July 20, 2007 1:19 pm : Comments 000
As originally posted on Strumpette.com on July 20, 2007.
Few things in public relations are harder than getting reporters and their outlets to admit they have screwed up. And I don’t just mean when it comes to reporting on issues that are admittedly open to interpretation, such as whether the CEO really was “fired” (their choice) or “stepped down to pursue other interests” (the client’s preference). Wrangling a printed correction or clarification or even a verbal “oops” over the phone for any mistake at times seems more challenging than selling Soldier of Fortune subscriptions to Quakers.
So kudos to BusinessWeek for chowing down on a heaping plate of humble pie in its July 23rd issue by publishing a story about Volkswagen’s “last-ditch drive” to save its U.S. operations. It was just over a year ago that the same magazine published a rather different article – a cover story no less – that was much more effusive about Volkswagen’s prospects, thanks in large part to its retaining Miami-based Crispin Porter + Bogusky, a “hot” ad team it hired to lead the big push to “rekindle” the Volkswagen brand.
To be fair, the earlier cover story wasn’t a total puff piece. The magazine did include commentary from ad industry execs who accurately foresaw the marriage of Volkswagen and Crispin Porter + Bogusky as an ominous one. Peter M. DeLorenzo, publisher of Autoextremist.com, was quoted saying that Kerri Martin (Volkswagen’s “director of brand innovation”) and Crispin Porter + Bogusky “would destroy the brand in the U.S. once and for all” if they weren’t stopped. BusinessWeek also noted that Advertising Age pulled no punches in its of review Crispin Porter + Bogusky’s first ad, writing that it was “so horrendously awful that it smoothes the way for Volkswagen’s quick and complete withdrawal from the American market.”
As it turned out, BusinessWeek should have given the detractors a tad more ink because they were right on the money. Volkswagen’s sales last year slid to 235,000 compared to 338,000 in 2002. Hindsight, what a wonderful thing.
Very much to its credit, BusinessWeek makes clear in its latest Volkswagen story that the exuberant vibe that ran through its May 2006 cover story was a bit premature and that its reporting could have benefited from a lengthier “to be sure” paragraph of cautionary insights. And it reminded readers of its earlier cover story. I wonder how many publications would have chosen to simply ignore Volkswagen’s current plight had they earlier published a similarly ill-judged cover story about the company’s turnaround efforts. I admire and respect BusinessWeek’s integrity, which is why I’ve long been a long and devoted reader.
Reading the two BusinessWeek stories side by side, there is a clear lesson to be learned from Volkswagen’s mistakes – and no, I don’t only mean the questionable decision to use a thick-accented, bleached blonde, dominatrix-type named Helga and an equally over-the-top German Engineer named Wolfgang to sell economically priced compacts.
It’s about overemphasizing image and style over “delivering the goods.” It’s about thinking that clever gimmicks, big marketing budgets, and slick ads are enough to make the silk purse from the sow’s ear and, if need be, make the sow’s ear as well. It’s about the dangers of putting all the public relations, advertising and marketing eggs in any one basket, and entrusting it to someone (or some functional group) who doesn’t know nearly enough about the multiple disciplines to keep a steady grip. Typically, it’s the Almighty Grand Poobah Brand Manager who gets that gig.
At Volkswagen, it was the “hot” advertising agency that seemed to be entrusted with the brand basket. It was Crispin Porter + Bogusky that talked Volkswagen into recasting the redesigned VW Golf as the VW Rabbit, a brand that hadn’t been used in 20 years (possibly, just possibly, because it was a problem-plagued car that frequently broke down or caught fire). Crispin Porter + Bogusky, by the way, is the same organization that believes good advertising “is anything that makes our clients famous” and responded to criticisms of its strategy by saying “I like that they are talking about the work. If they aren’t talking, then your brand is dead.” (There’s just so much wrong with those statements, but I’ll leave it for another day.)
Now, I don’t mean to suggest that Crispin Porter + Bogusky is totally to blame for Volkswagen’s continued failure to launch. After all, Volkswagen was not exactly at the top of its competitive game when the agency was hired and the products they were asked to support are as lackluster as ever (there’s just so much lipstick you can put on a pig). And someone back in Volkswagen Marketing had to be signing off on those proposed storyboards, right? I guess that would have been Kerri Martin, the person who brought the ad guys in. She was shown the door six months after BusinessWeek’s cover story.
If Volkswagen truly wants to make a go of its U.S. operations, it needs to start with making better cars, ones that aren’t ranked by J.D. Power & Associates in the bottom 20% of automakers for reliability, quality, and service.
In the interim, save the ad dollars and stick those leftover “Drivers Wanted” signs in the front window of U.S. corporate headquarters. Hey, it worked for the Chinese restaurant down the street.
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July 13, 2007 10:27 am : Comments 000
Well, it seems Wal-Mart isn’t the only retailer practicing deception on the Internet. John. P. Mackey, the vegan yogi CEO of Whole Foods Market, has been unmasked by the Federal Trade Commission as Rahodeb, an inveterate Yahoo message board contributor who touted the specialty retailer’s stock and had a certain fondness for its leader’s grooming. Rahodeb, I mean Mackey, reportedly posted more than 1,000 entries over a seven-year period.
In case you haven’t been following the saga, John Mackey wants to buy rival Wild Oats Markets, but the FTC wants to deep-six the deal. Mackey wants to deep-six the FTC. He has questioned the agency’s legitimacy and accused it of being “hostile and adversarial towards Whole Foods.”
Well, Mackey’s got that right. The Rahodeb disclosure was contained in a footnote of a document made public by the FTC late Tuesday and reported late yesterday by the Wall Street Journal Online. I can’t imagine where the little birdie came from who told the Journal to look for the footnote. Government bureaucrats can be awfully touchy when a CEO they are challenging publicly questions their ethics and integrity.
But let’s give Mackey his due. Wal-Mart reportedly pays Edelman some $1 million a year to come up with such ideas as the infamous “Wal-Marting Across America.” It appears that Mackey concocted and executed his deception all by his lonesome at no cost. Whole Foods’ shareholders gained further value for the $1 a year Mackey takes in salary.
From a crisis communications prospective, I also give Mackey credit for choosing to post a statement on Whole Foods’ website, rather than granting an interview to the Journal � he would no doubt have dug himself a deeper hole. But his unnamed spokeswoman did him in instead. “(Mackey’s) comments weren’t illegal” she told the Journal. Yes, but that begs the question, “does he still beat his wife?”
Mackey isn’t the only one with egg on his face (organic or otherwise). Ethisphere Magazine, a national magazine “dedicated to illuminating the correlation between ethics and profit” in May named Whole Foods “one of the world’s most ethical companies.” Step seven in the magazine’s methodology is to screen their pared-down list of companies through a Who’s Who of corporate watchdogs including The Business Council for Sustainable Development, The Center for Business Ethics, and several for-profit consultants and investment firms like The New Alternatives Fund, SustainAbility, and Winslow Management Company, among others.
Hmm… I look forward to seeing how a magazine focused on ethics handles its own public relations crisis.
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July 11, 2007 6:49 am : Comments 000
As originally posted on Strumpette.com on July 10, 2007.
How Julie Roehm Should Exact Revenge Against Wal-Mart
I know what it feels like to be wronged in the workplace and have images of legal retribution raging in your head. The incident happened many years ago, but my level-headed lawyer convinced me that “living well is the best revenge.”
So I have more than just a passing interest in the plight of Julie Roehm, the advertising executive who Wal-Mart fired for allegedly violating the company’s ethics rules. Roehm, too, feels she was wronged. But her preferred mode of revenge is the biblical kind, albeit with a twist: an eye for an eye, and a smear for a smear. Roehm isn’t just suing Wal-Mart for fraud and breach of contract – she also has accused the company’s biggest honchos, including CEO H. Lee Scott, of ethical conflicts. Underscoring her determination, Roehm has retained Michael “The flack when you are under attack” Sitrick. Pitting Sitrick against Wal-Mart’s army of Public Relations pros is the equivalent of hiring Robocop to take on The Three Stooges.
Given her nemesis, I instinctively want to side with Roehm. Wal-Mart is a company without a soul: It pays paltry wages and offers crummy health benefits, leaving a disproportionate percentage of its workers dependent on some form of government financial assistance. It takes great delight shaking down vendors (“Don’t ever feel sorry for a vendor” goes the company saying). It gets huge tax breaks and incentives to build its stores and then shutters them to build a bigger one down the road. Its sleazy PR tactics include the “Wal-Marting Across America” blog, supposedly penned by a couple of customer enthusiasts who turned out to have been bought and paid for by the company. (Yeah, I know the scam was Edelman’s handiwork, but Wal-Mart’s public relations people likely were in on the deception). I’m not inclined to believe anything Wal-Mart says, particularly if it involves a fired employee.
Yet as much as I want to believe in Roehm, a careful reading of her public comments and her court filings requires a dishonest leap of faith. Wal-Mart is quite explicit about prohibiting employees from accepting as much as a cup of instant coffee from vendors and potential vendors; this is an admirable and necessary policy for a company that actively does business in developing countries where bribery and corruption are rampant. So what was Roehm doing dining at New York’s trendy and expensive Nobu restaurant as the guest of the advertising agency she would eventually endorse (much less sitting on the lap of one of the ad execs)?
Roehm admits to the Nobu dinner – “Yes, Nobu! God, we went to Nobu!” – but insists she expected the advertising agency to bill her for the dinner. I’m troubled by this defense: Roehm essentially was relying on the good faith of a potential vendor to ensure compliance of Wal-Mart’s conflict-of-interest rules. My guess is that Wal-Mart’s bean counters would never have approved the Nobu dinner; by having the dinner billed back, the cost would likely have been buried in an invoice that Roehm herself might have had the authority to sign. Given that ad agencies typically mark up expenses, asking the advertising agency to bill back the dinner is fiscally irresponsible at a company that works on razor thin margins.
And then there are Roehm’s “easily explainable” emails to her married subordinate Sean Womack. Remember those? Here’s a refresher: “I think about us together all the time. Little moments like watching your face when you kiss me…” Roehm, who also is married, insists Womack is “like a brother to me,” and denies the two were romantically involved. Maybe I’m old fashioned, but when I want to send my love to my sisters, I just mail a Hallmark card.
Finally, there is Roehm’s outrageous and totally unfounded claim that “perhaps some (at Wal-Mart) did not like following or taking the advice of a woman.” Let’s be honest: the only gender issue here is the double standard that Roehm is benefiting from. The media wouldn’t take seriously a male executive who in an email to a female subordinate pined for her kisses.
Fortunately for Roehm, the facts no longer matter with Sitrick as her public relations bodyguard. Sitrick’s P.T. Barnum-esque “there’s a sucker born every minute” approach to media relations has been unbelievably successful. The infomercial he got 60 Minutes to do articulating his campaign against hedge funds who shorted the stocks of his clients is unquestionably one of the greatest media placements of all time. Just wait until Sitrick unleashes his “truth squads” on Wal-Mart. Don’t be surprised if Roehm remerges as a selfless whistleblower in the spirit of Enron’s Sherron Watkins (Watkin’s wasn’t a whistleblower either, but the media portrayed her as one).
Roehm will no doubt savor the coverage Sitrick orders up, but here is something she should consider: Eugene Melnyk, a controversial Sitrick client whose attacks on short sellers formed the basis of the 60 Minutes infomercial, in May disclosed that he received a so-called Wells notice from the Securities Exchange Commission, which signals the regulator intends to go after him. Fawning media coverage does not ensure legal success.
So here is my unsolicited public relations advice to Roehm. Drop your lawsuit, admit and learn from your mistakes, and get on with your life. Some of our nation’s most respected executives suffered the indignity of being fired or forced out of some very high profile jobs including Lee Iacocca, Sandy Weill, Jamie Dimon, and John Mack. They proved their mettle not by suing their former bosses, but going out and successfully competing against them.
Julie, trust me on this one – living well really is the best revenge.
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