Stop the Presses

By now, most people who follow marketing have heard how Yum Brands CEO David C. Novak stepped up to the microphones after the 2008 Kentucky Derby and spoke glowingly of the event and his company’s famous brands – Taco Bell, Pizza Hut, KFC, Long John Silver’s and A&W – while a stunned national television audience looked on.

The grinning Novak seemed oblivious to the fact that second-place finisher Eight Belles had just been euthanized after breaking down at the end of the race. Immediately, the bloggers hammered Novak for his apparent insensitivity – as the value of Yum’s sponsorship of the prestigious sporting event began to evaporate.

Bob Costas of NBC said he told Novak and others at the winner’s circle of Eight Belles’ fate. But Yum Brands executives disputed Costas’s account and insisted Novak had no idea the horse was dying. Knowing how careful corporations like Yum Brands are about such matters, we have no doubt Novak was caught unaware and would have modified his remarks if he had only known about Eight Belles’ fate.

Who’s to blame for the catastrophe and what can we learn from it? Here are key points to consider:

1. A sponsor pays for an event and is therefore The Boss. The first rule for an employee is to make sure the boss isn’t embarrassed. Thus, NBC bears responsibility for ensuring Novak was informed of the tragedy before he stepped onto the podium to address millions of viewers. NBC failed on this point.

2. A corporation in today’s world must be vigilant, nimble and responsive to all activities on the Internet, where today’s brands now live and die. A simple, well-timed and heart-felt apology could have salvaged the value of the sponsorship. Yum Brands was deficient on this score.

3. This brings us to the most important lesson of all – big companies must now be prepared to act quickly, and if possible, in real time, to deflect Internet blog and web site attacks and criticism. The world is moving at hyper speed. There is no second chance.

There’s little doubt that China once viewed this summer’s Olympiad as the ultimate opportunity to highlight considerable national progress on the world’s grandest stage. Perhaps it still does.

But as the torch made its tumultuous journey through Paris, San Francisco, and points beyond, it became readily apparent that many view China’s political and economic progress as not nearly progressive enough.

China isn’t helping itself either. The latest picture? News photos of demonstration organizers lined up in front of armed police in court to hear their prison sentences, which range from three years to life.

In the eyes of the world, Beijing’s brand is in need of some polishing. And it’s not too late for China to take advantage of its Olympic opportunity and win more support around the world.

First, China must take advantage of the fact that the U.S. government, the governments of Europe, and hundreds of western corporations want the Olympic Games and China’s transformation into a global business power to succeed. It needs to reach out and develop third-party spokespeople from among those allies who can speak to the need for gradual change, not an overnight turnaround from a culture that is six thousand years old. These advocates can do so with the credibility that Beijing now sorely lacks.
Second, China must identify and engage forward-looking spokespeople from among its own business class, rather than government officials, to convey its messages. They are the credible faces and voices of the future that need to be communicating now.
And third, China needs to make a meaningful gesture – perhaps suspending arms sales to Sudan or announcing substantive talks with the Tibetan separatists. Such a move would show, rather than tell, the world that its commitment to reform is real and its hosting of the Games is justified.

Following a disastrous 2007, in which dozens of Chinese products ranging from pet food to toothpaste and from toys to tires were recalled in waves by U.S. manufacturers, this year is playing out to be even worse for the Beijing government and its global business partners.

In the midst of its publicity woes involving Tibet and the Olympic Games, China is facing severe criticism for contamination of the active ingredient in the blood thinner Heparin, which has now been linked to more than 80 deaths worldwide.

Unlike the 2007 incidents, however, the Heparin case portends a new wrinkle in the world of product recalls. That’s because in 2006, China displaced the U.S. as the largest source of EU imports, totaling $191.8 billion euros in that year alone – a fact that makes a European “year of the recall” likely to follow the “summer of the recall” the continent experienced just months ago. (more)

The recent French, Italian, Dutch and Swedish recalls of Heparin only serve to further this hypothesis. As such, European companies need to ready their recall communications plans now, before they are needed – given the increased scrutiny that European product safety will garner as a result of highly-publicized American recalls, as well as the tougher regulatory environment in which European companies must operate.

In 2008, European companies would be wise to examine their American counterparts’ approach to restoring a sense of normalcy to the marketplace in the wake of China-related recalls. Are they ready to battle the plaintiffs bar in cyberspace? Are they prepared to issue messages that convey empathy and responsibility, but not culpability? Are they cultivating relationships with third party advocates that can lend credibility to their cause?

The Heparin recall may well be a warning sign of things to come. Smart European companies will take heed and prepare themselves for the impending storm.

Shortly after publishing the blog post below, I had an additional thought. One of the most fascinating parts of the whole story is the larger theme of a loss of control by the fragrance companies. Up until a year or so ago, they could virtually guarantee a successful product roll-out by spending a lot of money on advertising. And those advertising dollars, in turn, all but guaranteed positive editorial coverage in the beauty trade press. Fragrance companies knew all of the players and how to influence them. And then along came the blogs and other online media.

With the hyper-democratization that the blogs bring media and the Internet, how do companies influence the new influencers? Bloggers are not only taking on a larger role in journalism; they’re also taking on a role as experienced critics, wielding an amount of influence that used to only be affected by the companies, not the consumers.

When it comes down to it, the real message is clear: Control is what is at stake in the Internet revolution.

An article in today’s New York Times chronicled the fragrance industry’s struggle with new media–how online comments and blog posts are presenting a new challenge and how frustrated companies are dealing with the online world. But in a marketplace of ideas where everyone can be a critic, fragrance marketers would be smart to take advantage of the fact that everyone also has the potential to be an advocate.

With so many perfumes being purchased by the coveted market of young women aged 14 to 24, fragrance companies literally can’t afford to ignore the power of online media. Outside of magazines specifically designed to cater to that age group and in-store packaging and promotions, the Web is the place to correspond with this lucrative demographic. (more…)

It had to happen.

Last week, presidential candidate Barack Obama called for new legislation that would give shareholders a greater “say on pay” for corporate leaders. A boiling issue beforehand, this hot button is starting to glow.

Executive pay is now a political football, as increasing economic uncertainty has all three presidential candidates using the issue to buttress their populist appeal. Sen. Obama’s clarion call echoes similar sentiments expressed by both Sen. John McCain and Sen. Hillary Clinton.

Just last week, we used this space to posit that companies who deal aggressively with executive compensation issues can create the opportunity to position themselves better. As it has always been, the key issue is the need to focus on performance ahead of time. If boards hope to retain their right to decide top pay packages, they are going to have to fight back–not necessarily by changing the pay, but by changing the perception.

The Sustainable Endowments Institute has issued its 2008 College Sustainability Report Card (PDF file)–and in the spirit of March Madness, we decided to take a look at which of the 65 NCAA Men’s Tournament teams would have gone to San Antonio had energy efficiency, green buildings, and recycling been the deciding factors, rather than athletic prowess.

Why? Because Duke University (PDF file), Stanford University (PDF file), the University System of California (PDF file), and the University of Wisconsin–Madison (PDF file)–the four tournament schools that earned the best grades–are now leading the green university movement and demonstrating how getting out in front of a hot issue can bolster a brand. (more…)

If you mention the phrase ‘Web 2.0′ to some communications professionals, don’t be surprised if the reaction you get is less than positive. With the spread of misinformation and urban legends, the rise of a blogosphere with potentially vigilante elements and a constant battle over Wikipedia entries, the social media revolution may be at the root of many sleepless nights for some marcom staffers.

But it all depends on how you look at it. Smart companies are turning to Web 2.0 technologies like social networking and microblogging service Twitter (click here for an excellent explanation of this somewhat tedious-to-explain service) to take a proactive approach in solving today’s communications and brand management problems. (more…)

This weekend, The New York Times published a series of articles detailing the less-than-successful adoption of increased transparency requirements in driving tangible executive compensation reforms. As companies were required to shed more light on executive compensation policy, shareholders believed that top pay packages would reflect the fact that boards would now have to publicly justify their decisions.

Thus far, they have not. And no one should be surprised that C-Suite salaries continue to grow. Even when faced with beefed-up reporting requirements, the need to be competitive in attracting top talent still comes first.

What is surprising, however, is that the way in which companies communicate their executive compensation issues has remained unchanged as well– especially given the brand-strengthening opportunities that greater transparency presents. (more…)

Though online video may be best known for dancing cats, Obama Girl and the kid who sings the Numa Numa song, people would be remiss to think that the Video web is a place only for teenagers–there are valuable nuggets out there for professional audiences, too, and more and more every day. No more is this apparent than in the case of a video collection that has been making the rounds through the legal profession–LawProse.org’s raw, unedited footage of candid interviews conducted with eight of the nine current Supreme Court justices, where they talk honestly about things like typos, lengthy briefs and made-up words.

The videos are so interesting because there aren’t any snazzy graphics or slick transitions between scenes. There are no slow-motion flashbacks or fast-paced action sequences. In short, they are relatively unedited. (more…)