Holmes Report Blog

The Holmes Report blog focuses on news and issues of interest to public relations professionals. Our main site can be found at www.holmesreport.com.

Saturday, February 04, 2006

Dumb and Dumber: Business 2.0 has released its list of the 101 Dumbest Moments in Business for 2005, and as always it makes interesting reading for public relations professionals, who should at the very least check out the “Advertising” and “Companies” sections of the list.

Classic advertising goofs include Anheuser Busch’s "Mr. Discount-Airline-Pilot Guy" ad, which for some strange reason alienated the folks at AirTran—a major Budweiser customer; Boeing’s ad for the Osprey assault helicopter, which depicted the war bird attacking a mosque and contained the copy: "It descends from the heavens. Ironically it unleashes hell;’ and WPP creative director Neil French’s explanation for the absence of female creative directors in the ad business: “they’re crap” and eventually they "go off and suckle something."

In the “Companies” section, meanwhile, there’s Google’s boycott of CNET, Guidant’s decision not to tell doctors and patients about its potentially fatal defibrillators, and—one I somehow missed at the time—Russell Stover’s attempt to market six-inch chocolate crucifixes as an Easter candy treat.

Friday, February 03, 2006

Great Moments in E-mail: What is it about sports PR people?
Speech Impediment: I hadn't seen any coverage of this until today, but apparently Congress is in the process of making changes to the Trademark Dilution Revision Act, a piece of legislation designed to help companies protect their trademarks. And a coalition of consumer groups, artists, and librarians is concerned that the proposed changes--already approved by the House--go too far.

According to the groups, if this law had been in place "when Don McLean sang about driving his Chevy to the levee and finding the levee dry, the songwriter could have been sued for trademark dilution under the current language of the bill. Or when Walter Mondale criticized Gary Hart during the 1984 primaries by using Wendy’s slogan, 'Where’s the beef,' the remarks could be considered a trademark violation under the bill as passed by the House."

Think that's unlikely? Consider this: "Don Stewart, an Alabama graphic artist, has been drawing 'visual puns' for many years, including this picture of a VW Beetle composed entirely of insects. This particular image was created in 1992, so Don was surprised to hear quite recently from Volkswagen's lawyers. They demanded that he stop circulating the image in any way, shape, or form, and suggested that he tear the images out of the coffee table book he sells and send those images to Volkswagen."

Companies are absurdly sensitive about controlling their brands. The law as written looks likely to give rise to more frivolous lawsuits than asbestos, Vioxx and McDonald's coffee combined.
PR Career Blog: Longtime PR executive search consultant Judith Cushman joins the blogosphere. If you're thinking of a career change, it's probably worth checking out.
Data is Good: Cymfony has added a knowledge center to its database that contains a wealth of information about the blogosphere. There's everything from a glossary of terms to third party reports on the state of blogosphere and articles on measuring the impact of blogs. Very useful stuff.
Fombrun Speaks: Ernie Landante's latest podcast features Charles Fombrun, NYU professor, president of the Reputation Institute and author of Fame and Fortune (book better than it's title). I got to listen to it on a flight to Chicago yesterday, and while it doesn't have as good a beat as my Arctic Monkeys CD, the lyrics are pretty good.

Thursday, February 02, 2006

Not Good Enough to Give: Michael Fullilove, who directs the global issues program at the Lowy Institute for International Policy in Sydney, seems to believe that charitable work is a privilege that ought to be extended only to those who have demonstrated their genuine concern by not becoming famous.

Or something.

In a Financial Times op-ed that seeks to mock celebrities for caring about causes, Fullilove goes after Angelina Jolie, Bono, and David Beckham because their involvement in social issues is, I kid you not, “unseemly.” In fact, these celebrities damage the causes they support, because everyone knows celebrities are not smart or sincere or studious enough to contribute anything of substance.

In an article that wallows unabashedly in its intellectual snobbery, Fullilove argues that celebrities damage the causes they promote for four reasons:

“First, their lack of expertise opens up the movements they represent to ridicule by association… Second, the awkward lifestyle gap that yawns between the rescuers and the rescued undercuts the moral seriousness of the enterprise and occasionally gives it an exploitative feel…. Third, attaching your brand to a celebrity's fortunes can be hazardous. Chanel and Burberry had to scurry away from their clotheshorse Kate Moss when she was pictured in tabloids allegedly snorting cocaine…. Finally, these institutions inevitably shed a little gravitas when they borrow the clothes of the jetset.”

Suddenly, caring about an issue is no longer sufficient qualification. You also have to pass an Australian academic’s “moral seriousness” check. But if we’re going to apply it to celebrities, let’s apply it to everyone who wants to give time or money. Test their knowledge of the issue, turn away anyone who is too rich, make sure they don’t have any embarrassing personal habits, and assess their “gravitas” level. If you don’t meet these criteria, Fullilove doesn’t want your charity.
Crawl of Shame: Today’s cautionary tale about how a low-level employee can undo in an instant all the good work your public relations team has done in a lifetime is brought to you by the Westfield Mall in Australia.

Wednesday, February 01, 2006

Damned Lies and Statistics: For the ten millionth time, a survey has shown that ethical companies enjoy a major advantage in the marketplace. “Seventy-two percent of respondents said they preferred to purchase products and services from a company with ethical business practices and higher prices, rather than from one with questionable business practices and lower prices,” says a press release from LRN, a provider of legal, compliance, ethics management and corporate governance solutions. “Only 18 percent indicated they preferred the opposite.”

In case you are questioning my citation of 10,000,000 in the opening sentence, I can tell you that as numbers go, it’s more meaningful than any of the numbers in LRN’s press release. I don’t know if the firm is being disingenuous. Does its CEO, quoted extensively in the release, really believe that the survey findings justify the assertion that “ethical reputations have a clear impact on the purchasing and investment decisions of Americans.”

If so, how does he explain ExxonMobil’s recent $36 billion profit?

Seriously, though, this survey is a waste of money—at least it is if it was designed to provide meaningful, actionable data. If it was designed to serve as the basis of a press release that might be picked up by a handful of gullible reporters and a few dozen self-serving academics, then it might be a good investment.

If you ask people whether they would pay more for ethical products, the majority of them are going to say yes, because that answer makes them feel better about themselves and look better to the stranger asking the question. But guess what: people lie. (I stole that line from House, the TV doctor played by Hugh Laurie, who knows whereof he speaks.) Their self-reported behavior sometimes differs from their actual behavior, which usually involves picking the cheapest, most readily accessible product off the shelf regardless of whether its made by a candidate for canonization or a rapacious pillager of natural resources.

Offering advice to executives based on this kind of flimsy “research” is intellectually dishonest and—ironically, given the nature of the survey—unethical.
Welcome...: To the blogosphere Ken Makovsky, president of New York's Makovsky & Company. His new blog is yet more evidence that this is not a fad, because Ken is one of the least faddish PR agency leaders I know. Smart move: letting people know that he plans to post weekly; it's called managing expectations and it's a smart move.
Is Deception So Much Easier Than Truthfulness?: Every time I read one of these stories, I wonder about this. Setting up fake front groups to mobilize consumers is not only hard work, it’s dumb… for all the reasons enumerated in this Sacramento Bee article.

Basically, Allergan, the maker of Botox, hired Burson-Marsteller’s Direct Impact subsidiary to help mobilize Californians against a stupid state law that would have singled out its product for sales tax. Direct Impact set up a group called Citizens Against Unfair Health Care Taxes—they must have a file of these dumb, generic “citizen” group names—and started calling people asking them to write complaints about the proposal--without mentioning that they were working for the drug company.

Some citizens did so. And the one who is the subject of the Bee article now feels used. (Because she was.) “They were dishonest,” she says. “I fell for it. I would like an apology…. They should be investigated.”

So now—if the story is true, and the guy who spoke to Lowry really didn’t discuss the company's role in Citizens Against Unfair Health Care Taxes—Allergan and Direct Impact have alienated the very people they would like to have on their side in the coming battle, and undermined the effectiveness of any genuine, citizen grassroots effort to fight this silly sales tax by creating the impress that it's all a company smokescreen. It’s not only unethical and deceitful; it’s counter-productive.

And why? How difficult would it have been to call people up and say: “Hey, we’re from Allergan. We make Botox. And there’s this new proposal to tax our product. If you use our product, that means you’ll pay a little more. Now, I know you probably don’t like us, because we’re a big company and no one likes big companies, but here’s an issue where your interests and our interests are the same. Maybe we can work together. Maybe we can get this proposal changed. And maybe, in the process, you could learn to trust us a little more.”

That’s public relations. It builds relationships for the long term. What Allergan did is spin. It’s transactional, short-term. And it destroys relationships.
Suing the Telecom Company: The Electronic Frontier Foundation, which is dedicated to "protecting our civil liberties in the networked world," has filed a class action suit against AT&T for collaborating with the Bush administration's "massive and illegal program to wiretap and data-mine Americans' communications."
The lawsuit alleges that AT&T Corp. has opened its key telecommunications facilities and databases to direct access by the NSA and/or other government agencies, thereby disclosing to the government the contents of its customers' communications as well as detailed communications records about millions of its customers, including the lawsuit's class members.

The lawsuit also alleges that AT&T has given the government unfettered access to its over 300 terabyte "Daytona" database of caller information -- one of the largest databases in the world. Moreover, by opening its network and databases to wholesale surveillance by the NSA, EFF alleges that AT&T has violated the
privacy of its customers and the people they call and email, as well as broken longstanding communications privacy laws.

The lawsuit also alleges that AT&T continues to assist the government in its secret surveillance of millions of Americans. EFF, on behalf of a nationwide class of AT&T customers, is suing to stop this illegal conduct and hold AT&T responsible for its illegal collaboration in the government's domestic spying program, which has violated the law and damaged the fundamental freedoms of the American public.

I won't take full credit, but I did suggest someone take legal action about this back on January 3. Now, how do I sign up to find out if I was illegally wire-tapped?

Tuesday, January 31, 2006

Lawsuit Abuse: It’s amazing that a decade or more into the Internet age there are still companies that believe the best way to respond to a chat room criticism is via a lawsuit. Still, it’s understandable when lawyers do it. Lawsuits are a medium they understand, and no one expects them to know anything about protecting a corporate reputation.

But when it comes from a PR professional—as this missive to Canadian journalist, sci-fi writer and blogger Cory Doctorow did—it’s hard to understand. If “Dennis Zhidkov" really is a PR manager for Star-Force, Inc., it’s hard to imagine that he saw no other way to deal with Doctorow’s criticism of his company’s products except to threaten him with legal action.

Perhaps Zhidkov thought he was dealing with a nervous nine year old, because his hyperbolic attack—“your article violates approximately 11 international laws. Our U.S. lawyer will contact you shortly. I have also contacted the FBI , because what you are doing is harassment”—is so over the top the only possible reaction an adult could have is hysterical giggles.

McDonald’s learned the hard way that when you threaten (or worse still take) legal action against your critics, you not only amplify the original criticism, guaranteeing a wider audience and enhanced credibility, you damage your own reputation, because no one loves a bully, even if he happens to be right on the facts. That’s doubly true in the online world, where free speech is a prized commodity and any attempt to stifle discussion is an offense even to those who might otherwise agree with you.

I have no idea whether Star-Force products are as bad as Doctorow says. I do know, thanks to Zhidkov, it's not the kind of company I would want to do business with.
Back to the Future at GM: General Motors’ decision to bring back Steve Harris was an obvious one. He has the total respect of the company’s management and the automotive press—in fact, I don’t know any other PR guy who is held in such high esteem by the media covering his industry. His return won’t solve all GM’s problems by any stretch of the imagination, but it will earn the company the benefit of the doubt and a little time.

His decision to go back is a little more surprising. It’s not like he has anything left to prove. I assume GM is paying him well, but my guess is his choice had more to do with loyalty to the company where he began his career and where he still has a lot of friends and admirers in the public relations team.

It’s not often the decision to hire a new PR guy changes perceptions of a company, and I may be making too much of this, but watch the coverage GM gets over the next few months… I’ll bet it’s a little better than it’s been used to recently.
The Worst System in the World, Except for All the Others?: The Wall Street Journal’s editorial page draws our attention to a study conducted for the University of Maryland's Program on International Policy Attitudes that asked 20,000 people in 20 countries around the world what they thought of the capitalist, free market system.

When people were asked whether they agreed that "the free enterprise system and free market economy is the best system on which to base the future of the world,” supporters of the free market system outnumbered opponents by more than two to one. Only in France did a majority disagree.

The Journal notes that support for the proposition was highest in communist China—without pausing to question why people who have little or no exposure to capitalism like it better than those who experience it every day.

What the Journal doesn’t note is that while people accept that free markets are the best system available, respondents made it clear that want to make sure free market forces are kept in check. (Funny how the Journal missed that.)

Solid majorities in every country favored more regulation of large companies to protect the rights of workers (mean 74 percent), the rights of consumers (mean 73 percent), and the environment (mean 75 percent). Two-thirds of those polled agreed that "the free enterprise system and free market economy work best in society's interests when accompanied by strong government regulations."

And 73 percent agreed that "large companies have too much influence over our national government." Meanwhile, just 7 percent said they had a lot of trust in companies to act in the best interest of society, while another 34 percent said they had some trust.

Not quite the ringing endorsement of untrammeled free enterprise the Journal would have us believe.

Monday, January 30, 2006

Beyond Payola: Putting Steven Milloy in the same category as Armstrong Williams, Michael Fumento, and the rest of the commentators caught with their hands in the corporate (or government) cookie jar is unfair to everyone involved. It’s unfair to those reporters and commentators previously caught up in the scandal because at least they have some journalistic credentials, despite their occasional lapses. Its unfair to Milloy because he has never, to my knowledge, pretended to be anything other than a corporate shill.

So when The New Republic reports that Milloy received $90,000 from ExxonMobil last year and not coincidentally devoted one of his FoxNews.com columns to decrying climate change as “junk science,” we should not be surprised. Milloy has taken money from tobacco companies to trash research into the effects of second-hand smoke, and has typically been quite overt about both his politics and his financial support system.

The problem is not with Milloy, but with FoxNews.com, which continues to present his commentary—including a recent piece on the “Top 10 Junk Science Claims of 2005”—without disclosing his industry ties. A Fox spokesman told TNR that "Fox News was unaware of Milloy's connection with Philip Morris,” which seems incredible given Milloy’s background.
Google in China: The Wall Street Journal weighs in on the PR flap over Google’s compromise with the Chinese government, although the paper’s editorial board seems motivated by its irritation with the company’s failure to share private search information with the U.S. government rather than concern about doing business with a totalitarian regime—a fact that’s reflected in a somewhat muddled position.

For those who have not been keeping up, Google just secured the rights to set up a server in China, at google.cn, because its regular servers were very slow when used from within China and was losing out to local competitors. So now google.cn offers a fast search but in accordance with demands from the Chinese government won’t return pro-democracy results.

Google has gotten a ton of criticism from liberal bloggers and now from conservative media too, but I think the company’s position is eminently defensible. Chinese citizens are going to have to deal with censorship when they use search engines located in China whether Google complies with the government or not, so it’s not as though Google has the power to change anything in China—at least directly.

But indirectly, every deal the Chinese government cuts with western business hastens the demise of the dictatorship, albeit incrementally. Engagement by western companies is a force for good, because it exposes Chinese citizens to ideas that they might not otherwise encounter and provides them with more information with which to make choices. Sooner or later, they will choose democracy, and the government will be powerless to resist them.

The apartheid experience convinced me that engagement works. Companies that withdrew from South Africa could make self-righteous and principled statements, but they changed nothing. Those that remained in South Africa helped to drive a series of subtle changes that ultimately made an abhorrent regime untenable.

Overall, Google is likely to be a force for good in China.
The Unacceptable Face of Modern Capitalism: Ben Stein is a classic Ayn Rand/Milton Friedman free market economist, a veteran of the Nixon White House and still a Nixon loyalist (as well as an occasional actor and game show host). So when he finds a corporation’s behavior unacceptable, it’s worth paying attention.

Writing in the business section of Sunday’s New York Times, Stein excoriates management at United Airlines and describes the company’s history as “a perfect text for the ethical morass in which American business often finds itself.”

In the early 1990’s, when some investment bankers were casting around for a way to make tens of millions of dollars, they came up with a doozy: the employees of UAL would give up some of their salaries and benefits in exchange for stock in UAL, eventually becoming UAL’s largest owner through an employee stock ownership plan.

The deal went through — with staggering compensation to Wall Street — and in 1994 the American employees of UAL, as a group, became its largest owners….

Trouble was not far behind. The employees found management demanding pay cuts, big (and, for passengers, inconvenient) changes and cuts in scheduling and services.... Then came the blows of 9/11 and a recession, and then rising fuel costs. There were demands for more cuts in pay and benefits and more layoffs. That was not enough. About three years ago, UAL was “forced” to enter bankruptcy to stay alive.

This step meant that UAL could drastically cut workers’ pay—and it did. Pensions were simply jettisoned…. Thus, in a series of evil events, management of UAL basically ruined the lives of the employee-owners, if that is not putting too fine a point on it, by taking away their savings, incomes and pensions….

Now UAL has been reorganized. It is preparing to emerge from bankruptcy. It will soon have a stock offering. This offering is expected to raise very roughly $6 billion…. Here comes the good
part: management has asked the bankruptcy court to let it have—free—roughly 15 percent of the stock in the new company, or about $900 million. [Glenn] Tilton, the chief executive… would get about $90 million personally for his hard work shepherding UAL through bankruptcy (for which he was already paid multiple millions of dollars).

The bankruptcy court, instead of ordering Mr. Tilton’s arrest, instead cut the management share to about 8 percent, so he will get more than $40 million….

So here it is in a nutshell: employees are goaded into investing a big chunk of their wages and benefits in UAL stock. They lose that. Then they lose big parts of their pay and pensions. They become peons of UAL. Management gets $480 million, more or less. “Creative destruction?” Or looting?
It’s sharp analysis. The only thing Stein doesn’t offer is a solution.

But it put me in mind of a book I read almost 20 years ago, and which I still consider to be one of the best "public relations" books (though I don't think the words PR ever appear in it) I have ever read. In Corporate Culture and Performance, John Kotter argues that companies that focus on three core stakeholder groups--employees, customers, and investors--will outperform those with a focus on a single stakeholder (almost invariably the shareholder).

Along the way, he also identifies a breed of company that focuses on none of its stakeholders, that is interested solely in enriching its own management. The United Airlines of today falls neatly into that category, and may be rewarded for it in the short-term. One can only hope that in the long-term Tilton and his team reap what they have sown.
Krugman: He makes a good point in today New York Times column (Times Select req’d): that sometimes journalists who strive for “balance” end up misreporting the facts. He uses the Abramoff case to illustrate the point, but this happens all the time. Reporters believe that “balance” is achieved by presenting both sides of an argument rather than following where the facts lead.