Can Any Good Come From Bad Publicity?

For most of my career in the public relations business I have often felt that occasional, unintended negative publicity in the midst of an ongoing positive campaign can have a neutral to positive effect on an organization.

Strange? Maybe – but maybe not. My reasoning is that unless a company is afflicted by an ongoing crisis which is reported on almost daily in the print, broadcast and social media, most people in due time forget the occasional negative they read or hear and just remember seeing the company or product name in the media.

Now comes some proof that justifies my instincts. Three professors from Wharton and Stanford published research on this subject last month in the journal, Marketing Science, which was reported in The New York Times (10/29):

“A crucial factor is how familiar a brand or product was before the negative publicity. Crunching data that cross-matched book sales against critics’ appraisals, they found that negative reviews of a new book by an established author hurt sales,” but for books by relatively unknown authors, negative publicity had the opposite effect. They found, said The New York Times, that sales of Michael Jackson’s records rose during periods when the singer was in the news for child molestation or dangling his baby over a balcony.

As I had predicted, “follow-up studies pointed out that as time passes, we may not remember the context in which we heard something, we just know it’s familiar.”

Recently when the Gap changed its logo to the enormous disdain of its customers and finally changed it back again because the online shouting got too loud; the complaints were not about the company’s products; they were about the logo. Thus the study showed that the “more indirect the negativity is (about the logo – not the products) the more likely it could have a positive effect (on sales).”

The chairman of a Fortune 500 company, which was a long time client of Makovsky + Company, once made some “out-of-plan” undesirable remarks in an interview with New York Magazine. When I called the client to point out this faux-pas and discuss a solution, he retorted, “Oh I don’t care what they say I said, as long as my name is mentioned.” He obviously understood the dynamics of what was happening here.

Technorati Tags: The New York Times,Stanford, Wharton, publicity, reputation, communications, public relations, business, Makovsky

Ethics in Business: A Forthright Response to B-School Cheaters

Ponzi schemes … bailout money used to pay bonuses … allegations of fraud … charges of sexual harassment … the shady actions of a few executives can ruin the reputations of individual companies and, at times, whole industries. It’s sometimes hard for the average American to believe that most employees — and most companies — are decent and ethical.

I’ve often said that business schools should be providing MBA candidates with a solid grounding in corporate reputation issues … including, especially, ethics. After all, failing to recognize its ethical responsibilities puts a company at extreme risk — threatening its profitability and even its ability to survive.

So I was really impressed by a video I saw recently on YouTube, in which Professor Richard Quinn, of the College of Business Administration at the University of Central Florida, delivers an articulate and impassioned 14-minute lecture in which he reveals that many members of his class were found to have cheated on the midterm.

“I don’t want to have to explain to your parents why you didn’t graduate, so I went to the Dean and I made a deal,” said Quinn to his class. “The deal is you can either wait it out and hope that we don’t identify you, or you can identify yourself to your lab instructor and you can complete the rest of the course and the grade you get in the course is the grade you earned in the course.”

Those who confess to cheating will also be required to complete a four-hour course in ethics. So far, more than 200 students have already confessed to having cheated.

More strategists with the moral conviction of Professor Richard Quinn could no doubt eliminate the need for whistle blowers in the corporate world.

Technorati Tags: YouTube,  Richard Quinn, University of Central Florida, reputation, communications, public relations, business, Makovsky

Latest Victim: Netflix

It’s like banging your head against the wall. Every good corporate citizen today knows the name of the game is full disclosure (it’s an essential component of integrity). Yet even some very visible companies still try to get away with violating the fundamental rule of transparency – and think they will not get caught. But they mostly do.


Here’s the latest victim: Netflix.

Netflix made a HUGE mistake when it faked customer endorsements by hiring actors to deliver praise at the Canadian press launch of its new service – for which it later apologized.

According to an article in Boing Boing, “Netflix has had to apologize after it was revealed that the enthusiastic customers talking to the press at its Canadian launch were actors hired for the occasion, reciting lines from a prepared script.”

Literally extras were encouraged to move into the streets and play types, for example, mothers, film buffs, etc. An information sheet from Netflix distributed to extras said: “Extras are to behave as members of the public, out and about enjoying their day-to-day life, who happen upon a street event for Netflix and stop by to check it out.”

This makes you wonder what the Netflix folks were thinking – should one of these actors be invited by the press to do an interview. For all its press launch planning and execution, all the good has been undone in one fell swoop.

Technorati Tags: disclosure ,corporate citizen,Netflix, communications, public relations, business, Makovsky

Talking Too Much? Maybe Not!

You may criticize or envy talkers, but according to a recent study, they have a leg up on the rest of us! What do I mean? Well, an article on the study in Washington University Magazine (Oct. 2010) says the gabby types have found one of the secrets to a happier life.

Now let’s get specific. The research from Washington University (St. Louis, MO) and the University of Arizona, notes that “people who spend less time alone and more time talking to others have a much greater sense of personal well being … [and] the happiest people engaged often in more meaningful and substantive discussions, as opposed to those who filled conversations with idle chit-chat and small talk.” The study was published in Psychological Science, a journal of the Association for Psychological Science.

Organizations and their constituencies should take note. The internet is facilitating dialogue with customers and others, but this study demonstrates the value of organizational leadership taking the initiative to reach out and join together — in person — with these groups for valuable dialogue. It will result in happier customers, employees, suppliers and others. Isolating yourself does no one any good. Interaction is critical.

Who were the happiest participants in the study? Those who spent 25 percent less time alone and 70 percent more time talking to others, as compared with the unhappiest participants. Everyone from the President of the U.S. on down can benefit from this lesson.

Technorati Tags: Washington University, Psychological Science,University of Arizona, public relations, business, communications, Makovsky

“Proxy Plumbing” Issue: Solutions?

Transparency and shareholder communications are at stake in a vexing matter of increasing concern, which has come to be known as the “Proxy Plumbing” issue.  Central to the debate are the processes by which companies deliver proxy statements and other such materials to their shareholders who hold their shares through a broker.  Recently, the SEC has been reviewing the comments it has received from various interested parties on the matter.

To address potential solutions to this issue and shed light on other matters impacting corporate governance, Makovsky + Company is joining with Georgeson & Company, a noted proxy solicitation firm, to host a seminar, the details of which can be found here.

The delivery of proxy materials to shareholders has always been problematic.  Of particular interest to corporate managers are those shareholders who elect to remain anonymous and are known as “objecting beneficial owners,” or OBOs, for short.  It has been estimated that this group accounts for 60% of the shareholder universe.

Companies must deliver proxy materials to their OBOs, and do so by reimbursing brokerage firms for the fees those firms pay to third-parties, such as Broadridge Financial Solutions.  Seems a bit convoluted to me, not to mention costly especially for widely-held companies.  In addition, the present system makes it difficult for companies to effectively communicate with their shareholders… not a good idea given that transparency has become a corporate watchword these days.

The position for change is reflected in a comment letter to the SEC written by Dannette L. Smith, Secretary to the Board at UnitedHealth Group, a company traded on the New York Stock Exchange:

The Commission should be under no illusions. The current shareholder voting system is flawed and, in close elections, there are often serious doubts as to the accuracy and integrity of the voting results…  UnitedHealth routinely suffers major occurrences of attempted over-voting and under-voting in connection with its shareholder meetings…

On communications with shareholders,

… As noted recently in a report sponsored by the Council of Institutional Investors, however, "the OBO/NOBO distinction impedes company communications with beneficial owners"…

We believe that it is time for a change.  Communications must be open, honest and direct to foster true transparency and strong corporate governance.

Technorati Tags: CMO, Proxy Plumbing,Georgeson & Company, Broadridge Financial Solutions, transparency, Council of Institutional Investors, Makovsky

Gandhi: A Unique Letter

Yesterday President Obama toured the home of Mahatma Gandhi, the famous Indian leader who fought for his country's independence. Obama, who was in India as part of an economic mission, cited Gandhi as one of his heroes, along with Abraham Lincoln and Martin Luther King. This inspired me to think of Gandhi's many unique acts, and thereby I discovered one — featured on the blog, “Letters of Note” — that is relatively little known. It was a letter written by Gandhi to Adolf Hitler about a month before the Nazis invaded Poland. In it, Gandhi pleads with Hitler not to unleash a war “which may reduce humanity to a savage state.”

The letter — reproduced below — never reached Hitler, and it’s highly unlikely that it would have made a difference, but it underscores the fact that the act of communications requires the active engagement of both parties for the “conversation” to succeed.

As at Wardha,
C. P.,
23-7-'39

Dear friend,

Friends have been urging me to write to you for the sake of humanity. But I have resisted their request, because of the feeling that any letter from me would be an impertinence. Something tells me that I must not calculate and that I must make my appeal for whatever it may be worth.

It is quite clear that you are today the one person in the world who can prevent a war which may reduce humanity to a savage state. Must you pay that price for an object however worthy it may appear to you to be? Will you listen to the appeal of one who has deliberately shunned the method of war not without considerable success? Any way I anticipate your forgiveness, if I have erred in writing to you.

I remain,

Your sincere friend

M. K. Gandhi

HERR HITLER
BERLIN
GERMANY.

Technorati Tags: President Obama, Gandhi,Letters of Note, public relations, business, communications, Makovsky

Does PR have the CMO’s Ear?

Our guest blogger today is Laney Cohen, who is a Senior Account Executive at Makovsky + Company in our health group.


Money seems scarce—for infrastructure investment, purchasing homes and building brands. The new chief marketing officer (CMO) is changing the course of marketing and, most certainly, where money is directed. Earlier this month, an Ad Age article pointed out the new environment will “force marketers to reassess every practice and reset their approaches.”

Above anything else this article screams, “show me that my money is spent wisely.”

Why? Because it's difficult for the leadership team to connect the budgets for varied marketing-mix elements (public relations and advertising included) to results, it's relatively easy to understand why they might approach marketing and communications with reduction demands and the mandate to do more with less.

Now, public relations and advertising are not just competing with each other for a piece of the budget pie, but for THE budget. The lines of responsibility for creating content may appear (to clients) to be blurry. Agencies with communications labels are now encroaching on each other’s turf. The end result is that they are showing their sharp elbows at the expense of the clients’ endpoints.

Those agencies and personalities best able to chart the value, analyze program outcomes, and tap other skills and allied organizations will be best positioned to have the CMO’s ear.

Historically, communication companies have been measured in terms of activity volume. Sales, marketing, hiring and pricing decisions were made based on how many units you sold and needed to sell. And there appeared to be a fairly straight line between marketing, sales and units sold.

For CMOs it is no longer optional to factor longstanding relationship ties and “the way things were” into the budget metrics. Right now, public relations has the biggest opportunity to grab a larger piece of the resource pie because its heritage is in content and dialogue. CMOs understand that for a brand to succeed, they need to be a part of the stakeholder conversation—where content and conversation converge and opinions align.

Christian McMahan, Heineken CMO, commented at the recent Council of PR Firms Critical Issues Forum: “78% of people trust their peers, only 14% trust the company. “ Noting it is no longer just about talking to your audience; it’s enabling a two-way dialogue.

With the CMO acknowledging the change in how people connect with each other and brands, public relations is now faced with stepping up to the plate. The new set of outcomes includes measuring conversations and not just clicks and scoring engagement and not just eyeballs.

In demonstrating movement in perceptions, key-audience engagement, conversation stimulated and attitudes changed, public relations is in a prime position to shift the budget balance in its favor and earn an equal seat at the table where resources are sliced.

Technorati Tags: CMO, Ad Age,advertising, public relations, business, communications, Makovsky

A President I Admire

As we approach Election Day tomorrow, you might think I am about to rattle off pros and cons. Rather, I want to communicate some firsts of one of our coolest Presidents – and one I admire a lot – Teddy Roosevelt (whose birthday, October 27th, just passed):

• The first president to invite an African American to dinner. On October 16, 1901, he and educator, author and political leader Booker T. Washington discussed politics and racism over a meal at the White House.

• The first president to appoint a Jewish person, Oscar S. Strauss, to his cabinet (as U.S. Secretary of Commerce and Labor).

• The first president to be seen in an automobile in public. In 1902, he rode in a Columbia Electric Victoria Phaeton, surrounded by a squad of bicycle cops.

• A major proponent of the Scouting movement, he was named the first (and only) Chief Scout Citizen by the Boy Scouts of America.

With thanks to Neatorama.

Technorati Tags: Teddy Roosevelt, Booker T. Washington,public relations, business, communications, Makovsky