Recession Is Enhancing The Role Of Public Relations

January 2012 By Justin Pugsley of JJPAssociates Getting through a recession is always challenging, but using public relations can not only enhance the prospects of corporate survival, but positively position a firm at a time when fear levels are high and trust is in short supply. During periods of recession implementing targeted public relations campaigns that directly support sales and enhance a brand's image and reputation should become an integral part of the strategy for pulling through a downturn. PR can also help counteract some of the characteristics of a recession, not just for big firms, but arguably it can be even more effective for small firms that maybe largely unknown and more vulnerable. Typical behavioural characteristics during these periods, which harbour big uncertainties, include a shrinking of corporate and consumer time horizons, a return to core values, cost cutting, a search for safety and an attempt to retreat to familiar comfort zones. Trust is eroded and reputations come under strain and often great changes take place during a recession, which can leave companies that adopt a highly defensive stance at a big disadvantage. Purchasing patterns are dominated by a hunt for value for money and lower costs. A good public relations strategy can help in alleviating the effects of some of these patterns and even turn them to a company's advantage. Recessions Shake Up Industries During these times established brands should stand out as they are trusted and familiar, but that shouldn't be taken for granted. Their credibility needs to be maintained and that comes down to sales and marketing supported by consistent and targeted PR. It is worth noting that while many firms cut investment in new products and services during recessions, those periods also spur great innovation. For example the Great Depression actually saw enormous creativity unleashed with innovations in agricultural productivity, in the petroleum sector, broadcasting, food, automobile and aviation industries. And more recently the bursting of the tech bubble in 2000 with $5 trillion wiped off the value of shares in the US from March 2000 to October 2002 appears to have done little to stop the incredible pace of innovation seen in the Internet space, which continues to this day. Also, recessions often usher in great changes within industries. According to McKinsey 40% of the leading US industrial companies were toppled from their top quartile in their sectors during the recession of 2000-1, while 15% of companies that weren't industry leaders prior to that recession were vaulted into those positions during it. As such recessions and the early stages of recovery pose a longer term strategic risk for incumbent firms, which goes beyond falling sales and problems with customer credit worthiness. Economists describe recessions as a form of creative destruction, which releases capital and human talent to pursue higher returns and engage in developing new ideas and Copyright 2012 by Justin Pugsley - 1

concepts. Risk capital is in short supply during these periods, which in itself spurs creativity. A case of necessity being the mother of invention. And the current downturn, which started around 2008, will no doubt usher in many new innovations, technologies, industry leaders and possibly new industries. On a more practical level getting through recessions depends on keeping costs under control and maximising returns on spending. Also, it is critical to stay close to the customer, to engage with them and build a mutual bond. PR Can Play To Behavioural Characteristics Of Recession Public relations can satisfy those needs as well as play to the behavioural characteristics exhibited during recessions outlined earlier in this report. Take the search for value for money. Advertising can be prohibitively expensive, whilst public relations can often have a dramatic effect on the corporate image or sales and yet cost a lot less. Another problem is that consumers increasingly view advertising with cynicism and are therefore less susceptible to its calls to action. According to research firm Yankelovich, 75% of people dont believe that companies tell the truth in advertisements. Often to get attention advertising has to be 'shocking' and though that might get a company noticed it could also prove controversial and therefore damaging in terms of corporate image. What consumers are increasingly seeking is unbiased and useful information about products that helps them with their purchasing decisions. Reading about a firm in an article published by a well regarded or specialist title usually carries far more weight with consumers than claims made in an advertisement, particularly if it is a compelling story that is being told. Seeing those mentions repeated in the media, providing they're not negative, can help enhance a company's reputation and credibility with consumers and establish familiarity. That in turn supports the marketing and advertising message and reinforces the call to action. That means companies must maintain and develop their visibility during recessions and that translates into regularly communicating with the media and building relations. With many news organisations reducing head counts leaving fewer journalists to produce content can actually increase the chances of well crafted messages getting coverage. Are You An Underdog? PR can be used to great effect by smaller firms taking on giant rivals by creating a sort of David and Goliath stance and people tend to naturally want to support the plucky underdog. The story of the school drop-out with no qualifications and no money building up a business from nothing who then takes on the established players is legendary from Europe, to the US to Asia. For small players with much smaller budgets PR is an excellent way to make the playing field a little more level, great publicity is worth countless thousands of dollars or pounds and the underdog story is a compelling one. It is a theme that has been picked up by Hollywood studios with great effect creating many blockbuster films. During recessions such stories are inspirational, uplifting and stir passion and people who Copyright 2012 by Justin Pugsley - 2

are themselves struggling identify favourably with such firms or determined individuals. During a recession much of the population will feel like an underdog. They bring hope and can instil great consumer loyalty that can last for years. Of course the 'underdog effect' translates across to celebrities, authors and politicians who have succeed against great odds. On a more practical level people will buy into the message if backed by action of: we're smaller than our rivals so we try a lot harder. It's the value for money proposition. Shifting Media Landscape Favours PR Thanks to a number of innovations and changes in the media sector in recent years carrying out targeted and effective PR has actually become easier. The media industry is becoming more fragmented and moving towards specialisation, which makes targeting specific audiences easier. Of course that also means crafting the message to suit each specialist audience, be they particular groups of consumers, regulators, politicians or other stakeholders. But there is another interesting shift that is taking place and it concerns the credibility of the media itself. Successive soundings by the pollsters Gallup have shown that trust in the mass media, as in do they report the news fully, accurately and fairly, has fallen steadily since the mid seventies in the US. In September 2011, 36% of people in the US who were surveyed said they didn't trust the mass media that much 19% not at all, compared with 33% who said they trusted it a fair amount and 11% a great deal. The situation in the UK isn't a lot better and according to Gallup most British people had lost trust in the mass media by 2005. In 2010, 56% of respondents did not have confidence in the mass media's quality and integrity, compared with 39% who did. After the scandal involving tabloid journalists hacking the phones of crime victims, their families and celebrities and engaging in other intrusive and unethical behaviour to get a story, that trust has probably been even more severely eroded. These trends favour greater media specialisation and without a doubt the growth in social media and trust in it. However, this does not mean that mass media should be written off, it still does have tremendous reach and power. Getting Personal With Social Media Social media is a truly revolutionary event for PR and marketing and is even driving a convergence between the two disciplines in that consumers can now be engaged with directly via platforms, such as Facebook, LinkedIn, Twitter and so on. This is about staying close to the customer an important consideration during a recession. Conventional PR is very much about convincing a journalist to quote corporate spokespeople in an article and include their opinions, in other words the message goes via a filter meaning that a lot of its meaning can be lost. Also, social media moves beyond just specific audiences in that it can drill down to micro audiences or even just the individual. This implies a level of targeting that was hitherto very difficult to achieve. Where social media can really add power to the corporate message is via word of mouth, Copyright 2012 by Justin Pugsley - 3

which is one of the most effective and low cost mediums for building trust and sales. And during a recession, when people have heightened concerns over issues such as credibility, familiarity and value for money, social media is coming into its own. As social media is built around communities of often like minded people or friends, such as Facebook, word of mouth marketing can become very powerful. This gives a recommendation by a member of that community, especially if they're an influencer, a strong level of authenticity that it must be genuine. A friend or a respected member of that community endorsing a particular product can carry tremendous power and PR is ideally suited for engaging with social media. In this context maybe PR should stand for Personalised Relations rather than Public Relations. Getting positive mentions on social media platforms can carry a lot of weight while enabling companies to engage directly with their customers and potential customers. They can become part of the dialogue about their products and services. It is a great way to find out about a product's strengths and weaknesses and therefore to be able to address them. And of course companies that listen to feedback and actively engage with their market get 'kudos' for doing so by those communities. Of course the message has to be delivered in an honest fashion. Propaganda, or even the suspicion of it, soon gets ferreted out and comes into to the open with potentially very damaging consequences. Therefore dealing with these influencers in an honest, transparent and open fashion is paramount. Influence The Influencers An older, but still very important part of that online community space is bloggers, a medium that in some ways resembles traditional media in that the blogger is like an editor or journalist and is responsible for generating the blog's content. These individuals who are often fervent enthusiasts for the topics they cover can be tremendously influential. Some of the more established ones have tens of thousands of followers and are highly regarded by their readership. Engaging with top bloggers is important, even giving them certain privileges, such as access to some unique information, which they can pass on to their readers in other words a scoop. Even free trials or discounts can be very effective in bringing bloggers onside. The same can apply to dealing with other key influencers on platforms such a Twitter where an individual may have a great number of followers. One of the best ways learn about social media is to become part of a social media community or even become a hub around which a community is based and to fully engage in the process by setting up, for instance, blogs or video blogs (vblogs), twitter and Facebook accounts. Using content farms can be useful for generating insightful articles about the company and its products, information that is helpful and genuinely informative, which can be distributed via social media. If that information is deemed as useful by a social community it can quickly be passed around thereby creating a 'viral' effect.

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Avoid The 'Versus' Mentality But it is important not to view PR in terms of traditional media versus social media. The fact is the two interact all the time and traditional media is increasingly engaged in social media as the more savvy publishers have noticed its growing prominence. Publications also see social media as an excellent way of engaging with potential customers and to make existing ones feel involved. It is very common for articles and broadcasts from the traditional media to become actively debated by communities on platforms such as Facebook, LinkedIn and Twitter, which shows that the two types of media can be highly compatible from a PR perspective. Indeed, much of the information circulating in the social media space has appeared as a result of an article published in a well known newspaper or magazine, for example. In the other direction journalists frequently trawl these social media platforms for story ideas or to back up a story they're already working on. Increasingly celebrities chose to make news breaking announcements via their Twitter or Facebook accounts. Even stories concerning bad behaviour of a company towards its customers or of product defects often appears first in the social media arena before gravitating towards traditional media once the story has gained enough traction. It also shouldn't be seen as a case of public relations versus marketing. Public relations practitioners are ideally suited to engaging with social media influencers as they have gained those skills from dealing with journalists. At the same time marketing professionals are skilled at identifying markets, market segments and customer needs therefore the different skill sets should be combined for maximum effect. Total Communications With a big deficit of trust in society openness and transparency are more crucial than ever for building credibility. And this isn't just because of the recession, but also because so many pillars of the establishment have been undermined by scandal from big banks needing to be bailed out, evidence of politicians on the take following the UK parliamentary expenses scandal, journalists hacking phones, the Eurozone crisis and so on. Many of the institutions the public thought were relatively safe have turned out to be anything but. When trust is low and cynicism prevails, people are often more willing to believe negative stories and feel less inclined to give the benefit of the doubt. They prefer to turn to friends and people they know for advice. Companies should think in terms of total communications and their public relations function should increasingly be thought of as a media organisation and as a publisher of content using all available channels, which can reach desired audiences. Those communications should be focussed, clear and carry as little jargon as possible. Jargon often alienates, especially for those who are not 'in' on it. Content should be spliced and repacked to appear in e-mailed newsletters, news releases, blogs, condensed for Tweets and recycled in an appropriate way to make it fit for other social media platforms. At the same time these communications need to echo the central Copyright 2012 by Justin Pugsley - 5

marketing message(s) and support the values of the brand and the organisation. There needs be regular communication to ensure visibility, to build up credibility and familiarity, especially during a recession. And with the growth of social media communication increasingly needs to become a conversation and an exchange of information rather than a one way dialogue. And with social media in mind, content generated by a company should include useful information of interest to target audiences, that in some way resolves a problem for them, rather than just pushing out news items. The current downturn, which may play out as a series of recessions or patches of stagnation, leading to continual uncertainty will probably foster great change in the market place, but could also open up opportunities for nimble organisations to grab market share. Surviving this challenging period or even finding a way of benefiting from it will to a large extent depend on the quality of communication with the market. In Summary: Five Areas Where Public Relations Can Play Role In A Recession: 1. PR can build credibility, familiarity and trust and get across the core values of an organisation at a time when trust is low. 2. PR can generate leads and interest from potential customers for less cost than advertising therefore making it cheaper to acquire new clients. 3. Via social media PR can bring the company closer to the customer and prospects by engaging with them and by being part of the conversation rather than simply talking at them with news releases and advertisements. Apart from gaining new customers this helps build customer loyalty and word of mouth referrals. 4. PR can enhance the capabilities of a marketing campaign and add value, which in turn enhances the return on investment for that campaign. 5. PR Is a great medium for playing on the underdog theme if that is relevant, which again can be great for gaining new customers while encouraging a sense of loyalty and an emotional attachment to the brand. For more reports: www.jjpassociates.co.uk justin@jjpassociates.co.uk

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