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March 17, 2006
If You Want Free Trade, PR Is Essential Ingredient
I watched Team USA go down to defeat last night in the World Baseball Classic at the hands of a very capable Team Mexico. As the Canadians suffered during the Winter Olympics when their men's hockey team failed to win the gold in a sport invented in their country, America has now surrendered its superiority in baseball. Following on Team USA's third place finish in basketball in the 2004 Summer Olympics, it could safely be said that the rest of the world has caught up with America in two of its favorite sports. No more Dream Team 1992 with Charles Barkley dunking on the head of a hapless Angolan half his size. The lasting image of yesterday evening was of a forlorn Alex Rodriguez, Most Valuable Player in Major League Baseball's American League, looking out wistfully from the dugout after the game-ending double play erased the last hopes of the US team (note that ARod could have played for his native Dominican Republic, whose team is going to the playoffs in San Diego. Wonder what he is thinking today?)
What’s the moral of the story? The outcome of the baseball game is simply further proof of Tom Friedman's hypothesis in his recent best-seller, The World Is Flat. The integration of China and India into the global economy has fundamentally changed the world by enabling outsourcing of service jobs and low cost manufacturing of goods. Martin Wolf of the Financial Times (subscription required) yesterday described this as a supply shock, an economist's description of how Western consumers are benefited by low prices, while Western producers are discomfited by the intense competition. The high price of oil is also causing a major build-up of cash in the Middle East and Russia. As the newly affluent players accumulate funds, they will ultimately not be satisfied to invest in low-yield US treasury bonds, they will want to buy productive assets, specifically companies in the US and Europe. The rest of the world wants a level playing field for the game of business.
Neither the US nor the EU is ready for this level of true global interconnection, with free flow of funds across borders. The US Congress rose up in protest when the Bush Administration proposed acceptance of an acquisition of a UK company P&O by a Dubai Government controlled entity Dubai Ports World which would have placed control of six US ports in the hands of "Middle Eastern interests." American critics were quick to wave the bloody shirt, noting that two of the 9/11 hijackers came from the United Arab Emirates. Meanwhile, the Spanish Government is blocking a takeover bid by EON, the large German utility, for a major Spanish utility, Endesa. Young people in France organized a protest march this week against proposed legislation that would allow companies to have less stringent regulations on termination of employment in the first two years on the job, despite a 25% unemployment rate among first job-seekers in the country.
Why does this happen? In many cases, because governments and business still prefer to conduct their affairs the old way, behind closed doors. Here is a perfect example. The US Government is still putting tariffs on soft wood imports from Canada, despite rulings from the World Trade Organization, a NAFTA panel and a US court. I asked Canadian Ambassador to the United Nations, Alan Rock, whether Canada had ever considered using PR to tell the story directly to US consumers. He said the Canadian Government was just using lobbyists and lawyers. When I asked why the US Government was being so stubborn, he said the Bush Administration had promised a few prominent businessmen to stand firm. This seems to me a perfect opportunity for PR to shine a light on an issue, where consumers are disadvantaged as builders are squeezed by higher costs. I am sure that a smart PR person would have pointed out the risk of the Dubai deal as proposed and might have suggested an alternative construction, such as a group of prominent former US executives (Lee Iacocca, Larry Bossidy) who could have overseen the US ports.
The Edelman Trust Barometer shows clearly that there is a problem confronting Asian companies coming into the West, seeking acquisitions. For example, 43% of American opinion leaders they are least likely to trust a Chinese company acquiring a US company, while South Korea another Asian power, was the second least trusted at 21%. The European countries in the survey displayed similar misgivings about these two rising economic powers. The Chinese were the least trusted by 38% in France while South Korea (21%) and India (13%) also had some visible trust issues.
Just as American, European and Japanese companies had to learn how to play in overseas markets in the 60s, 70s and 80s, so now do the Chinese, Indian, Korean and Russian multinationals. It will require education of the CEOs. I remember vividly a conversation with a CEO of a large Chinese company a year ago when I suggested that he needed a profile in the US. He said, "Tall flowers get chopped down in China," meaning that he wanted to remain behind the scenes.
It is our job to change his mind on this subject. We have to explain the values of the company, the working methods, innovations they can bring to the market, the benefits to workers and consumers, and the importance of corporate social responsibility.
Companies in emerging markets need to raise their profiles and humanize their companies. Employee blogs, like Robert Scoble's of Microsoft, have helped do just that for their companies. So what about blogs by employees on the inside telling us what it is like to have a Chinese or Indian boss -both the good and the bad parts. This will allow horizontal connection and it moves beyond media relations to personal connections.
In short, those of us in PR must be the bridge between cultures. I would like your views on this important issue.
Posted by Edelman at March 17, 2006 12:18 PM
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Comments
I think in today's world culture, having a transparent voice is critical, and PR is the best vehicle for that.
I also think that for countries and companies innovation is crucial. We may have given up dominance in baseball, but we still kill at snowboarding. And when the rest of the world catches up there, we'll invent something else.
Posted by: Tac Anderson at March 17, 2006 1:50 PM
I think you are missing the key issues: climate change is upon us despite all the spin around it as showed (for instance) in the Seattle Times blog devoted to the environment:
http://blog.seattlepi.nwsource.com/environment/archives/102015.asp
There is no business on a dead planet. Of course it will take a while although we are already experiencing serious consequences. Considering the abysmal failure of the present US government (while the US is a main culprit) it becomes essential for every corporation to think in terms of sustainability. It is also true for China, India, Korea and else: if they adopt our not sustainable technologies (like polluting cars, polluting power plants) the planet (at least as we have known it) is doomed. Nobody likes Cassandra and beyond the warnings we need solutions and commitment to solutions. I am not so sure about the future of "Free Trade" (see the books by Emmanuel Todd) but we are sharing a small planet that can only sustain so much pollution and destruction. Is Edelman doing anything about it? It that any concern of yours?
As for "free trade", what do we know about the way the free trade goods are produced? Reading the labels I always wonder: child labor at 1$ per day?
Posted by: philippe at March 18, 2006 11:12 AM
Yes, we need more employee blogs in outsourcing destinations. Filipinos are the best English-speakers in Asia, and young Filipinos are early adopters of social media. As such, I often learn more about Filipino call centers and software houses from employee blogs than from corporate brochureware.
Posted by: Mike at March 19, 2006 6:30 AM
Canada played bad hockey at Turin Olympics - and Finland, who was unbeatable until the last match, managed to lose the gold to its neighbour, Sweden. Talk about pain!
More seriously, to Philippe's question on climate change. Edelman Brussels and the whole network of our European offices, together with Saatchi London, is partnering the European Commission to run the largest ever European Union information campaign on climate change for more than 380 million Europeans.
We in the Brussels office are extremely proud of this opportunity to be part of such an initiative and look forward to helping to change behaviour to avoid climate change.
Posted by: teemu at March 20, 2006 4:24 PM
First off, A-Rod simply can't hit in the clutch and the US team would have been better served with him playing for the Dominicans (who would have come to regret his decision as well) - and this is from an avid Yankees fan who sincerely hopes A-Rod gets his head straight at crunch time soon.
Second, and more importantly, I think you reiterate the point made elsewhere that domestic political-demagoguery is playing a negative role in both America's International business interests and broader foreign relations. I think you're right in as much as PR has a role to play in making international business more transparent in terms of how goals, ambitions, intentions are communicated. In the case of Dubai - and I think more importantly CNOOC - PR was not leveraged in terms of building public opinion. I like your idea of humanizing companies, encouraging the local employees of foreign multinationals to discuss their experiences openly and honestly could be a very valuable tool. It is also important (again as you note) for the CEOs and other execs - at least as they are working to build solid American public opinion - to be out front selling their message.
But on the point of the Chinese CEO, it is also important that we as Americans recognize local culture and help allay their fears about being out front, i.e. we have to help them find the right message domestically that supports their public persona overseas even as they strive to maintain a low profile at home. That's not an easy task but it is one that we are going to have to get comfortable with if we want to help our clients broaden the effectiveness and foreign receptivity of their message and offering.
Posted by: Usher Lieberman at March 21, 2006 6:01 PM
Usher,
Perhaps the solution is to empower a local manager to speak out in the US That is what Microsoft has done in Europe with Mr. Courtois He is the face from MS headquarters in Paris He is at board level and has real power in the company Thanks for reading my blog
Posted by: Richard Edelman at March 22, 2006 11:00 AM
P
We are very involved in climate change issues We have worked with Swiss Re for two years on a global study on risks associated with climate change--including flood, hurricane etc. The point of the study--business has a critical interest in environmental degradation.
We also work with Rich Sandor at the Chicago Climate Exchange which does trading of carbon credits And with the Chiquita company which has gone to a sustainable method of growing bananas And with Starbucks which has insisted on buying only fair trade coffee I am a big believer and use my bully pulpit to push clients in this area
Posted by: Richard Edelman at March 22, 2006 11:01 AM
Mike
You are right We have to help places outside of India establish brand for outsourcing
Posted by: Richard Edelman at March 22, 2006 11:03 AM
T I love your optimism. Go tomato man. Now I actually know what snowboarding is!
Posted by: Richard Edelman at March 22, 2006 11:05 AM
Richard, not sure whether uve seen this article or not but thought theres no harm sharing :)
Let me know your thoughts on this.
~Sya~
Why the likes of Edelman don't get tech PR
David Richards - Monday, 20 March 2006
OPINION: The technology industry is a goldmine for public relations Companies. It's fast moving has constant new product or upgrades and above all fierce competition between brands. But do global PR Companies like Edelman really understand wha its all about.
The answer is NO. What they do know a about is charging vendors big fees, spin doctoring and delivering media reports for vendors that actually do not report whether ones PR investment is being well spent.
A classic example is big end of town PR group Edelman who represent several vendors including Samsung. They are also the same agency that got dumped by LG 18 months ago. A recent conversation with one of their senior executives clearly demonstrated that this Company has really lost it when it comes to identifying what is news and relevant Vs a subject which they believe that they can spin doctor or as they said "find an angle on". Here is an example of why Edelman clients should be questioning their investment in the Companies operations. Last week Josh Delgado a senior executive of Samsung's mobile phone division in Australia gave an industry address on the mobile phone market. He revealed that within the company's business units that generated $US57.5 billion in sales last year, Samsung's mobile division was the largest contributor to revenue growth.
He also told the audience that last year Samsung increased its sales by 20 per cent to 103 million units to become the third largest manufacturer behind Motorola and Nokia. He even revealed that in Australia. In 2005, Samsung grew sales by 33 per cent. So is this news and relevant to the marketplace. Dam right it is. So did Edelman invite the technology media to hear the good news? No. With the exception of one or two whom in there opinion will go to an event after 6.00pm. There view was that most technology journalists are not interested in stories after 6.00pm which in my opinion is a load of garbage as I have been to many industry events in the evening attended by journalists. When approached as to why no journalists were invited or why no press release had been issued after the event. They said "We are still working out an angle for journalists. If you tell what your focus is we will find an angle for you".
Hello, is the world round? The fact is that SmartHouse Magazine has been in the market for 4 years, its sister reseller trade publication 3 years and in that period we have constantly covered Samsung as a global brand in the lifestyle technology market and the mobile market. Yet I have to put up with some PR imbecile asking me whether what I write is relevant to Samsung. The fact is that Edelman is a classic churner. They take overseas product releases and churn them out the door to media organisations like mine and then claim credit for gaining PR exposure. Is this worth a big fat retainer? No, because we are going to cover a new product announcement anyway. The fact is that today the name of the game is getting news onto Google where everyday millions access the Google searh engine for information. Companies like Edelman don't get this and as a result their clients suffer.
Today my business is more about web than print as it allows me to not only reach tens of thousands of people who visit our consumer web site www.smarthouse.com.au but trade sites like www.smartofficenews.com.au and www.smarthousenews.com.au.
So do PR Companies like Edelman understand the value of brand PR the answer is No, and is that a big worry for vendors, Yes, as brand PR is worth far more than product PR. In 15 years of writing about technology and churning out roughly 3,000 words a day on various technology subjects I have never once had a PR Company come to me and say that they want to talk about a brand instead of a product. The fact is that products get old and need to be replaced. Brands hang around for a long time. What Josh Delgado of Samsung's mobile phone division spoke about goes to brand values not product PR. Consumers are loyal to brands just look at Sony. 18 months ago they were a basket case in the large screen TV market, today they are on a role with the Bravia LCD TV.
What we have today with the likes of Edelman PR is a Company that is desperately trying to churn content and hours to make money. The staff they employ may have done a PR course but most are brain dead when it comes to understanding how or what a technology media Company like mine needs to be fed. For example during the time that I ran one of the largest IT media Companies in Australia I was never once approached by a PR Company with a view to actually trying to understand how we operate or what we need. Nor have I ever had one of them approach us to organise front line work experience for their account executives who don't have media experience.
I don't need a PR hack between a Company executive and myself to ask a simple question of an industry executive. I don't need them to as Edelman put it find an angle to sell to us. The fact is that PR is critical in any marketing mix but we are not here to be a cheap form of communication. Companies like Creative Technology have been churning PR for years with little expenditure on brand advertising and look where they are today. Making big losses and desperately trying to compete up against Apple, who are very much brand and PR savvy.
Right now many Companies like Edelman are telling clients that they know how to spin the PR ball to get a result, some have even resorted to editorial inserts in an effort to dress PR up as an advertising message.
The fact is that media Companies need ad revenue to survive so we are a wake up to the Companies that try using media organisations as a free party political broadcast machine to get a message up without any investment in paid marketing other than PR. At the same time we like breaking news which is something that the likes of Edelman don't understand. We like new products and we like brand and retail stories but for many Companies the question is what comes first the PR or the advertising. In an interview recently, marketing strategist and author Al Ries pointed initially to the credibility factor in launching an unknown entity through advertising. "Relatively speaking PR has more credibility than advertising he said. That's why a lot of advertisers have tried to run ads that look like editorial. And the media has fought back by labelling that ad with the word 'advertisement.
He says that the problem with advertising [to launch] a brand? Is that it has no credibility. Why would you read an ad about a product you've never heard of? See most people say, 'I've never heard of it; it can't be anything.' Why would you believe what's in an ad? It's self serving; it's a one-sided message."
"He's wrong," concluded chairman of ad agency DDB Worldwide Keith Reinhard, who dismissed Ries's challenge to the ad industry. "Why would anyone set up a completely artificial choice between advertising and PR? Any experienced marketer knows that we use them together. Every brand is different, every brand has different needs and different targets, and so we utilise all the communications voices at hand. But to say that advertising is not an essential part of this is nuts."
For the records I also established Weston Communications Pty Ltd which was the third largest and most profitable PR Company in Australia. We worked on brands like Shell, BMW, Avis, Dulux and Pepsico. This Company was sold to Ogilvy & Mather and was the foundation Company for what is Ogilvy & Mather PR today.
Posted by: sya at March 22, 2006 9:56 PM
From an economic perspective, I think it's an interesting argument to say that PR can play in expanding a foreign company's marketplace and advocating free trade.
But protection policies (policies that block free trade) are not so simple. Nations have specific goals that they are trying to achieve by employing economic tools. Yes, sometimes perceptions of the politicians matter, but not always. Protection policies such as tariffs and quotas, etc. are imposed by a government to maximize national and social gains as much as possible.
Consider WalMart. WalMart imports a lot of stuff from China, which makes it difficult for many American manufacturing companies to compete and sell to WalMart due to the demand for "everyday low prices." We're happy to have low prices but we have done so at the cost of employment in the US.
Free trade may be considered positive because of the word "free." When you say "change perceptions through PR for free trade for a better, culturally informed world," it is an idealistic statement. Not everyone benefits from free trade exchange--there are always winners and losers.
Posted by: CK at March 23, 2006 3:17 PM
I'm very interested in your choice of words by suggesting that it's PR's job to "shine a light" on some issue. Back in journalism school, Pulitzer's call to "shine a light into the darkest corners" was presented as gospel.
So, has the traditional media shirked this responsibility and is it up to the average citizen, as well as corporations or anyone with an opinion and a voice, to keep the lights on?
And, if the light comes from PR, will it be considered somehow tainted? Or are we about to see a time when PR companies become trusted sources for information?
Posted by: Chuck T at April 3, 2006 10:59 AM