SOCIETY

Elton John Just Boosted Dolce & Gabbana’s Profits

SOCIETY
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Mar 18, 2015 at 8:23 AM ET

When fashion magnates Domenico Dolce and Stefano Gabbana attacked gay adoptions, IVF and reproductive medicine over the weekend in one (painful) interview, Elton John took a stand. He rallied thousands around the hashtag #BoycottDolceGabbana and his activism took the Internet by storm.

And then the boycott (probably) made D&G a lot of money.

“Boycotts are double-edged swords,” explains Paul Sergius Koku, a professor at Florida Atlantic University and author of a 1997 study on the financial impact of boycotts. “Companies can make money hand over fist in the wake of a boycott.”

Indeed, Koku’s results showed that 54 publicly traded companies collectively averaged a revenue increase of about 0.66 percent after the threat of boycott, and another 0.76 percent five days after the boycott launched. For Dolce & Gabbana, which reported a $1.5 billion in revenue in 2011, Elton John could theoretically win the company over half a million dollars in the first five days of his boycott (assuming a daily revenue of $4.1 million).

But Koku cautions that his figures represent an average gain from several different industries. Movie production companies, for instance, actually tend to lose money during a boycott. Meanwhile retailers like Dolce and Gabbana usually see modest gains on the order of 0.21 percent—an additional $8,000 each day of the boycott right in D&G’s pocket. In any case, it seems likely that Elton John will unwittingly boost Dolce & Gabbana sales.

There are several reasons why many boycotts fail miserably, Koku says. Often a strong response in the form of a “buycott” is to blame. When Chick-fil-A faced boycott in 2012 for opposing gay marriage, Tea Partiers rallied behind the company in support of traditional marriage.

Supporters also need to believe that the cause is worth the potential costs. When Stevie Wonder called on performers to boycott the state of Florida after the Trayvon Martin scandal, virtually no one joined him. “Florida drove in record numbers that year,” Koku recalls. “I suspect Stevie Wonder did not frame the issue properly.” Similarly, performers and actors who wear Dolce & Gabbana are unlikely to boycott the brand, regardless of their views on adoption and IVF.

Since D&G is a privately traded company, it is unlikely that we’ll ever know how much money it made off of Elton John’s good intentions. But we do have plenty of data on how particular industries generally respond to boycotts. Here’s a breakdown from Koku’s study: