PUBLIC RELATIONS: PR TAKES CENTRE STAGE - A durable corporate reputation is very precious but not so easy to maintain. To ensure a strong image, PR is increasingly perceived by most companies as a vital marketing component. By James Curtis

A few months ago, BBC’s Newsnight carried a report asking whether the UK’s supermarket giants now exert more influence in society than the Government. Another recent study, by Business in the Community, found that after government and local community groups, people look to large corporations to solve the country’s problems. Strange as it sounds, these stories indicate the extent to which corporations have become woven into our social fabric.

A few months ago, BBC’s Newsnight carried a report asking whether

the UK’s supermarket giants now exert more influence in society than the

Government. Another recent study, by Business in the Community, found

that after government and local community groups, people look to large

corporations to solve the country’s problems. Strange as it sounds,

these stories indicate the extent to which corporations have become

woven into our social fabric.



Succeeding in this environment is about much more than providing goods

and services at competitive prices - it is about building your

reputation through consumer trust. It is also about bolstering this

reputation at a time when companies operate under the microscope of

public interest.



The merger of EMI with Time Warner and the struggles of Marks & Spencer,

for example, were not just confined to the financial news - they made

the headlines.



It is no wonder that public relations consultancies - the

self-proclaimed specialists in reputation management -are playing a far

more prominent marketing role. Chris Genasi, the chief executive of

Shandwick International’s corporate division, explains why.



’It’s the result of a combination of trends. First, a lot of big

companies, like Shell and Marks & Spencer, have been involved in PR

disasters that have had a massive effect on sales and share price,’ he

says. ’When a company sees its value being destroyed like that, the

senior people tend to sit up and think about their PR strategy. Second,

the Government’s pro-consumer stance has put companies under the

spotlight like never before. Business has suddenly hit the media

mainstream and companies are, increasingly, looking to PR to help them

survive.’



This was the case with Shell, which made Fishburn Hedges its lead agency

in its pounds 15 million global effort to present a more humane,

environmentally responsible face. The PR company is in charge of a

multi-disciplinary programme of which advertising - devised by J. Walter

Thompson - is just a part.



Marc Moninski, the joint managing director of Fishburn Hedges, says:

’Corporate reputations are made from such a multitude of factors that

you need a discipline that can take a holistic view. PR is so much

better equipped to deal with that, compared with other techniques, which

tend to reduce things down to simplistic messages.’



Christy Stewart-Smith, JWT’s director in charge of the Shell account,

admits: ’Reputation management is a much bigger issue that can’t be

dealt with by advertising alone. It involves talking to a wide variety

of audiences, in which all marketing disciplines have a role.’



This need for a dialogue with a multi-faceted audience is central to

reputation management and may be the best argument why PR is in a good

position to take a lead role in setting marketing strategy. Moninski

says: ’All other marketing spend can be undermined if you don’t have a

system in place that gives you a dialogue with all stakeholder

groups.’



Take Nike as an example. Some of the most admired and powerful brand

advertising was tainted when the company became embroiled in the Asian

sweatshop scandal. The brand that could seemingly do no wrong was

suddenly the target of a violent backlash, particularly on the internet,

where a Boycott Nike website became the focus of activity. The effects

of the PR disaster on Nike were dramatic. In 1998 it made losses for the

first time in 13 years and was forced to cut almost 2,000 jobs.



This case demonstrates why the internet is driving corporate reputation

- and with it, the role of PR - to the top of the business agenda. When

consumers, journalists and opinion formers want to know more about a

company, the first place they now go is the internet. But this is also

where potentially crippling rumours start and where like-minded ’brand

saboteurs’ can gather into a potentially destructive force.



Because it has become so important in the corporate reputation equation,

PR agencies are taking the internet very seriously. Many, like GCI,

Edelman and MacLaurin, have launched spin-offs specialising in new-media

strategy.



Richard Gilbert heads GCI’s internet specialist division, GCI Digital

Communications. He says: ’Reputation management has always been the key

rationale for PR, but the internet has taken that to a new level.

Companies are having to adapt to operating in a goldfish bowl

environment, with audiences forming opinions and making decisions based

on a huge variety of information that is often misleading and

inaccurate. But they also have to remember that it gives them the

opportunity of reaching out in ways never possible before. PR is all

about understanding, engaging and building relationships with a wide

range of audiences and the net is an extremely powerful tool for doing

that.’



Gilbert explains that the net can act as a barometer of public opinion,

allowing companies to gauge the state of their reputation quickly.

Importantly, it can help companies detect and address problems before

they get out of control. ’The earlier you can identify and respond to

issues the better. If the first you hear of something is when it hits

the mainstream media, then you’ve probably lost the battle. The internet

lets you take the pulse of opinion very early on.’



As the Nike example demonstrates, the potential damage of the internet

to a company’s reputation can be felt at the bottom line. As a result,

PR consultants say clients have never been more receptive to their

advice.



Robert Grupe, associate board director of the Text 100 offshoot, August

One, says: ’Any claim made about you on the internet can snowball and

soon have an impact on your share price. Board-level people make it

their business to look at this and they understand the role of PR.’



For the new breed of dotcom start-ups, a strong corporate reputation is

a precious but not easily obtained asset. The fact that many of them are

making intensive use of PR to quickly build their corporate profile is

also helping to boost the standing of PR in the wider marketing mix.



Perhaps the best example of this is Lastminute.com. Its co-founders,

Brent Hoberman and Martha Lane Fox, are rarely out of the papers and

they and their brand have become synonymous with the e-business

boom.



Carl Lyons, marketing manager at Lastminute.com, says extensive use was

made of PR from the moment the company launched in October 1998. ’The

most important things for us were to explain our concept, as it’s very

easy to misinterpret what we’re about. We also wanted to build consumer

confidence in the service and, through Martha and Brent, ensure the

brand had some personality. PR has done a fabulous job for us, but you

need to remember that there was a lot of interest in us anyway because

it’s such a good idea.’



Lastminute.com employs three PR agencies - Gnash, Ketchum and Citigate -

which handle trade, consumer and City communications respectively. Their

contribution has helped the website become the second best-known

e-commerce brand in the UK after Amazon.com (according to research by

BMRB) and amassed an estimated value of pounds 340 million by 2 March

this year. As the company prepares for an initial public offering - Lane

Fox stands to earn at least pounds 45 million from her share - the value

of a reputation built with the help of PR is there for all to see.



Grupe says dotcoms rushing to make millions in IPOs is focusing

attention on the value of reputation and PR. He says: ’These companies

grow out of what the market says about them. They don’t have revenue or

sales to speak of - their entire structure is built on the strength of

their brand.’



Steve Bennett, the founder of the e-commerce site, Jungle.com, says a

successful net start-up is about ’much more than the product it sells,

the advertising it creates or the publicity it reaps’. He adds that his

marketing strategy, which involves a lot of advertising, is not reliant

on the PR work of Cohn & Wolfe alone.



However, he admits: ’PR is important, because of the speed at which

these businesses are launched. We’ve used it to explain our brand

positioning, product offering and commitment to security and customer

service. These have enabled us to establish a point of difference.’



One of the biggest problems facing dotcom start-ups is to be taken

seriously by consumers and opinion formers. This is where PR is finding

it has a natural role to play, as it helps to get the brand talked about

in the right circles.



Ann Comerford, marketing director of Hyporium.co.uk, an online trading

hub for IT resellers, says: ’When a new dotcom is up against well-known

high-street brands, reputation is everything. You need weight and

substance and PR can help give you that credence by putting you in front

of the right audience. It gets you visible fast and gives you a stamp of

authority in a competitive market. We’re about to roll out across Europe

and PR is top of my list when it comes to formulating a marketing

plan.’



A factor occupying the minds of the more established dotcom businesses

is how they should build customer loyalty. So much attention has been

focused on customer acquisition that the question of retention has

hardly been addressed. Gavin Grant, the UK chairman of public affairs at

Burson Marsteller, says corporate reputation will play a key role. He

adds: ’To succeed, you don’t just have to add value, you need to add

values.’



As the e-commerce juggernaut gathers pace, PR is in a prime position to

capitalise on the focus it has brought to building value through

reputation. However, the claim of PR consultancies to be the experts in

this field is under threat from other corners of the marketing services

sector. Advertising agencies, branding consultants and management

consultants are also slugging it out for a place at the client’s top

table.



Creenagh Lodge, chairman of the brand consultant, Corporate Edge, says:

’I’ve no argument with PR and advertising agencies saying they are the

brand guardians, but they are not brand establishers. To manage a

reputation you need a core brand equity in the first place, otherwise it

won’t have any grip.’ Other brand consultants, like Bamber Forsyth and

Enterprise IG, will tell you the same.



Ultimately, all suppliers will argue that they are indispensable to the

client and are needed to help them get up in the morning and drive them

home at night. But the fact that PR can genuinely claim to be operating

at the highest level bears testament to how far it has come in the past

few years. There is no doubt that PR consultancies have formidable

skills and experience in the field of corporate reputation and, now that

this is at the top of the marketing agenda, PR has never been in a

better position.





HOW TO MEASURE THE VALUE OF PR: A NEW METHOD WITH OFFICIAL APPROVAL



The importance of PR is all very well, but how do you measure it? A

range of measurement tools are now available.



The Institute of Public Relations and the Public Relations Consultancy

Association have joined forces to develop the PR Research and Evaluation

Toolkit. It suggests dividing measurement into: output (what messages

went out and audience reach); out-take (extent to which audience

understood and remembered the message) and outcome (how the PR activity

changed behaviour and opinion). Continuous tracking of PR activity to

ensure it stays on course is also recommended.



The Toolkit urges PR to reduce its reliance on Advertising Value

Equivalents and Opportunities to See in favour of using more in-depth

research. Overall, the Toolkit recommends spending 10 per cent of the PR

budget on research and evaluation.



Some agencies have developed their own measurement tools. Edelman has

one specifically designed for corporate reputation. It starts with a

’gap analysis’, to see where actual reputation is in relation to desired

reputation. Once this and the execution of the programme have been set,

the measurement can begin.



First, media coverage is evaluated by quality of coverage and

communication of key messages. Qualitative and quantitative research is

also done a year later to see how the messages have changed. Opinion

formers - such as politicians and analysts - are also researched over

time to see how their perceptions of the company change. The company’s

peers are tracked, to see how well they are doing in relation to the

client and all this information is put into a reputation index.



Media evaluation is crucial and tools like Millward Brown’s Precis

(formerly CMS Precis) will put media coverage through a scientific

series of tests to measure their impact. Not forgetting, a lot of

advertising measurement tools, like pre-testing, media planning and

calculating message shelf lives, can all be used in PR.



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