Public Relations

1
Public Relations Advertising Campaigns for
Controversial Business Issues

• Eric Sedler
• Managing Partner
• ASK Public Strategies

2
Overview of Presentation

• Major reasons businesses become controversial
• Common mistakes businesses make
• Tools for effective communication
• Case studies - ComEd, SBC (formerly Ameritech),
  Household International and Wisconsin Energy
  Corporation

3
Newspaper Headlines Today

• Regulators Say Energy Companies Rigged
  California Markets
• Union Says American Airlines Talks Stalled
• HeathSouth CFO Pleads Guilty to Fraud
• Sony Music Expected to Cut Jobs This Week
• Many Vehicles Flunk New Side-Impact Crash Test

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Major Reasons Businesses Become Controversial
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Customer Service Problems

• Utilities
• Cable companies
• Retail banks

6
Financial Mismanagement

• Enron
• WorldCom
• Tyco
• Adelphia
• Near North Insurance
• HealthSouth

7
Exploitative Products/Services

• Tobacco industry
• Payday loan companies
• Casinos
• HMOs

8
Negative Environmental Impact

• Oil companies - ANWAR
• Automotive industry - emissions
• Lumber industry - deforesting

9
Labor Strife

• Labor practices in developing countries - Nike
  and The Gap
• Union turmoil - United Airlines
• Layoffs - McDonalds, SBC, Motorola

10
Common Mistakes Businesses Make
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Legal Strategy Drives Communication Strategy

• In most instances, legal strategy is to
  communicate as little as possible Protect
  against liability
• Most communication is geared towards legal issues
• Key stakeholders such as customers, employees and
  investors dont usually read legal filings

12
Implementing a Defensive Program

• Attacking critics
• Attempting to explain companys position
• Believing too strongly in the merits of the
  companys arguments

13
Issues Not Framed Correctly

• One message for all audiences
• Providing legal and/or financial messages to
  public audiences
• Messages are from the companys perspective not
  the audiences perspectives

14
Too Little, Too Late

• Offer concessions that dont have impact
• Mistake what matters to company for what matters
  to the audiences
• Havent built a reservoir of positive opinion
• Companies dont make new friends when theyre in
  trouble

15
Tools For Effective Communication
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Understand What Key Audiences Think About Your
Company

• Companies with high levels of credibility have
  more leeway in their communication options
• May be able to mount aggressive counter-campaign
• Companies with lower levels of credibility are
  more limited
• Must engage allies
• Likely forced to make concessions

17
Know What Actions Will Change Audience Opinion

• Understand what actions would make a positive
  impact on audience opinion
• Take actions that matter to your audiences
• Syncing a companys action with the audience's
  desires is the quickest way to mute critics (its
  also usually least desirable)

18
Consider What Will Make an Impact With Your
Audiences

• Tailor messages accordingly
• Employees - job security, compensation
• Customers - companys ability to provide service,
  price changes
• Shareholders - stock price, companys financial
  status

19
Pick The Right Medium for Your Business and
Audience

• Television advertising is most effective for
  recognizable companies with issues affecting
  large population segments
• Direct mail is more effective for smaller
  companies with very specific audiences
• National newspapers focus on national companies,
  local papers focus on local companies

20
Engage Credible Third Parties

• Credible allies can bolster a companys position
• Third parties are more believable
• The less self-interested the better
• Examples industry analysts, academics,
  associations, customers, employees, vendors

21
Be Proactive and Repetitious

• Company must build a positive reputation to
  inoculate against potential controversy
• Develop consistent messages for each audience
• Deliver messages over a sustained period of time
• Build third party relationships before you need
  them

22
ComEd Case Study

• COM ED TO BE HELD LIABLE FOR OUTAGES
  Chicago Tribune 6/98
• POWER CRISIS JOLTING FAITH IN COM ED
  Chicago Tribune 6/98
• CAUSE OF OUTAGES STUMPS COM ED Chicago
  Tribune 9/99

23
SBC (Ameritech) Case Study

• AMERITECH SERVICE WOES DRASTICALLY WORSE
  Chicago Tribune 9/00
• AMERITECHS LOCAL SERVICE SUFFERING Chicago
  Tribune 6/00
• SBC AMERITECH PERPETUALLY OUT OF SERVICE
  Chicago Tribune 10/00

24
Household International Case Study

• HOUSEHOLD TO PAY 484 MILLION FINE
  Newsday 10/02
• HOUSEHOLD FINANCE AGREES TO PAY 484 MILLION TO
  SETTLE NATIONAL MORTGAGE-FRAUD CASE
  Associated Press 10/02

25
Concluding Tips

• Even good companies get bad press
• Biggest mistake is to focus on the companys
  position, not the audiences
• Understand the interests of your audiences
• Be proactive - communicate before the company has
  a problem