Nov 02

Putting all your Eggs in one Basket

I must admit to cringing when I read the dismaying news about ad agency Berlin Cameron losing its two anchor accounts last week and having to downsize 55 of its 90-person staff.

It was a "there but for the grace of God go I" feeling since Peppercom has twice faced similar circumstances in our 10-year history. One occurred when a division of GE and its 35 percent of our billings decided it needed a global firm to "best meet its needs." Another occurred very early on when a now defunct business insurance client was acquired by another one, and 40 percent of our billings disappeared faster than you can say or spell "actuarial."

These were painful but healthy lessons for us to learn. When a business relies too heavily on a few key clients, it creates too many vulnerabilities and, in my opinion, distorts the client-agency relationship since the client knows it wields tremendous power (and we’ve experienced a few, very abusive client managers who knew this fact and took advantage of it).

The "too many eggs in one basket" syndrome is a house of cards strategy that can immediately impact a firm’s image and reputation if the client(s) departs. Advertising Age, for example, ran this headline in covering Berlin Cameron’s double loss: "The fall of Berlin?" And they quoted an industry analyst as saying, "From a new business perspective, some clients may pause for a second and wonder what’s going on." Such comments can be the kiss of death for an agency and the beginning of a self-fulfilling prophecy that can only end in acquisition or Chapter 11.

Nov 01

Wal-Mart’s Big Chance

Weeks after heroically taking over for an impotent federal government in the wake of Hurricane Katrina, Wal-Mart finds whatever goodwill it earned to have evaporated.

Bracing itself for the release of an unflattering documentary by Robert Greenwald, the company has set up a so-called "war room" at its Bentonville headquarters. It is staffed with high profile ex-White House aides now employed by Edelman, such as Reagan image genius Michael Deaver and former Clinton advisor Leslie Dach.

This public relations operation runs counter to founder Sam Walton’s wishes, reports today’s New York Times. Walton apparently thought public relations to be a waste of time. Were he still alive today, he would have to change his mind.

Despite all the kudos accorded Wal-Mart for its bringing bargains to communities all over the country, its practices have come under increasingly harsh light, even by those who applaud the company’s entrepreneurship. Its wages are so low that some employees need government assistance to make ends meet. Its health insurance is inadequate. Cities are blocking the construction of new stores. The stock price has slid since 2000.

Wal-Mart’s critics include the usual cabal of whiners and complainers, especially labor unions, which still refuse to acknowledge their own obsolescence. The anti-Wal-Mart lobby also embraces the embittered Democratic Party left, upset that voters refused to heed its wise sage, Michael Moore, last Election Day. Their steady drumbeat of criticism is obviously taking a toll on the company’s image, however, so Wal-Mart realized that it had to do something. Enter Edelman.

For those of us in the public relations industry who hear our work derided as nothing more than mere "spin," this is a chance to prove otherwise. Let us all hope that the pros from Washington do more than put out PR brushfires. Wal-Mart has an opportunity to burnish its image by responding to reasonable criticism with constructive and concrete action. One can expect no less of America’s number one corporation.

Oct 31

A Krafty Move

The lead story in today’s Wall Street Journal chronicles a neat little morality play on corporate responsibility and the power of the free market. 1

Faced with the twin specters of childhood obesity and possible government regulation of children’s advertising, Kraft Foods, Inc. announced in January that it would stop advertising certain products to children under the age of 12.

To be sure, this is not a perfect solution. The company, which makes such teeth-rotting, waistline-expanding and nutritionally-challenged fare as Oreo and Chips Ahoy! cookies, Fruity Pebbles and Honeycomb cereals, and Kool-Aid drinks made exceptions to its self-imposed ban. For example, it continues to market its sugary and caloric Capri-Sun Sport drink to children, making it sound like Gatorade for youngsters.

Still, it seems that Kraft learned a lesson from the travails of its corporate sibling, Philip Morris USA. Philip Morris, of course, denied the health effects of tobacco for years. Then it lost its landmark $200 billion lawsuit in 1998. Now it is in favor of government regulation of the industry, which is opposed by other tobacco companies.

Kraft is in a similar bind. Its competitor, General Mills, Inc., continues to market its Trix and Lucky Charms cereals to this young demographic, unburdened by any sense of shame or fear of a tarnished reputation.

Despite its imperfection, Kraft is to be applauded for its decision. What’s more, Kraft took this step without being forced into it by government regulation. Therein lies the moral: In the end, it is up to individual companies and industries to understand what’s right and what’s wrong. They may be pleasantly surprised to find out that it is good business, too.

Oct 31

Viva La Inteligencia!

By its very nature, this blog tosses brickbats and bouquets in unequal measure. In recent months, I have been storing up a warehouse full of the former for the manufacturers and marketers of "Che" Guevara T-shirts. In case you have missed it, many young people think that the face of this man gracing their fronts is somehow cool looking.Che

Nothing could be farther from the truth. In today’s post-Cold War era, the idea of violent Marxist revolution as means of freeing humanity from its shackles of oppression holds as much validity as the belief that the earth is flat. Even in his day, Ernesto Guevara could barely be complimented as a footnote to history. The Argentine medical doctor’s claim to fame is that he helped Fidel Castro in his revolution that destroyed Cuba. Along the way, they and their comrades jailed, tortured and slaughtered thousands of innocents, all in the name of the "people."

My revulsion at seeing this bloodthirsty nobody’s visage elevated to that of an icon is matched only by my anger at the manufacturer’s and marketer’s playing on the ignorance of the youth to whom they so disgustingly pander with this piece of schlock. What’s next: T-shirts sporting the faces of Hitler, Stalin or Mao?

Oct 28

Short Term Results, Long Term Failure…

Are the big oil and gas companies headed for trouble?  With several of them posting record profits this quarter, one would think not.  The industry is enjoying the rare benefit of increased demand along with surging prices.  The cash is rolling in.  Life is good.

But one wonders how sensitive these behemoths are to a potential backlash from the American public for profiting at their expense.  As we head into winter, the gap is likely to worsen. Oil and gas consumption will increase, causing a further dent in consumers’ wallets.

I’m not anti-business and I’m not advocating that these companies should not be profitable so we can drive around in our SUVs and purchase cheap gas without reservation or concern.  However, if I were the communications chief of one of the these oil companies, I wouldn’t be waiting around hoping that the American public doesn’t wake up and take action.  Instead, I would urge my management team to use a small percentage of those profits to benefit a cause that would help some of the people who are hurt by the rise in energy prices.  I would use it as an opportunity to preempt any consumer backlash and use it to strengthen the company’s reputation.  I would send a clear message to all of my key stakeholders that while critical, the bottom line shouldn’t be the only measure of success. After all, the price tag on any company’s reputation is likely to be a lot higher.

Unfortunately, I don’t know of any oil company that has adopted this strategy.  Wall Street is too focused on near term results so management teams are too focused on profits.  Time will tell how this all plays out but ignoring the issue and continuing to reap the benefits at the expense of customers is akin to throwing fuel on a fire.

Oct 28

Penny Wise. Pound Foolish

Today’s New York Times Metro Section contains a front-page article about a returning Iraqi veteran, Michael Serricchio, finding that his former $200k per annum job at Wachovia Securities had been eliminated during his tour of duty.

The 33-year-old husband and father says that, after three months of pleading with his employer to get his old job back, he was instead assigned to making cold calls for a $2,000 monthly draw on commission. Mr. Serricchio says he intends to sue.

Wachovia executives won’t comment publicly on the issue, saying it’s a legal matter that needs to play itself out in court. As a result, what could have been a minor issue easily resolved has now blown up on the pages of the Times.

One wonders who is making the calls within Wachovia. Is it a human resources executive? Perhaps it’s Serricchio’s erstwhile boss? More likely, a chief legal counsel is calling the shots. I just hope corporate communications wasn’t involved in this fiasco. And if it wasn’t, why wasn’t it?

Too many times short-sighted decisions that can have a huge long-term impact on an organization’s image and reputation are made without consulting corporate communications first. If Wachovia was smart, they would have reinstated the returning soldier’s job. Instead, they’ve done an excellent job of reinforcing the pervasive attitude many Americans have towards large companies: that they’re cold, uncaring and focused solely on the bottom line.

Oct 27

Pride Goeth Before a Fall

Once upon a time, our agency had a very mean client. This client had an ego that would put The Donald’s to shame. She believed she walked on water and, as a newly minted partner at the executive search firm we represented, felt her personnel announcement should be a cross between "War and Peace" and "On the Road." This was a brand new client for us, and handling this woman’s personnel announcement was our first assignment.

Each day, a revised draft would be sent over and would boomerang back to us faster than you can say, "Crocodile Dundee." Why? Because it didn’t flatter her ego to the degree she felt appropriate. Our writers "didn’t get it," she would tell us. "They don’t understand that I once ran a company and was profiled on the cover of Obscure Business Today," she would sniff.

As the days progressed, our queen of mean became increasingly disenchanted with the drafts of her press release. "They’re boring," she would complain. "They don’t capture all of the amazing things I’ve done," Then, literally 10 days into the relationship, we were fired because, "we couldn’t execute on the personnel announcement." To add insult to injury, we were told they weren’t comfortable we’d be able to generate the kind of front-page trade story coverage her announcement demanded.

Fast forward to the present. We had just been contacted by a prospect firm with a strikingly similar name as that of the executive search company. Since the long-forgotten name was back on our radar screens, we decided to find out what had become of our nemesis. So, we checked the site. She was gone. After a little checking, we discovered she had landed at a larger, much better known search firm. And there was an announcement about her joining the firm in the press section. And guess what? This major tycoon of the modern business world received exactly two sentences in a trade rag. Ah, we thought. There is such a thing as poetic justice.

Oct 26

Your Call is Unimportant to us. So is your Loyalty.

Just when I think that the major international airlines are lumbering awake in the face of their impending doom, I am reassured that, alas, they are just as obtuse as ever. An ongoing battle with one of them, American, serves as confirmation.Aa_logo_2

Last spring, we flew on one of American’s OneWorld partners to Europe. In total, we flew about 8,000 miles, which American refused to credit to our frequent flier points. "It didn’t go through," I was told at first. Only after finding all my receipts, boarding passes and itineraries, then faxing them to Dallas and waiting for weeks, were we rewarded with a grand total of 1,077 points each.

Calling the customer service center proved to be a fruitless endeavor, as well (that was after searching the web site for a number to call, which took some time). Each time I called, I was immediately put on hold and forced to listen to Muzak. If American doesn’t want disgruntled customers to call, this is the way to do it. I gave up.

This is no way to treat a dwindling base of loyal customers. They have far too many choices and you need them more than they need you. If you want examples of good customer service, look at what JetBlue and Southwest are doing. Their customers are fanatically loyal.

Yet the big airlines wonder why they have problems. I would tell them to look within. You can’t blame fuel and labor costs for everything.

Oct 24

Hitting Below the Belt

The crack marketing minds at McDonald’s have fumbled with their sponsorship of a new, CBS/NFL pre-game show segment called the "Pounder Index."

Each week, McDonald’s and the CBS pre-game crew of erstwhile NFL jocks rate the most vicious tackles/hits of the preceding Sunday from a video and audio standpoint. Each tackle/hit is assigned a "Richter-scale" like number based upon its viciousness and loudness. The hapless New York Jets and their wide receiver, Laverneus Coles, took top honors this past Sunday for a shot Coles received courtesy of a Buffalo Bills safety that registered a "whopping" 9.1 on the Pounder Index scale.Pounder1023051_1

One wonders how McDonald’s Pounder Index would have rated the hit that Jack Tatum laid on Darryl Stingley back in 1978, leaving Stingley permanently paralyzed? Would that have topped the Coles tally of 9.1? Or how about the time another Jet, Dennis Byrd, ran full speed and head-first into a teammate and broke his neck? Byrd eventually recovered, but never played another down. Would Byrd’s horrific collision have carried enough visual and acoustical drama to have made McDonald’s top Pounder Indexes of that long-ago week?

It seems to me the burger marketers can find better, more humane ways to reach the NFL’s Joe Six-Pack audience than spotlighting the ever-more horrific "shots" that NFL players lay on one another.

C’mon McDonald’s. Stop with this hitting below the belt. Pull the "Pounder Index" segment. We deserve a break today (and every Sunday).

Oct 21

Journalism’s Evil Twin

I’m in the midst of reading Barbara Ehrenreich’s new book, "Bait and Switch: the (Futile) Pursuit of the American Dream."  As she did in her incredible "Nickel and Dimed: On (Not) Getting By in America" tome of 2001, when she went "undercover" to see what it was like to be a member of America’s working poor, Ehrenreich goes incognito in search of a new story.Int_ehrenreich_25

This one really hits close to home, as the former New York Times columnist reinvents herself as a 50-year-old unemployed public relations freelancer and event planner.  She takes the reader along as she goes job hunting for a full-time corporate PR gig.

Unlike "Nickle and Dimed," however, the story is slow and unappealing. The author spends far too much time ridiculing the various self-help job search gurus and PR executives she encounters on her sojourn. What really got my attention, though, were Ehrenreich’s constant jabs at, and put downs of, the public relations field, which she refers to as "journalism’s evil twin."

Ehrenreich reminds me of so many other "holier-than-thou" journalists who look down their collective noses at PR and refuse to admit how much they depend upon us for ideas and access.  This has obviously been an age-old problem for PR people and isn’t likely to change anytime soon.

Still, I’d love to hear or read something from a journalist that speaks objectively about PR, and recognizes what we bring to today’s 24×7 world.

Well, I can always dream. Oh, and by the way, Ms. Ehrenreich?  We’d never hire anyone with such preconceived notions and such an obvious chip on her shoulder.  Better hang onto that day job.