Archive for May 2007
It’s a ‘received wisdom’ that a good reputation aids the financial performance of an organisation. We call it the “doing good will lead to good” notion. An Australian study of major banks has, however, found that there was no causal relationship between corporate reputation and financial performance (in either direction), contrary to studies in other countries.
The case put forward by Robert Inglis and fellow researchers at RMIT University, Melbourne was based on comparison between two major banks, Westpac and NAB. According to a reputation index, RepuTex, Westpac was the leading company in the national banking sector in 2003 and 2004. Westpac, however, was losing market share in deposits and home loans to competitors.
“If consumer decisions were made on reputation, it would not be unreasonable to expect Westpac to have the dominant market share and the others to trail behind. The fact that Westpac was not dominant in the market suggests that factors other than reputation may be taken into account by consumers when their decisions are made and/or that Westpac has not exploited its reputation advantage.” (p.942)
They also said that NAB, which previously had a high reputation for corporate governance, suffered financial losses of $A360 million and replaced CEO and chairman when fraud was discovered in its currency trading operation in early 2004. On the other hand, within six months of the fraud revelation and subsequent corporate upheaval, it was recording strong growth in business lending and led in market share.
“In the NAB case there is seen a company that had a lower reputation than its close counterpart in the same industry, Westpac, yet was achieving a higher performance.” (p.943) Inglis and his co-authors commented that reputation indices are also no predictors of company performance as shown by NAB’s high reputation for corporate governance that was undone by internal system failures.
Inglis, R., Morley, C. and Smut, P. (2006) Corporate reputation and organisational performance: an Australian study. Management Auditing Journal. 21 (9), pp. 394-947
At the 2005 CIPR Excellence Awards in London, the overall winner was a campaign called “Meal Deal” aimed to change the lunchtime eating habits of school children in the capital’s borough of Greenwich. “Meal Deal”, which gained national attention when it was adopted by celebrity chef Jamie Oliver, was creatively planned, gained media support and brought a part-solution to childhood obesity to the notice of Government. Oliver not only took a million-strong petition to No.10 Downing Street but he also created recipes and ran cooking lessons for school cooks.
So far, so good – This was an example of celebrity endorsement being actively applied to publicity in support of a good cause. But two years on, the target audience of school children is proving difficult to change to the proferred vegetables, fresh fruit and fish. Many still yearn for greasy, salted burgers with chips and baked beans. In the latest report from the School Meals Trust, there had been a fall in the take-up of meals in some educational institutes, although there had been a generally neutral response. Of those that reported a decrease, two-thirds put it down to a dislike of healthier options in the new menus.
Looking back to the award winning campaign of 2005, it was successful in agenda setting in the media and provided a platform for legislative change, for which it was deservedly acclaimed. But it’s worth recalling from the benchmarking Excellence Study of public relations that the likelihood of public relations activity achieving behavioural change was 0.04% (Dozier & Ehling 1992).
The “Meal Deal” campaign from Greenwich provided the “push” but now greater resources are needed to “pull” through the behavioural changes amongst a resistant audience. To paraphrase, a “single vegetable stir-fry does not a happy student make.”
David Phillips kindly sent me a posting on the role of ROI in Marketing from Brian Carroll’s B2B Lead Generation Blog – http://blog.startwithalead.com/weblog/2007/05/the_difference_.html – which discusses the difference between ROI and marketing accountability. As this is an issue in public relations, I have posted this comment:
Part of the problem with ROI is that a financial concept is applied to a non-financial activity. Sure, marketing and sales activity should result in financial results but the misuse of specific business language in an effort to get understanding from the Board is only piling pressure on marketers and communicators.
One of the definitions of ROI is the ratio of how much profit or cost saving is realised from an activity against its actual cost, expressed as a percentage. In reality few marketing or communication programmes can be expressed in that way because of the problems in putting a credible financial value to the results achieved. In 2004, the UK’s Institute of Public Relations said, “this (use of ROI in PR campaign) is not only confusing but misleading” when the term PR ROI is used loosely. Unless the objectives of the activity are solely to achieve a sales or financial outcome, ROI is meaningless.
For marketers, the application of ROI limits their role to sales support and ignores the brand and reputational issues. In PR, I’ve long argued that the use of business language is a fundamental sign of insecurity and a lack of confidence. It seems that marketing has the same affliction.
To read more on my views on the role of ROI in public relations, see this article on the PRism online academic journal, http://praxis.massey.ac.nz/fileadmin/Praxis/Files/Journal_Files/Issue3/Watson.pdf
The latest announcement from Cision, the owner of the Delahaye Index, says that Microsoft has the “best reputation in the media” based on (according to the Cision press release of May 7) “a score of how many positive and negative reputation driving attributes are found within each story”.
It goes on to breathlessly to say that Cisco Systems ranks second because of “high profile coverage derived from Cisco’s negotiations with Apple over the name of the iPhone” and acquisitions. Following on is General Motors which has roared up to the top three having been “ranked in last place” a year ago.
Dummyspit isn’t quibbling over who is first, second, third or tenth. That’s irrelevant although league tables are a much-used tactic for creating media coverage. Our question is over the misuse of the term, ‘reputation’ and the claim by Cision North America’s CEO Steve Newman that “corporate reputation is uniquely measurable through the media, as news affects and reflects public sentiment.”
That’s wrong. A generation of study has suggested that media may have agenda setting properties but it doesn’t necessarily shift public sentiment. And it won’t always reflect public opinion. That’s wishful thinking by PR practitioners and service providers and is a classic example of the substitution game – where output is confused with outcome.
Reputation, as this blog has said before, is given to organisation by those with whom it is engaged. The media is just one of those stakeholders. It can reflect a positive or negative sympathy towards an organisation and there’s no doubt that media analysis can judge tone and favourability. This factor (sympathy, tone or favourability) is an affective component but leaves out the cognitive element. It is thus worth noting the comments of Prof David Dozier, one of the gurus of public relations research, who commented that reputation may be based on direct experiences as well as on processed messages. (Dozier 1993: 230)
Some examples of corporate behaviour are a joy to bloggers. The latest example is the famed advertising and marcoms group Saatchi & Saatchi’s creation of a girl band called ‘Honeyshot’. As reported in The Guardian (UK) recently, it had the explicit role of “a vessel for covertly advertising products to music fans”.
At the beginning of April, Honeyshot’s first single ‘Style, Attract, Shock’ was sent out to DJs but without notifying them that it had been created by a subsidiary of the ad agency and that its title was the new slogan for a hair gel called Shockwave.
It was quickly rumbled by the BBC, whose Radio 1 is the top audience pop and rock music station in the UK, and banned from playlists. But not without being played. This may have been an outcome that got coverage for the brand, which has been mentioned for reasons of explaining the story in the previous paragraph. And probably someone has already told the brand’s owner that this furore was worth some absurd figure in advertising value equivalent.
Peter Robinson, who broke the story, makes two cogent points – “From Saatchi & Saatchi’s point of view, it (the record) betrays a stunning level of deception – which is going some, in the ad industry” and “… it is important that the Honeyshot project fails, which it has, unless the whole thing was a double bluff aimed solely at securing Shockwave’s column inches to promote the company’s penchant for insulting their customers’ intelligence.”
Will brands, their owners and advisers ever learn that honesty and authenticity are integral to their reputation?
The future of the public relations consultancy was one of the major discussions at the UK Public Relations Consultants Association’s annual conference in London (May 15). Titled ‘Agency 20:20’, a panel of experts surveyed some of the influences that may shape the consultancy business in 12 to 15 years time.
The panel, chaired by PRCA chairman Richard Houghton, included Julian Cacchioli of Galileo Travelport, Jo Ellen Zumberge of MS&L, Trevor Morris of Westminster University and Danny Rogers, editor of PR Week. Among their views were:
– Julian Cacchioli, from a client perspective, said PR services have to be positioned as consultancy and not agency. “Consultancies need to help us where we can’t do the job ourselves”. He added that media relations is becoming a commodity and an agency task. Consultancies can add value by providing advice on strategy, messaging, CSR and “information we don’t have.”
– Jo Ellen Zumberge, wearing an international consultancy’s hat, made a case that the new technologies have changed the nature of the communicative relationship – from mass communication to one-to-one, from press relations to viral messaging, and to develop credibility by conversation. This was leading consultancies towards a more flexible approach in delivery of PR services.
– Danny Rogers, the journalist, was the most conservative of the four panelists because he considered that the PR agency (not consultancy) structure would be similar to today. There won’t be a single model as the diversity of operations will continue. Speed of communication will, however, have shaped many changes in the services with greater emphasis on strategy.
– Trevor Morris, former consultancy boss-turned-academic, nominated marketing PR as the service that will change most dramatically as it will become more of a price-driven commodity than at present. This will be brought about by the switch to online presentation of information. He also noted the decline in the staffing of major advertising agencies (e.g. JWT London dropping from 1000 30 years ago to 200 now) and tipped a similar impact on consultancy staffing.
– Evaluation will become a constant factor, said Jo Ellen and Trevor, because data from online traffic would offer constant benchmarking and give “hard statistics”.
So from this hour-long discussion, some of the characteristics of the PR consultancy in 2020 could be:
- Greater focus on high value-add services
- Expertise on conversation creation
- Smaller staff numbers, with greater depth of expertise
- Very flexible operations; many different organisational structures
- Data-driven instant, continuous evaluation
That’s the snapshot from a preliminary discussion. What’s your view?