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If bad shit is unobserved and unpunished it has no cost and will be normalized faster.
Our problem right now is that people shake their fingers at Trump but he never actually pays any consequences - if bad actors are forced to pay for their damage we can discourage repeats from them and, if we publicize it, others.
Also, all but the dumbest marketers know that some news is directly damaging - it's just that some things you might think are damaging aren't. As an example, a wardrobe malfunction in the middle of a live commercial Ala Janet Jackson isn't going to cause brand damage because it's not actually a negative association...
Similarly, while Toyota needed to complain about the use of Hiluxes in the Chad-Libiyan border war because embracing it would implicate them in human rights abuses... The Great Toyota War was excellent PR for Toyota by both getting their name out there indirectly and by proving how fucking indestructible those fuckers are.
So I'd probably say that the premise of that statement is just false but is instead highlighting that a lot of things called "bad press" actually aren't.
I mostly agree, and it's the secondary part, the lack of punishment/consequences that led to asking this question. If the criticism is ineffective at persuading others toward your views, does it outweigh whatever attention/awareness it's giving the subject?
I don't believe so. I think they're separate considerations.
I think that Colbert's decision to not say Trump's name for a long time was a good one - I think that Trump in particular is narcissistic enough to be wounded by silence. However, even when he wasn't president there were some things he was doing (like proclaiming the innocence of Jan 6 insurrectionists) that we needed to call out and have attention on - but his opinions on random shit didn't need to be heard.
Now that he's president we need to listen and hold him accountable when he speaks. Unfortunately some dickwads reelected him so he's in the middle of the spotlight regardless, so we should closely examine his bullshit (i.e. when he said "I will own Gaza" - the media should be hounding him over that shit).