Tuesday, November 27, 2007

Negative Brand Equity

In my last post I picked an easy fight with WalMart and their crappy PR. A lot of others joined in the fun, from Mother Jones to The LA Times.

I argued that this is a moral failing, not a PR blunder. And so it may be, but that doesn’t mean it can’t be quantified as a costly business mistake, and measured in terms a stock holder would understand outside of any wishy-washy ethical dimension.

Brand equity, so we’re told, is the net gain a branded entity brings to an organization, compared with an unbranded counterpart. In other words, what is a punter prepared to pay for a branded product, above and beyond the price of a competitive product/service of roughly equivalent function? An iPod costs a lot more than an equivalent generic mp3 player, and the difference is seen to be accrued brand value or equity.

In theory, brand equity cannot be negative, or so says Wikipedia. Some disagree, including me. The problem is brand equity is a fuzzy concept that’s very hard to really quantify.

In contrast, good and bad publicity is getting easier to measure, because most media is now available online, and search technologies exist that can give a reasonable indication of subjective content. Such a media barometer could be a strong tool to ascertain true PR equity, especially if we link this to other tangible measures of business health – say a company’s stock price. A clear correlation between the two would be a strong weapon for PR professionals.

Academics have worked on this already. At an extreme, Rao and Hamilton have shown a clear correlation between unethical (read quasi-illegal) behavior and stock indicators, but you’d expect this because the behavior is very likely to have direct financial consequences – lawsuits, and so on. The Phelps Group, an integrated marketing agency, looked at the wider literature and found studies that showed less than 10% of a stock value was accounted for by brand equity. A boatload of methodological issues go along with all this research, but they’re a start. There’s probably more studies I’ve missed, let me know if you’ve seen some.

Tuesday, November 20, 2007

The value of PR?

Over the last year of so Walmart has gone from being a Wall Street darling to the embodiment of everything that is bad about Big Business. Alright, so maybe I'm overstating things, but their reputation has been keeping good pace with their sinking stock price, and they seem to take every opportunity to accelerate the decline.

Case in point: Today's Wall Street Journal ran a nasty cover story on the preditory practices of healthcare providers who increasingly are suing accident victims for access to their legal damages settlements. They led with the case of woman hit by a truck who barely made it out of intensive care, and who eventually won a settlement only to be sued by... you guessed it, her employer Walmart. They wanted to recoup the $440k+ they'd paid out in insurance coverage.

Now legally, there's no doubt that Walmart and their healthcare provider have a right to the cash. But ethically, morally? And if they have no ethics, don't they think through the ramifications and cost to their business? They're approaching the retail holiday bonanza with PR that is beyond bad, that will drive off shoppers in droves, and which shows Olympic levels of business stupidity.

Given my profession it would be easy for me to label this a public relations failure, but it really isn't: This is a moral failure that has PR consequences. The Walmart spokesperson rightly stated that they have to protect the interests of all their healthcare plan members and their investors, a stock answer in every sense that displays no sense of proportion, probity, anything.

Maybe this argues for a moral dimension to PR, or is this oxymoronic (or just plain moronic) ?

Friday, November 2, 2007

The chicken was first

Sometimes you bump into a website and rediscover why it's called the World Wide Web, and why it's cool. Ask500People is a relatively simple mashup/social computing site, but it's oceans of fun. Ask a (relatively) random sample of 500 people anywhere in the world a simple question, any question, and see the answers stream in real-time, with location information and voting patterns. Is Hillary going to win? Ever smoked hash? Is marriage archiac? Can you calculate the mean of these five numbers?

And it's official: the chicken came first, but only just.

Thursday, November 1, 2007

What are we talking about?

A while back I blogged about Adoption of Innovation research, and I’ve also talked about how blogs might generously be described to have a symbiotic relationship with conventional media, and uncharitably be described as vampiric.

Back in the day when I studied this stuff, one of the few theories that seemed to have merit was Agenda Setting theory. The theory is oft summarized with the axiom “the media may not tell people what to think, but they do tell people what to think about.” The theory goes that media outlets focus on an agenda of items that are considered newsworthy – these can be enduring news values, or specific news events. For example, proximity is an enduring news value – the closer the ‘news” is to the reader, the more newsworthy it becomes (hence, as happened with The New York Times some years back, a front page story might describe a local car crash where a dozen people died, while buried on page three is a squib about a train wreck in India with over 300 casualties). A specific news ‘event’ might be immigration, or avian flu, or the lead in children’s toys, to name a few of the moment.

There have been mountains of research to show that there is a causal relationship between people’s agendas and what the media is highlighting. This is one reason why politicians are always trying to create an agenda that favors their views or corners their competitors.

Agenda Setting works when you have a fairly monolithic media, with a few controlling interests commanding considerable public reach: This was the case pre-Internet, but has rapidly eroded. Today, most people get their news from many sources, not just their local paper. Today we have blogs.

Does this change anything? Probably, and possibly not for the better. Journalism.org reported that when the mainstream media focused on Iraq and immigration, the alternative media focused on iPhones and game consuls. Blogs do the same thing, as I noted in a past post where nerd-level subjects like Web 2.0 outdo mainstream discussions of President Bush.

Tobias Escher at the OII is doing research in this area, as has Kaye Sweetser and colleagues: Early days, but blogs seems to have some influence on overall news agendas. The effect seems to be indirect – again, an amplification process, rather than establishing agendas.

Blogs exist in subcultures – narrow, divisive, tribal, and often contumacious. They accentuate some abiding news values and usually have a very narrow agenda of interest. In this sense, blogs represent the opposite of mass media – the media of division.