September 6, 2007 9:34 am : Comments 001
As originally posted on Strumpette.com on September 6, 2007.
Like a writer who keeps random plot line ideas and bits of dialogue scribbled in a notebook kept by the side of the bed, I’ve kept the Daily News‘ infamous “Ford to City” headline in the back of my head, just waiting for the right opportunity to rip it off. Thanks to Apple CEO Steve Jobs latest orchestrations, the moment finally arrived.
The technology impresario announced yesterday that Apple would slash the price of its iPhone by some 33%, but denied that lower-than-expected sales were the reason. As he told the New York Times: “It’s very clear we have a breakthrough product on our hands, but it’s also clear that many can afford it, some can’t. We’d like to make it affordable to even more folks going into this holiday season.”
So exactly when did Apple become a philanthropic organization for the tech gadget-deprived?
I don’t know about you, but if I was one of the Apple diehards who camped out overnight a mere 10 weeks ago just for the privilege of coughing up $600 the next morning to get their mitts on an iPhone, I’d be pretty ticked off right now. And I’d go into orbit after reading Jobs’ dismissive comment to USA Today about the brand-worshipping customers who paid full price: “That’s technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that’s what happens in technology.”
Can you imagine the fallout if, let’s say, BMW suddenly slashed the cost of its highly popular 3-Series cars by more than 30% just weeks after they were introduced? Or if Rolex slashed the prices of its watches by 30%? The brands would be forever damaged. But the traditional rules of branding and public relations don’t seem to apply to Steve Jobs, and his fire sale discounting of the iPhone is only the latest example.
Take Apple’s exclusive partnership with AT&T. The telecom company has one of the slowest wireless networks around and a solid reputation for bad customer service. Apple offers superior technology, and while its customer support has deteriorated somewhat, it’s still way better than its competitors. The pairing of the two companies is as mismatched as Armani entering an exclusive distribution agreement with Sears.
Then there is the iPhone’s inconvenient replacement battery requirement which, with the exception of the New York Times‘ Joe Nocera, has been largely ignored by the mainstream media. Like all cell phones, this one’s battery will eventually need to be replaced (Apple says the original one will last 200-400 charges, approximately 12-14 months). The kicker is that is must be sent back to Apple, however, leaving people without their beloved iPhone’s for an estimated 10 days. I’m hardly a heavy cell phone user, but being without my phone for just one day would cause me some angst – and mine doesn’t have all the fancy bells and whistles that the iPhone does! A couple of lawsuits have already been filed regarding Apple’s battery replacement policy, but they have received scant media attention.
The cost to replace the battery will be approximately $100, or roughly one quarter the cost of the newly discounted iPhone. My guess is that Jobs will have the next generation model out within a year and he’s banking that a good number of iPhone owners will decide they’ll get better value for their money by replacing the whole phone with the latest version instead of just getting a new battery.
Truthfully, I’m somewhat in awe of Steve Jobs. I give him credit for his unparalleled ability to get away with sticking it to his most ardent customers, for getting the technology media to dance for him like puppets on a string, and for creating an aura that he is not someone driven by profits and personal wealth. P.T. Barnum has long been regarded as the greatest showman on earth, but I suspect even he would agree that Steve Jobs is in a league by himself.
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August 31, 2007 10:36 am : Comments 000
As originally posted on Strumpette.com on August 29, 2007.
Sticks and Stones May Break Your Bones, But Words Can Really Hurt You
I recently had drinks with a very prominent journalist – never mind his name, trust me, he’s a biggie – who made a rather remarkable admission: “I rarely give interviews to reporters and when I do it’s always via email because I want a paper trail of exactly what I said. Reporters never get it right.” He then went on to tell me about a colleague of his who staunchly believes that the only time you should talk to a reporter is when you are promoting a book.
Encouraging, eh?
That conversation was in the back of my head the other day when I saw an article in the New York Observer about Joanne Lipman, the embattled editor of the much-hyped new business magazine Portfolio, and again while reading New York magazine’s current piece on Matt Drudge. Neither journalist, of course realizing they were in the crosshairs, granted a verbal interview. “Ms. Lipman would only respond to questions by e-mailing a statement,” the Observer noted in its article, and the other one talks about how the reporter tried unsuccessfully to get in contact with Mr. Drudge for the piece.
If there’s a kernel of truth to the journalism tenet that three makes a trend, then it is worth noting that at least that many of the best and the brightest journalists prefer to interact with their professional brethren by keeping their mouths shut and their typing fingers busy, at least when the news isn’t pretty.
Once considered the avenue of last resort because of questionable “optics,” written statements are clawing their way up the hierarchy of preferred responses when a crisis strikes. The Internet can be thanked/blamed for this shift, which some may consider an about-face in how best to deal with a crisis from a media relations perspective. Savvy PR folks, not wanting to entrust their crisis response messages to reporters who may or not use them in totality or in proper context, are increasingly capturing the opportunity the Internet presents to appeal directly to important audiences with the right details presented the right way at the right time.
Of course, there are times when it is better to simply not participate at all when a reporter is known to be working on a negative article. While there may be an initial knee-jerk response to attempt damage control by granting an interview request when you know a harmful story is in the works, it takes a seasoned professional to recognize when the potential cost outweighs the potential benefit, when doing so only serves to “feed the beast” and makes the bad situation grow.
A classic example of that scenario would be the disastrous Katie Couric article that New York magazine ran a few weeks ago. I am not privy to what went on behind the scenes or what (and whose) thought process led to her sitting down with that reporter, but I’m guessing some part of it included the hopeful notion that they could halt or at least slow down her sliding popularity and program ratings by giving a candid interview where she showed more of the personal “Today” Katie and less of the rigid “CBS Evening News” Katie. Essentially, they hoped it would remind people of the good ol’ days when she reigned the airwaves and our hearts. Instead, she came off rather disconnected and -like, which was the last thing she needed in the wake of the embarrassing blog plagiarism incident.
Ms. Lipman clearly understands the value of knowing when to hold your tongue. Although the Observer cites countless unnamed Machiavellian staffers apparently bent on destroying her, Ms. Lipman chose not to speak to the reporter. I suspect Ms. Lipman knew full well that she invariably would have been on the defensive had she granted an interview and ultimately provided more fodder and legitimacy for what almost certainly was a negative article. It is my hope that the unpleasant personal experience might make Ms. Lipman more reluctant in the future to allow her writers the generous use of unnamed sources to malign the magazine’s profile subjects.
John Mackey, the CEO of organic grocer Whole Foods, is another person who seems to understand the value of not participating in a story. If you look at the critical page-one story the Wall Street Journal (subscription required) ran in connection with the FTC leak about Mr. Mackey’s questionable business-related online posts using an alias, it’s hard to see how he could have possibly helped his cause by granting the Wall Street Journal reporters an interview. I doubt Mr. Mackey could have said anything that would have ultimately improved the tone or tenor of that article. The same can be said for Mr. Drudge and the New York magazine feature. Indeed, without Mr. Mackey’s cooperation, the Journal’s profile of Mr. Mackey overall was rather benign. And as for Mr. Drudge’s profile, I couldn’t help but feel a certain degree of compassion and sympathy for him, though I’m fairly certain that wasn’t the reporter’s intent.
Of course prolonged or absolute “radio silence” rarely – if ever – is advisable in a corporate crisis. Stakeholders rightfully demand information and corporate accountability when things go wrong. How best to serve those needs depends, as always, on the particulars of the situation. At Whole Foods, they astutely opted to address the alias brouhaha in a controlled public forum – its own website. Similarly, Brandweek reports that Mattel refers reporters working on toy recall stories to statements on the company’s website. Both companies clearly realize that sometimes there is simply too much at stake to “outsource” message delivery to a reporter who may or may not agree with your position on the most salient details.
Worth noting is a comment Mr. Mackey made in a Fortune Q&A published in the July issue (presumably conducted before the FTC leak): “The great thing about blogging is that I don’t need you journalists to interpret me anymore.”
Hmmm� I wonder what Ms. Lipman and Mr. Drudge would have to say about that. I suspect I already have a good idea how Ms. Couric feels about blogging these days.
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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 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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June 22, 2007 10:31 am : Comments 000
As originally posted on Strumpette.com on June 23, 2007.
I’ve always been dubious about the “taken out of context” defense. It’s like the proverbial dog-ate-my-homework excuse. Sure it’s a possible explanation, but nobody really buys it.
Merrill Lynch gave it a shot when it first became public that its once-high-profile analyst Henry Blodgett was singing the praises of certain stocks publicly while privately referring to them in emails as “crap” and “pieces of s***.” Ouch. Merrill, to its credit, came clean a week later and acknowledged that the analyst’s e-mails were “unacceptable” and “inappropriate and well below the standards that Merrill aims to achieve.”
Flash forward to this year and you have former Wal-Mart marketing executive Julie Roehm giving the “taken out of context” defense a whirl. Roehm was fired for various alleged improprieties, including an inappropriate relationship with an underling. She claims that some of the risqué comments in a series of lovelorn emails to subordinate Sean Womack are “easily explainable” and don’t prove that she violated the retailer’s policy against employee fraternization. If that’s the case, I’d love to see the rest of Wal-Mart’s HR manual. I just can’t figure out any scenario under which “I think about us together all the time. Little moments like watching your face when you kiss me…” could possibly be deemed appropriate corporate-speak.
Don’t get me wrong – I am hardly declaring Goliath victor over David in this PR battle. Wal-Mart has had plenty of its own missteps in the public handling of this affair – ahem, no pun intended – but we’ll leave that Monday morning quarterbacking for another day.
So back to current headlines and more people with context issues. This time it is John Mackey, founder and CEO of Whole Foods Market, who is waving the “taken out of context” flag. At issue are some seemingly damaging comments he made in emails and other correspondence that the FTC subsequently cited when issuing its rationale for blocking the retailer’s proposed acquisition of rival Wild Oats Markets. Among the remarks was a discussion about how the acquisition would enable the company to “avoid nasty price wars” that could harm gross margins. Hmmm, that sure smells of antitrust aroma to me.
Here’s the kicker: Turns out Mackey’s comments really were taken out of context and “easily explainable” as well (eat your heart out, Julie Roehm).
How do I know? Rather than ask the general public to blindly take their word for it, Mackey and the folks at Whole Foods took the bold step of posting the alleged damning documents and other related materials – including a confidential memo to the board of directors outlining the rationale for the Wild Oats acquisition – to its website. And you know what? Mackey makes a pretty convincing business argument why the Wild Oats acquisition isn’t anticompetitive.
While Whole Foods certainly gets some positive points for backing up its claims of comments being taken out of context with tangible evidence, they are offset by demerits earned for two negative outcomes generated by their transparency play.
First, Whole Foods’ leadership lets its collective frustration get the better of themselves by launching a highly questionable and very vitriolic attack on the FTC as part of its posted defense. Questioning the legitimacy of the agency and the ethics of government bureaucrats before whom you have significant business dealings is not a smart negotiating tactic.
The second related cringe-inducer is from a PR standpoint: As shared in his blog, Mackey argued that Whole Foods faces formidable competition from mainstream supermarkets, not just ones specializing in natural foods. He is especially passionate about Wegmans Food Markets, an upscale Northeast supermarket chain with legions of fans, including one of my colleagues, who lives for its chocolate chip muffins.
To wit: “Wegman’s (sic) operates huge stores with excellent quality of perishables and low prices and it is difficult for us to effectively compete against them“. (emphasis mine).
If I were Wegmans, I’d have my advertising team working on full-page advertisements with the following headline: “Even Whole Foods Raves about Our Excellent Quality and Low Prices.” John Mackey has already written the ad copy.
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