CONSUMER STRATEGIES REPORT July 22 2003

al berrios & co. CONSUMER STRATEGIES REPORT 07.22.03: The Business of Public Relations

THIS WEEK'S CONTENTS ARE:
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[1] UPDATES: New Site and Format, New Analyses and Editorial Calendar, New Events
[2] MANAGEMENT: The Business of Public Relations
[3] OPINION: The Fall of Advertising Is Happening Whether You Accept It Or Not

QUOTATION OF THE WEEK
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"While some have argued that public relations represents a 'two-way street' through which institutions and the public carry on a democratic dialog, the public's role within that alleged dialog is, most often, one of having its blood pressure monitored, its temperature taken," Dr. Stuart Ewen, "PR! A Social History Of Spin", Basic Books, 1996

[1] UPDATES
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Good morning execs,

Ahhhh! A nice two-week vacay from writing. Hopefully, you wondered what happened to us and checked out our website, where we announced a lot of big things.

For starters, with this issue, we celebrate a whole TWO YEARS publishing. As of today, you are among a group of 200 highly exclusive, very senior executives and friends that receive this publication. This issue includes slightly redesigned introductory and contents sections, more obvious unsubscribe option (just in case I haven't personally asked you if you're still interested in receiving this publication), and a reworded Disclaimer.

We've also relaunching our "about us" section today to more prominently feature our services on our home page, to remind you that we're advisors first and foremost.

Another exciting feature (for me, at least) is our very first editorial calendar, which finally reveals the subjects we're spending time researching.

As if all this weren't exciting enough, al berrios & co. will be sponsoring or participating in several panels and forums during this summer and fall, a calendar of which will be posted as part of our "Executive Panels + Forums" section online.

This week, Thursday, July 24, 2003, from 5:45pm until 7:45pm, I will be moderating an academic panel on "Researching and Actionable Data: Understanding Consumers" at Baruch College's Zicklin School of Business (where I am an adjunct professor). Speakers include researchers from UniWorld, The Vidal Partnership, and Ogilvy & Mather. RSVP. There is no cost to attend if you've received this email.

Finally, I hope you enjoy our newer, more in-depth analysis of the businesses and operations we review and how they affect consumers, starting with public relations. I personally interviewed PR pros and reporters to get their take on the business, and help you, the senior decision-maker at your company, determine everything from how you pay an outside firm to PR's affects on consumers.

Enjoy your REPORT!

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[2] MANAGEMENT
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The Business of Public Relations
BY AL BERRIOS

(Disclosure: In an unexpected direction, the research conducted for this article regards public relations reaching you, business executives, not consumers. The interview portion of my research, in my opinion, does not dig deep enough into public relations efforts for consumer products, movie releases, etc. However, the industry in general practices some common standards when executing business or consumer campaigns, which serve as a basis for this article to explore how public relations affects consumers, too.)

> The Public Relations Professional Through The Eyes of Its Target
> Why Is The Reporter The Target Of The Pitch?
> The Affects of PR On Consumers
> A Brief History
> Working With PR: Accountability And Fee Structure
> Current Industry Challenges and Beyond
> Conclusion

In one of my earliest job interviews, I recall a recruiter with his own search firm asking me the difference between public relations and other forms of marketing. My answer, without any in-depth knowledge of the practice, given to me by my college advertising textbook, is that PR is free.

"Public relations was about fashioning and projecting credible renditions of reality itself," said fellow CUNY professor Dr. Stuart Ewen from his conversations with the "father" of public relations, Dr. Edward L. Bernays, in his 1996 book "PR! A Social History Of Spin". The most telling definition of public relations I encountered during my research came from a reporter from a major newswire: "PR is sales. [Pitching newsworthy information and its credentialed informants.] The target is the reporter."

PR sees itself as a part of the "marketing umbrella" and understands their role in helping generate awareness for their brands and organizations. Journalists, on the other hand, appreciate PR as essential to helping them investigate their story. And here's where opinions diverge.

The Public Relations Professional Through The Eyes of Its Target

Rarely do PR folks acknowledge that they're salesmen, or the more popular terms, flacks or hacks, in their efforts to disseminate their story to as many journalists they can find. Many don't realize that journalists are all looking for the exclusive hook that no one else has. After all, journalism is a business, too, and exclusivity is what drives it.

In the opinions of reporters, flacks must develop a good relationship with them in order to succeed with them, where deadlines are respected and reliability is earned. A reporter from another major newswire told me a story about how a professional from a reputable PR firm blatantly plagiarized parts from an interview from another news organization and tried to pass it off to her as a fresh newsworthy exclusive about his client. After she conducted her double-check, she soon realized the scam. Needless to say, this sort of behavior is quickly discovered and these type of hacks soon become widely perceived as disreputable.

But the worse part isn't how hacks whore their story around, but when they do it without accurate information on their target audience, the reporter, the audience, and without accurate information on their brand or organization, which is just about the ultimate sin a PR person can make. "Sometimes PR guys don't know their audience and what they're pitching… this annoys me," says one reporter.

A solution has been to deal with company publicists more often than with outside publicists, who are also more willing to provide more reliable "on the record" information rather than the more suspicious "off the record" variety: "PR firms are once-removed from [their client's] company and makes information [a little stale], unless [they are] embedded [directly within] company strategy. We deal with company people more often. Insider status is very important," says this same reporter.

(Note: I interviewed three reporters for their opinions, but due to the recent Jayson Blair experience, news organizations have put strict policies in place deferring all interview requests to their public relations departments. As a result, I promised not to disclose my sources in return for their valuable insight.)

Why Is The Reporter The Target Of The Pitch?

"PR has complete and total control over look and feel. However, [what we do is] not as credible as [the] interpretation of journalists," says Bambe Levine, Principal at independent, award-winning Bambe Levine Public Relations, Inc. Ultimately, it is the journalist that makes a story credible, even if that story came from a publicist.

But, as I've written about in prior reports, the journalists' perceptions, biases, egos, and aspirations skew their interpretations ("Expecting Too Much From The Press - The Future of News Content Part 2"). Their opinions are often mixed with facts, resulting in audiences that are increasingly unaware that their opinions are being influenced by the opinions of their news sources. al berrios & co. calls this effect the media influence argument and model ("An Analysis of How Media Companies Influences Consumers").

By understanding this relationship and the decision-making processes involved when the consumer doesn't have perfect information, a PR person stands a greater chance of influencing a journalist, even during times of national news stories, which usually presents difficulties for flacks selling their stories. Says Erin Flynn, principal at independent Flynn Media, "If there is a major news event, it can be very difficult to win client coverage. When Operation Iraqi Freedom started, radio producers across the country replaced scheduled interviews with war coverage. Bookings were possible, of course, but a lot tougher to get. In general, you need to find a story angle or hook that captivates a reporter's attention. Obviously clients who are already well known or industry experts are easier to place than someone with no media experience."

My source from one of the major newswire concurs: "The likelihood of a 'flack' achieving success with [a] reporter increases when it's a general news story and the reporter is looking for one more source to feature."

The Affects of PR On Consumers

Although there are no in-depth studies on the affects of PR on consumers, the public relations professionals I interviewed agreed that they are unnoticeable. Not only that, journalists tell me that they give equal weighting to all leads, offering news consumers what are hopefully considered fair and balanced reporting.

Consumers are rarely aware when a public relations effort has influenced a story. "Consumers really have no idea what is influenced by PR. When a columnist reviews a book, for example, he won't write, 'This information was supplied to me by ABC Media, a PR firm based in NYC,'" says Ms. Flynn.

According to Al and Laura Ries, distinguished authors and marketing consultants, in their 2002 book, "The Fall of Advertising and the Rise of PR", published by HarperBusiness, PR is essential to launching a campaign, while advertising should be used to maintain it. Their argument is that there is simply too much advertising that consumers tune out. That advertising, with it's high inefficiency and lack of credibility with consumers (and executives), is "an anomaly".

Public relations professionals, however, don't fully capitalize on their promise to manage public opinion and create credibility, because even though they claim to invest substantially in understanding consumers, this claim is as suspicious as their "off the record" information. An informal review of the websites of 12 top public relations firms reveals that almost all offer the same services, to the same industries, but generally, with nothing but "the experience of their professionals" as the basis on which their "insight" is based on. If insights are revealed, they're usually in the form of articles or presentations written by members of firms, and presented to prospects and clients in unreliable, downloadable formats, relegated to almost unlocatable sections of their websites, leaving the means by which PR firms gather and use data highly questionable.

There's no question that pending client approval, PR firms activate all sorts of fancy research projects. But in light of the fact that PR firms are supposed to be consummate interpreters of the public's opinions, isn't it reasonable to expect that they maintain their own primary data-gathering infra-structure and insights perpetually at the ready? Many don't.

A Brief History

War has always provided governments with the occasion to try and influence their citizens towards their cause. From World War I being one of the most important for setting public relations doctrines to today's "embedded reporter" program, propaganda has been used to sway the public and alter their minds ("The Problems & Opportunities of Ignorance"). It has thus been the domain of highly intelligent counselors, psychologists, economists and other social scientists guiding their clients through the minds of the masses, building the framework for clients to change consumer perceptions. This blatant manipulation of the social consciousness wasn't always accomplished with press, but with events, government policy, and with the support of advocacy groups.

With no formal processes or standards (for managing strong and productive relationships with the gatekeepers of information and telling compelling stories with exclusive facts at the perfect time), public relations continues to maintain that their target is the consumer, and with the goal of changing their minds. However, with increased competition, and the inevitable decrease in the quality of the PR profession, the press has become ever wary gatekeepers. And in the course of at least seventy-five years, the role of public relations practitioners has become one of car salesman to the press, that anyone can do. Altering consumer perceptions has arguably remained in the hands of the press.

A portion of Dr. Ewen's book serves to illustrate this point: "It should be noted that [Dr. Edward L.] Bernays, at the time of our conversation, felt that the field of 'public relations' had failed to live up to his 'professional' expectations. 'Today,' he related to me with some dismay, 'any nitwit or dope or anybody can call himself or herself a public relations counsel. I had a young woman call up two months ago and she said I hear you're nice to young people. Can I come in and see you? And I said, what do you do? She said, 'I'm in public relations.' So I made a date with her and when she came in-she was about 27 years old, young woman, apparently intelligent...

I said, 'What do you do?'

She said, 'I'm in public relations.'

I said, 'I didn't ask you that. I asked you what you did.'

She said, 'I give out circulars in Harvard Square.'

She was in public relations! [The term public relations] hasn't only been misused. But people have used the name for press agents, flacks, publicity men or women, individuals who simply try to get pieces into the paper that are favorable to a client. Whereas, by my definition, a public relations person, who calls themselves [sic] that, is an applied social scientist who advises a client or employer on the social attitudes and actions to take to win the support of the publics upon whom his, or her, or its viability depends."

The unfortunately de-evolution of PR from it's previously high pedestal has been supported by advertisers that don't always understand the value of credibility or being able to alter public opinion and PR firms that recruit entry-level grunts that don't get the right scientific training by the time they're managing accounts, resulting in continued lapses in quality within the industry and reduced barriers to entry for more of this sort of "public relations".

The most popular trade associations include: The Public Relations Association of America, Council of Public Relations Firms, Public Affairs Council and they all provide easy to find, relevant research for their members and prospective PR clients.

Working With PR: Accountability And Fee Structure

Firms don't overtly like working with each other, but will attempt to enhance each other's value to your marketing efforts. Their true value is realized with increased integration into your company and its strategy, since that's what their journalist relationships value the most - insider information. So if you hire an outside public relations firm, you better be prepared to not restrict his/her access, as well as permit them to reveal that information to the public in such a way that your competitor won't exploit that information to your disadvantage.

The bottom line is that they all understand that if you want them to work together, they will, since they're part of a communications umbrella. These stressfrl-at-best relationships are more common of larger firms than smaller, independent PR folks.

Fees vary based on the number of markets you'd like to reach, the scope of the assignment, and of course, how many professionals will be assigned to make it all happen. It rarely depends on success metrics, since PR efforts are still largely unmeasurable, with results evident by the total number of press clippings and other mentions in news that were the direct result of your PR professional. Although these are commonly referred to as impressions, to use the same language of other marketing efforts, they are still largely outside of the control of the PR effort, again, which is why you don't pay for public relations the way you would for advertising which can deliver a fixed amount of impressions, even with certain guarantees.

But both sides acknowledge that PR is crucial to all businesses. From accounts such as Worldcom to the President of the United States, a publicist has been involved in managing the image perceived by journalists, and ultimately, consumers. The unfortunate truth is though, that all other marketers can take credit for this image-management service, too, leaving the role of the public relationships specialist, that still can't definitely prove their value in dollar terms, occasionally superfluous. Heck, even lawyers manage image now (as Citigroup's recent announcement of Chuck Prince's ascension to CEO of the entire global firm demonstrates, effectively replacing Sandy Weill, as we predicted here seven months ago on January 14, "Chief Executive Office: Not What It Used To Be"). To complicate this perception of the public relations professional, their main role of having relationships with journalists isn't necessarily worth much if they're perceived disreputable by the press community.

al berrios & co. has argued that marketing effectiveness should be gauged on the degree to which you've established your relationship with a consumer ("The Optimal Structure for Corporate Marketing Departments"). Being that PR is a component of the marketing process, its effectiveness should be gauged similarly instead of through the number of impressions and their equivalent cost in media placement.

Current Industry Challenges and Beyond

"Current challenges in PR are an overabundance of information and news clutter - [it is] really difficult to do things that will make your client/s stand out above the rest and cut through the white noise," says Trisch O'callahan, director of public relations at cultural marketing communications firm Ad*Itive, who has been managing PR for the American Legacy Foundation's anti-smoking Truth campaign.

It's true. A wired world has released an unprecedented amount of information onto an unprepared society. Today, reading one edition of The New York Times is equivalent to the entire education of a 17th century English gentleman, according to Marian Salzman, author and Chief Strategy Officer at Euro RSCG Worldwide ("AMA Author Series: "Buzz" Featuring Marian Salzman").

As proven by our government's embedded reporter strategy, too much information gets us lost in the details. Although the effort of providing an overabundance of information was perceived to be a strategic victory for public relations practitioners and citizens' choices alike, it also demonstrated how too many options left consumers unable to decide or act. In fact, this phenomenon has been referred to as the "24-jam" vs. "6-jam" problem, where consumers, given the choice between 24 jams of jelly, are less likely to make any decisions, whereas only 6 choices increases the likelihood that they will purchase a jar of jam. And to complicate how consumers respond to an overabundance of information options, research has demonstrated how Westerners typically have a narrower view of things than everyone else. That is to say that as thinking persons, we typically don't take into account the whole picture into our perspective, limiting the amount of information we use to make decisions ("We Clap, Yawn & Follow Fads Because We Sync").

As if excessive information weren't enough of a problem, PR also has to deal with the fact that consumer perceptions of the press has generally been declining for decades - again the result of too many news sources, many plagued with credibility issues. As we've covered here before, the press has increasingly become less objective, which has lead to a decrease in the quality and standards, and a harder to entertain news consumer ("Expecting Too Much From The Press - The Future of News Content Part 2"). Getting information is no longer perceived to be enough reason for consumers to stay interested in news.

Crisis communications has recently jumped to the forefront of the executive consciousness. I'm sure you've been following the MCIs (fixing financials for new, better, trustworthy company), White Houses (defending their intelligence), Oracles (convincing that their hostile bid for PeopleSoft is good for all) and even Verizons (facing extraneous union negotiations) in business news. The leaders of all these firms understand the importance of their publics' perceptions of them and without that positive positioning in the minds of their constituents, they lose credibility and ultimately, influence. And without this influence, the consequences would be terrifying to these leaders.

On a smaller scale, earning respect from media and business from clients has been the two most difficult challenges faced by small to mid-sized PR firms. Thanks to the misperceptions of a week economy and the value of consumers and their behavior during such an economy, misperceptions of what PR actually does, and higher advertising costs siphoning more of their budgets, senior executives continue to come up with excuses for not budgeting PR.

Conclusion

I originally set out to define and compare public relations with other marketing disciplines. I believed public relations was simply a matter of communicating to the press and writing speeches. But that's just the action. The reaction is what's powerful about public relations - the ability to alter reality into whatever you want it to be in the minds of your audience. I whole-heartedly support the business of public relations as a major component of your overall marketing efforts, however, encourage you, the marketer, increase your standards, and make sure that your account at your PR firm is managed by capable, scientific, analytical minds and not their assistants.

In addition, I urge you to experiment with how you hold your PR professionals accountable. Simply gauging their success on the value of the media placement in which they managed to secure a mention of your organization and its accomplishments doesn't effectively leverage PR as a form of altering public opinion. Don't be convinced that PR is free. If you want a result as immense as altering the very reality in which your consumers believe in, you must spend money.

Based on the al berrios & co. media influence argument and model, credibility is achievable from a consumer's familiarity with something or someone, and familiarity is achievable with reach and frequency using all forms of media and channels, not just press ("An Analysis of How Media Companies Influences Consumers").

RELATED AL BERRIOS & CO. ARTICLES:
> "Credibility, Perception, & the Internet"
> "Changing Corporate Culture"

READ MORE:
> "Visiting Edward Bernays"
> The Museum of Public Relations, featuring Edward L Bernays
> Tye, Larry, "The Father of Spin: Edward L. Bernays and The Birth of Public Relations", Owl Books, 2002

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[3] OPINION
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The Fall of Advertising Is Happening Whether You Accept It Or Not

When Al and Laura Ries' book, "The Fall of Advertising and the Rise of PR" published by HarperBusiness, launched in 2002, advertising and even PR execs severely criticized them for inaccuracy and "gross generalization". They argued that PR has many more uses than simply a product launching effort. Indeed, much of the logic sets up the many factors why advertising simply makes no sense for anything other than giving legs to PR's campaign launches.

However, how would you feel if a consultant respected by your clients told them that you're no longer a viable "vendor"? Or even a viable vendor for anything but launches? Ad agencies vendors!? How incredulous!

In fact, the Rieses even infer that because of so much inefficient advertising, companies launch extensions rather than innovative products, since it's cheaper to launch an extension with advertising. And consumers? In countless surveys, have responded by saying to marketers that we're tired of extensions and want innovation. I can attest to this kind of thinking, as contacts from large agencies have informed me that too often, advertising is done to conceal the poor product attributes. Advertising replacing quality.

Clients, of course, don't think twice about the consequences of such an effort. Not only does it desensitize consumers to your brands and communication, but those of your entire sector.

And because advertising agencies aren't regarded as highly as other professional service providers ("We never ask our agency what to do", a CEO was quoted in "The Fall…", "we tell them") the poor nature of their relationship between agencies and their clients is painfully obvious to everyone… except the agencies.

RELATED AL BERRIOS & CO. ARTICLES:
> "Creative is a Commodity: Nepotism and the Perfect Market"

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Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2001-2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

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