even in high wages states such as New York, California and Maryland, their annual incomes are \$50,000 or less, typically far less in most of the county (the median is \$41,098). When you consider that 80% of all black women are their family’s sole breadwinners, discretionary money necessary for a Lincoln Navigator must be near zero. What expensive advertising campaign will target a tiny sliver of the market?
There is also the awkward reality of the black proclivity to declare bankruptcy and defaults on car loans at almost double the rate for whites. And not only are black disproportionately bankruptcy prone, but they are far less likely to get permanent relief, regardless of the form of their bankruptcy. Blacks in general also have dramatically worse FICO credit scores than any other racial/ethnic group It gets worse. Blacks in bankruptcy generally possess fewer assets than whites so pay-off debts and, if unemployed, find it more difficult to acquire a new job.
The upshot is that any Lincoln car dealer who entices a black women to buy one of its luxury vehicles is not only making a risky financial decision, or shifting that risk to a finance company, but this seduction may be a financial disaster for the ”beneficiary.” And sweetening the allure with a minimal down payment and an extra-long pay-back period further exacerbates the damage. Repo man here we come. What single mom even earning \$60,000 will benefit from having to make the payments on a \$60,000+ Lincoln Navigator?
In a sense, those promoting commercials appealing to blacks are no better than junk food companies who profit off burgeoning obesity. That so-called champions of blacks outraged over menthol cigarettes have remained silent regarding these potentially ruinous TV pitches is remarkable. How about instead pitching the benefits of home ownership that feature ordinary blacks saving their money and fixing up their houses? The conspiratorially minded might conclude that a plot exists to keep blacks mired in poverty by enticing them to over-spend on “the good life” via easy-to-get credit cards and luxury cars.
Then there’s the damage to a product’s reputation when it is closely associated with blacks, particular those who appear lower class. It is one thing to have a commercial for Rolex watches featuring Tiger Woods, quite another to use a sepia-tone model who looks like a \$2000 a night hooker in a platinum blond wig to tout a German luxury car. How many potential buyers who could afford that vehicle will now tilt toward an Audi etron versus the comparably priced BMW or Mercedes Benz? Will users of AmEx’s platinum card transfer their balances to a Wells Fargo card since they, too, want to enjoy the free-spending sporting life depicted in TV commercials?
What explain this odd marketing? Conceivably the firm’s marketing department has been captured by recent Gender Studies graduates who see TV commercials as a way to give “voice” to historically marginalized communities such as slinky black women coiffed in platinum blond wigs. Or, possibly, shareholder activists threaten litigation unless Ford Motor Company increases diversity and putting a black model behind the wheel of a Lincoln is the cheapest escape.
Let me suggest, however, an explanation that this is all about virtue signaling, a burnishing of corporate imagines in today’s dysfunctional race-obsessed world. Alas, this signaling has become an arms race, and a few million to BLM may only get a seat at the back of the room. More is necessary and this brings to mind the potlach, a ceremony among the indigenous people of the Pacific Northwest that “…involves giving away or destroying wealth or valuable items in order to demonstrate a leader’s wealth and power. Potlatches are also focused on the reaffirmation of family, clan, and international connections, and the human connection with the supernatural world.” This is not about destroying trinkets. To impress, the destruction must be sizable, an act available only to the richest of the rich. Throw a Rolex into the fire.
Translated into today’s racial cosmology, GM’s Cadillac Division can show the world that they are so committed to racial justice that they can afford to debase their most upscale brand by featuring young black female TV actors, people who are not typical Cadillac owners and whose appearances may well alienate traditional customers. That is, feature actors who would never be admitted to the country club, and if they did seek admission, the police might be called. After all, in today’s corporate world where racial sensitivity is mandatory, and diversity hiring quotas de rigueur, what’s the next level in the virtue signaling Olympics? In gymnastics, this would be the triple double. That is, GM is so committed to Diversity and Inclusion that it will destroy millions in shareholder value to prove it.
The sliver of good news is that, maybe, the market will eventually punish this counter-productive PC pandering. Wealthy middle-aged whites, the core clientele for Lincolns, Cadillac, Audi and Lexus will shun the brand dues to its racial pandering. Elon Musk will get even richer. The Wells Fargo credit card will become known as a fancy EBT card (the electronic government benefit card) and those with genuinely good credit will be embarrassed to show it when out with friends.
No doubt, sacrifices on the Great Altar of the Racial Reckoning must continue.