Posts filed under ‘Crisis Communications’

Pile On Groupon

Groupon: time for a lot of PR and a new ad

The “fastest growing company ever” owns today’s fastest spreading controversy. Groupon has triggered outrage with Super Bowl ads that appear to mock serious issues, primarily China’s occupation of Tibet. Oscar-winner Timothy Hutton begins the key commercial by acknowledging Tibet’s woes only to segue into the virtues of fish curry from a Tibetan restaurant purchased at a discount thanks to Groupon. The ad’s tagline is “save the money.”

On the face of it, the ad appears to be a sophomoric satire linking a company’s everyday offerings with a global crisis, a la Kenneth Cole’s widely criticized tweets about the Egyptian uprising. Only later has it been explained that Save the Money is a legitimate cause-based program, not an iteration of Groupon’s discounting premise. The ad is meant to simultaneously spoof celebrity sanctimony and Groupon’s viral bargains. The problem is that Groupon is too clever for us. Its CEO, Andrew Mason, confirms as much in a next-day blog response that The Wall Street Journal calls a “non-apology apology.”

Groupon seems to be joining other web ventures that proved their clout with a Super Bowl sponsorship, although turning down Google’s $6 billion buyout is a much cooler demonstration. Amending a media mix (television now in addition to online) entails reaching out to new audiences as well as re-connecting with current ones. It calls for a basic message, not an obscure one made under the assumption that everyone already grasps the company. It can have humor–a Super Bowl advertising staple–but it must use that multimillion-dollar window to display the brand. So beyond their controversy, Groupon’s ads miss the mark as effective communications. Articles on the ads have cited the agency, Crispin Porter + Bogusky, as being known for edgy work. This invokes Al and Laura Ries’ warnings in The Fall of Advertising & The Rise of PR about shops that are more focused on artistic expression than marketing fundamentals.

Groupon has deepened its self-inflicted wounds with CEO Mason’s off-putting response on his company blog. He insists that the ads support real social causes (impossible to tell at first glance). He then points fingers at other offensive Super Bowl ads, primarily those that objectify women. He defends his ad agency, citing their precedent for irreverence with their commercials for Hulu.com. In short, Mason acts upset that people are upset with his company. He is going to need a lot more PR, an infusion of contrition, and a new ad:

SCRIPT: GROUPON “WE’RE SORRY”AD

A “backstage” setting with lights and cables visible. A clapperboard fills the screen, scrawled on its face: GROUPON “WE’RE SORRY” AD.

Clapper Loader (off screen): Groupon, take two!

The clapperboard claps and is pulled out of the shot, revealing CEO Andrew Mason sitting in a tall director’s chair. Standing around him are actors Timothy Hutton, Cuba Gooding Jr., and Elizabeth Hurley.

Mason: Hello, I’m Andrew Mason, CEO of Groupon. By now, you’ve probably heard about our Super Bowl ads that offended many people who thought we were making fun of important social issues such as human rights in Tibet.

We’re sorry. The ads were confusing and sent the wrong message. The right message is that Save the Money-dot-org is a real program soliciting donations and building awareness for worthy causes around the world. Groupon supports this program because while we’re working to save you money locally, we’re also thinking globally. Please visit Save the Money-dot-org to learn more and to give. Thank you for your understanding.

Timothy Hutton nervously leans toward Mason.

Hutton: Do you want us to say anything?

Mason (pleasant): No.

Hutton straightens back up. The foursome smiles and waves at the camera.

FADE IN: Groupon logo with titles beneath: www.savethemoney.org

FADE TO BLACK

—–

POSTSCRIPT 1: Groupon CEO Andrew Mason blogs a straight-forward apology on Thursday, Feb. 10, and pulls the ads.

POSTSCRIPT 2: Groupon fires Crispin, Porter + Bogusky with CEO Andrew Mason saying they placed “too much trust” in the ad agency. CP+B says it was simply end of project work and wishes Groupon well.

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February 8, 2011 at 3:02 pm Leave a comment

Steve Jobs: All Too Human…Again

Steve Jobs’ announced leave from Apple for health reasons harkens to his 2009 leave and the similar PR issues it created. Click here to read my post from that time, “Steve Jobs: All Too Human.” In the original post, I discuss an unclear line of succession at Apple. Since then, Timothy Cook as emerged forcefully as Jobs’ heir apparent, essential to Apple’s immediate stock price and long-term prospects.

January 18, 2011 at 10:27 am Leave a comment

UC Execs Get an F

Dean Christopher Edley, graduate of the Lloyd Blankfein School of Public Relations

The San Francisco Chronicle reports that 36 top executives in the University of California system are demanding increases in their pensions. The group has written a letter to the UC Board of Regents calling the increase a “legal, moral obligation” and threatening to sue if the demand is denied. The executives cite a 1999 agreement to boost pensions if the IRS lifted a cap; it did so in 2007.

The UC system is currently in a budget crisis, as are all public schools in California and the state itself. Per the SF Chronicle, UC has over $20 billion in unfunded pension obligations. The increase demanded by the 36 executives would cost more than $5 million a year and $51 million in retroactive reimbursements from the 2007 trigger date.

Among possible self-inflicted PR wounds, money grabs are some of the most infuriating. The UC execs have infamous company:

2003, American Airlines. While exacting more than $1 billion in concessions from workers, executives at American Airlines concealed hefty retention bonuses and pension protection for themselves. After outcry, the execs surrendered the perks and CEO Don Carty left the following year.

2009, AIG. After receiving $170 billion in bailouts, insurance giant AIG announced $165 million in bonuses to members of the financial products unit, the company group at the center of the 2008 economic collapse. Public, political and media outrage came swiftly. Most of the top execs returned their bonuses.

2009, 2010, Goldman Sachs. The Wall Street giant has paid billions in quarterly bonuses during the Great Recession. Each bonus announcement burnished Goldman’s image as the epitome of Wall Street greed. The abrasiveness of their PR chief, Lucas van Praag, only worsened the firm’s rep. In an attempt to counter negative reactions, Goldman contributed $500 million to a small business development fund and switched compensation for its advisory committee from cash to stock.

All the above groups, including the UC execs, have made similar arguments: the financial rewards are necessary to attract and retain top talent. AIG’s rationale deserved a special honor for circular logic: the people receiving the bonuses were needed to undo the mess they had created.

As we have become a nation of expendable workers, no one can sustain an aura of indispensability. Scan the comments section accompanying any online news coverage of the UC execs’ pension demands and you will read dozens of calls for the execs’ termination.

Many have already turned the execs’ “a deal is a deal” argument back on them, citing the University of California’s deal to provide quality, affordable education, a deal undone by curtailed classes, slashed staff and hiked tuition. The UC homepage promises the system’s 10 schools will “open their doors to all who work hard and dream big.” The same homepage links to an overview of pension revisions for standard university employees. Here’s a hint: future retirees will take their lumps.

Amazingly, parties with self-inflicted PR wounds have the strength to twist the blade anew. As criticism and scrutiny mounted, Goldman CEO Lloyd Blankfein stated that his firm was “doing God’s work.” Amid the UC pension flap, Dean of the UC Berekley Law School, Christopher Edley, is the only one of the 36 UC execs to speak to the media to date. He defends the demands for higher pensions as important to his family. He sarcastically refers to himself and his 35 colleagues as “craven scum,” acknowledging yet dismissing the PR fallout of their actions.

Predictions for the new year:

  • Outrage and protests will grow as students, students’ families, and ordinary Californians return from the holidays. Social media will increase awareness of the story. I learned about it on Facebook from my state assemblyman, Jeff Gorell.
  • Every politician and pundit with a pulse will be able to score easy points off greedy execs and any milquetoast regents.
  • There will be defections among the 36 executives demanding higher pensions; people were ready to march on the homes of the AIG bonus recipients. By signing the letter to the regents, all these execs now bear a scarlet letter.
  • As self-appointed spokesman for the execs, Dean Christopher Edley stands with Goldman Sachs’ Lloyd Blankfein in issuing cringe-worthy quotes. If he keeps opening his mouth, he may join the league of BP’s Tony Hayward. Like Hayward, Dean Edley may be looking at an early retirement, with or without a fatter pension.

POSTSCRIPT 1: UC faculty launch an online petition condemning the pension demands of the high-paid execs, a group they dub “the gilded 36.” The executives’ disregard for public relations begins with disconnection from UC’s vast internal audience.

POSTSCRIPT 2: California State Assemblyman Jerry Hill introduces a bill to cap all state employee pensions. It would categorically enforce the upper limit of calculable annual income: $245,000. The IRS’ lifting of this rule for UC due to its nonprofit status precipitated the pension demand letter by the 36 UC execs, all of whom have salaries near the standard limit or well above it. The bill is a predictable response to the furor, resembling to moves in the U.S. Congress to staunch the AIG bonuses.

January 1, 2011 at 2:07 pm 5 comments

Involuntary Transparency

WikiLeaks screen shot. Hard to come by these days as the site is the top target on the Web.

The title phrase–involuntary transparency–comes from Andy Greenberg’s cover story for Forbes on WikiLeaks. A fascinating juxtaposition of the unpleasant and the noble, the term harkens to a post on this blog, “The Automated Honor System.”

Are we truly transparent or honorable when it is forced upon us? Despite the seeming revolution of Web 2.0’s power to disclose and shame, it is simply another example of the Internet providing venerable products and experiences fast-fast-fast, to adapt Anacin’s tagline from 50+ years ago. In short, the Internet is a labor-saving device for delivering consequences, the eternal tool for behavior modification.

Transparency has always been mandatory, but we don’t always follow rules, written or unwritten. Mr. Greenberg’s use of the word “involuntary” suggests the matter has been taken out of the hands of governments and corporations, and by extension all of humanity. My past post on the subject humorously assumes as much.

However, just as the old laws and standards have had a hard time keeping people in line, WikiLeaks will fare little better. “Do the right thing” has rarely been a natural strategy, even though many are calling for such epidemic honesty as the only antidote to the WikiLeaks onslaught.

I am not dismissing the newest demands for disclosure and ethical behavior. I like “involuntary transparency” in a wistful, PR professional kind of way. Nevertheless, transparency must be completely voluntary. It must come early. It must be consistent. It can’t be applied like an anti-virus program. I regularly cite PR legend Al Golin, the man who coined “the trust bank.” From his book, Trust or Consequences:

  1. Trust is the most basic element of social contact–the great intangible at the heart of truly long-term success.
  2. Trust is both a process and an outcome; it’s at the heart of dealing with every relationship.

WikiLeaks will not improve transparency because it is not a vehicle for trust. The confidential communications it has acquired from the American government result from espionage and treason. We can add blackmail to those unsavory terms as embattled WikiLeaks founder Julian Assange threatens a mass release of more damning files, all encrypted and dispersed among a network of supporters, if anything happens to him or his site.

In the end, WikiLeaks is not a game-changer for public relations, although it is a formidable practitioner of the discipline as it has driven much of the news in recent days. It is not a sanctuary for whistleblowers. It is not a virtual version of the World Court. It is simply a brand that trades magnificently on malfeasance, gossip and finger-pointing. In short, it is the greatest tabloid on earth.

December 5, 2010 at 11:37 pm 1 comment

Be Careful When You Hit “Send”

Volumes have been written about the importance of content and tone in electronic communications. The typing may be in haste but the thoughts are permanent because nothing ever dies on the Web. Immortality is guaranteed when The Wall Street Journal reprints your missives.

Such is the case with analyst John Kinnucan, featured in a WSJ story over the weekend about the huge inside trading case that the Federal Government is building. According to a subsequent article, Kinnucan was on his front porch with a glass of wine when two FBI agents pulled up, accused him of passing inside information, and threatened him with arrest unless he recorded conversations with his clients to help gather evidence against them. Kinnucan refused and later sent an e-mail to his clients:

Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information…. We obviously beg to differ, so have therefore declined the young gentleman’s gracious offer to wear a wire and therefore ensnare you in their devious web.

Kinnucan claims that he is contractually required to notify clients of such contact with investigators. I doubt that his contracts stipulate taunting the Federal Government on the eve of an anticipated landmark prosecution.

Kinnucan says that he is innocent and does not deal in the type of non-public information that precipitates an insider trading case. He is obviously angry and upset, as anyone would be in his situation. He also says that his business has “imploded” following his new notoriety, another obvious consequence. The Feds may have put a scarlet letter on him, but he reapplied it with a paint roller thanks to his late-night e-mail.

Law enforcement is not always right or noble. Former DA Mike Nifong’s misconduct in the rape case against members of the Duke lacrosse team is an example. Fewer people than ever may expect the Federal Government to “do the right thing.” However, one institution held in even lower esteem is Wall Street. John Kinnucan may be based in Portland, Oregon, but he resides figuratively in lower Manhattan. In the end, his e-mail may elicit sympathy from peers and clients, but now it is grist for a national news story.

No matter how righteous John Kinnucan felt after his FBI encounter, it did not grant license for public arrogance. According to the WSJ article, he told the FBI agents on his porch that he wanted to talk to a lawyer. He should have also called a public relations specialist.

November 22, 2010 at 12:41 pm Leave a comment

ROI U

My alma mater

In recent months, for-profit colleges have received heightened scrutiny regarding recruiting practices, tuition costs and resultant student loan burdens, and the real-world value of the certificates and degrees they issue. The Obama administration has sought restrictions of federal aid for schools whose students have to spend over 8% of their starting salary on loan payments after graduation. This measure affects career colleges offering vocational programs such as culinary arts and medical support.

For-profit proponents present a slippery slope argument that the career college regulation is part of greater designs to “rein in” the industry. Many cite unfairness in holding for-profit schools to standards not extended to other institutions. Harris Miller, president of the Association of Private Sector Colleges and Universities, says the new regulatory formula would flunk most medical schools.

Journalists and politicians are finding their story angles. ABC News conducted an undercover investigation into University of Phoenix misleading prospective students about future employment opportunities and encouraging them to take on maximum student debt. Many media accounts point out the vast cost discrepancy between for-profit schools and community colleges, an argument that  Sen. Tom Harkin echoes. Harkin has held hearings on for-profit schools and called for industry reforms.

As the saying goes, I have a dog in this fight. I hold a bachelor’s degree in Marketing from the University of Phoenix. I support for-profit schools and I’m a member of the slippery slope contingent (yes, I learned in class at UoP that “slippery slope” is a fallacious argument–unless one presents a logical chain of events and is ready to accept a “middle ground” conclusion.) For-profits will face more regulation because they draw 85% of their revenue from federal funds in the form of grants and loans. The Obama administration is demanding to see a return on investment, the ROI mantra constantly heard in the business world. It’s a justifiable claim. For-profit schools are much like defense contractors: big-time capitalists dependent on government largesse.

The concern centers on the fairness of that ROI measurement. Will for-profit schools confront tougher standards and restrictions than public and private schools? Will for-profit schools become a political punching bag, prompting more government regulation and intervention? Are parties with interests that conflict with for-profit schools driving the debate?

To this last point, there is a push for students to choose community colleges over for-profit schools with the cost factor a major rationale. (Another note: I hold an associate degree from Los Angeles Pierce College, so I’m a community college fan too.) With the Obama administration simultaneously backing increased community college enrollment and curbs on for-profit schools, it’s easy to speculate a hidden agenda. The stumbling block for the community college plan: these are public schools under tremendous budget pressure, currently reducing classes and educational opportunities.

The “ulterior motive” arguments get more compelling with Steven Eisman speaking to Congress about the need for stricter controls over for-profit education. Eisman is a portfolio manager who has been identified as a short-seller of for-profit education company stocks, making money when those stocks drop in value. Per conventional wisdom, more government oversight would mean less profit and growth, driving down stock prices.

The for-profit education industry faces considerable PR and marketing issues. In his Washington Post op-ed, Harkin describes the schools that spend close to 30% of revenue on advertising. There is an implicit tie-in to tobacco and fast-food: the image of big companies mounting big campaigns that persuade people to make poor choices. An industry criticized for having the audacity to advertise means one thing: it’s in crisis mode, which is a job for public relations. There has been a fair amount of media coverage and op-eds supporting the industry against more government control and emphasizing the shortfalls of relying more heavily on strapped community colleges. I personally liked students from for-profit schools rallying at the Capitol with shirts reading: “My education. My job. My choice.”

Unfortunately, the for-profit industry’s primary value proposition has become its biggest liability: “we are the schools for working adults who want to advance their careers.” The jobless recovery makes the inherent vocational pitch ring hollow. The go-go years for the industry may be over. University of Phoenix has announced changes to its recruiting process that may decrease enrollment, in turn necessitating higher tuition. Less service for more money. Now who says for-profits aren’t just like other schools?

Read my other post about for-profit schools: An Education Outside the Gates.

October 19, 2010 at 2:36 pm Leave a comment

The Atomic Press Release

Today, August 6, marks the 65th anniversary of the dropping of the atomic bomb on Hiroshima. Official announcement came through a press release issued by President Harry Truman:

Sixteen hours ago an American airplane dropped one bomb on Hiroshima, an important Japanese Army base. That bomb had more power than 20,000 tons of T.N.T. It had more than two thousand times the blast power of the British “Grand Slam” which is the largest bomb ever yet used in the history of warfare.

The Japanese began the war from the air at Pearl Harbor. They have been repaid many fold. And the end is not yet. With this bomb we have now added a new and revolutionary increase in destruction to supplement the growing power of our armed forces. In their present form these bombs are now in production and even more powerful forms are in development.

It is an atomic bomb. It is a harnessing of the basic power of the universe. The force from which the sun draws its power has been loosed against those who brought war to the Far East…

Arthur W. Page, a legendary figure in public relations history, wrote the release. Son of the co-founder of the Doubleday, Page & Co. publishing house, Mr. Page served as AT&T’s VP of Public Relations. During World War II, he oversaw the Joint Army and Navy Committee on Welfare and Recreation and was responsible for numerous communications and morale programs.

Noel L. Griese is the author of a definitive biography on Mr. Page. According to his account, Secretary of War Henry Stimson summoned Mr. Page to full-time duty in April 1945 and briefed him soon after on the Manhattan Project. The Trinity test blast would take place in the desert of Alamogordo, NM, on July 16. Mr. Page was asked to write the release that ultimately would be read to reporters at the White House on the day of the Hiroshima bombing while President Truman was at sea returning from the Potsdam Conference.

Arthur W. Page is credited with writing the most momentous press release in history. Whereas the 1969 moon landing–the 20th century’s other signature event–was beamed live to television audiences, Page’s release alone was the public’s introduction to the atomic age. It is likely the last time a sheaf of paper would change the world.

August 6, 2010 at 9:21 am Leave a comment

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