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August 11, 2010 7:24 AM Subscribe
What do crisis management PR campaigns such as BP and Toyota's actually accomplish and how?
I'm basically just wondering how this affects the company's bottom line, how it is justified in their budgets (as opposed to putting that money elsewhere in the business, say actually resolving the real problem), who the ads are realistically meant to influence, and other considerations along those lines. I imagine most large scale campaigns of this sort are handled by outside PR firms, so how does the firm propose their campaign will add value, and how is it measured? Is the budget for this type of media work pretty insignificant compared to the company's revenues as a whole? Is it just symbolic?
For those who might be unaware, I'm talking about BP's full page ads in newspapers like the Washington Post and Financial Times that seem to be running every day for weeks now and Toyota's ongoing TV commercials about how much they care about safety....
I'm basically just wondering how this affects the company's bottom line, how it is justified in their budgets (as opposed to putting that money elsewhere in the business, say actually resolving the real problem), who the ads are realistically meant to influence, and other considerations along those lines. I imagine most large scale campaigns of this sort are handled by outside PR firms, so how does the firm propose their campaign will add value, and how is it measured? Is the budget for this type of media work pretty insignificant compared to the company's revenues as a whole? Is it just symbolic?
For those who might be unaware, I'm talking about BP's full page ads in newspapers like the Washington Post and Financial Times that seem to be running every day for weeks now and Toyota's ongoing TV commercials about how much they care about safety....
The classic case study: http://en.wikipedia.org/wiki/Chicago_Tylenol_murders
posted by dfriedman at 7:37 AM on August 11, 2010
posted by dfriedman at 7:37 AM on August 11, 2010
Best answer: A couple of things.
First, the idea that money spent on PR campaigns is money not spent on "actually solving the real problem" seems flawed. You can only spend so much money on fixing an oil well. Throwing a trillion dollars at the problem wouldn't have helped the engineers with the otherworldly conditions it had to deal with a mile underwater, nor would it have magically caused people and materials to move faster or the weather to cooperate. Crises can absorb a huge amount of money, but there is, in fact, a point beyond which additional money has no practical value.
Second, part of the problem here is that the value marketing in general and advertising in particular are notoriously difficult to measure. It's very difficult if not downright impossible to prove that an uptick or downturn in revenues is caused by any action by Marketing or whether it would have happened anyways. So "justifying" these sorts of things in budgets always involves a sort of voodoo economics and magical belief in the value of advertising, crisis or no crisis.
Third, companies do care about their image, because even if it isn't the sort of thing we can do any kind of robust measurement about, the public perception that a company is irresponsible or uncaring does affect the bottom line. If nothing else, it's something that competitors frequently use when making a pitch. One might wonder exactly how much BP in particular would be affected by this, as they sell a fungible commodity on the open market rather than a branded product like Toyota. But even if it's hard to value, intangibles like brand recognition and public goodwill are valuable, and indeed, are considered as part of the assets of a company during mergers and acquisitions negotiations.
Finally, most companies spend a tiny fraction of their total revenues on advertising, PR, etc. Proctor & Gamble, the consumer products giant, spends more on marketing than any other entity: $2.62 billion in 2007 alone. But they do almost $80 billion in revenue. The next largest spender is GM, which with revenues in the neighborhood of $100 billion, only spent half as much. That's still a lot of money, but relatively speaking it's a pittance.
I'm afraid that isn't a terribly precise answer, but that's just the nature of this beast, I think.
posted by valkyryn at 7:49 AM on August 11, 2010 [1 favorite]
First, the idea that money spent on PR campaigns is money not spent on "actually solving the real problem" seems flawed. You can only spend so much money on fixing an oil well. Throwing a trillion dollars at the problem wouldn't have helped the engineers with the otherworldly conditions it had to deal with a mile underwater, nor would it have magically caused people and materials to move faster or the weather to cooperate. Crises can absorb a huge amount of money, but there is, in fact, a point beyond which additional money has no practical value.
Second, part of the problem here is that the value marketing in general and advertising in particular are notoriously difficult to measure. It's very difficult if not downright impossible to prove that an uptick or downturn in revenues is caused by any action by Marketing or whether it would have happened anyways. So "justifying" these sorts of things in budgets always involves a sort of voodoo economics and magical belief in the value of advertising, crisis or no crisis.
Third, companies do care about their image, because even if it isn't the sort of thing we can do any kind of robust measurement about, the public perception that a company is irresponsible or uncaring does affect the bottom line. If nothing else, it's something that competitors frequently use when making a pitch. One might wonder exactly how much BP in particular would be affected by this, as they sell a fungible commodity on the open market rather than a branded product like Toyota. But even if it's hard to value, intangibles like brand recognition and public goodwill are valuable, and indeed, are considered as part of the assets of a company during mergers and acquisitions negotiations.
Finally, most companies spend a tiny fraction of their total revenues on advertising, PR, etc. Proctor & Gamble, the consumer products giant, spends more on marketing than any other entity: $2.62 billion in 2007 alone. But they do almost $80 billion in revenue. The next largest spender is GM, which with revenues in the neighborhood of $100 billion, only spent half as much. That's still a lot of money, but relatively speaking it's a pittance.
I'm afraid that isn't a terribly precise answer, but that's just the nature of this beast, I think.
posted by valkyryn at 7:49 AM on August 11, 2010 [1 favorite]
...as opposed to putting that money elsewhere in the business, say actually resolving the real problem
You're working from the flawed premise that money is the factor limiting BP's or Toyota's response to their problems. Both companies have more capital (or access to more capital) than they have human and technical resources to spend it on.
posted by mullacc at 7:54 AM on August 11, 2010 [2 favorites]
You're working from the flawed premise that money is the factor limiting BP's or Toyota's response to their problems. Both companies have more capital (or access to more capital) than they have human and technical resources to spend it on.
posted by mullacc at 7:54 AM on August 11, 2010 [2 favorites]
Both companies have more capital (or access to more capital) than they have human and technical resources to spend it on.
This is a critical point. Both have balance sheets with more than $50 billion in capital. Some of this capital is in illiquid assets; nonetheless, that is capital that can be converted to cash if needed (or forced by the consequences of litigation.)
posted by dfriedman at 7:56 AM on August 11, 2010
This is a critical point. Both have balance sheets with more than $50 billion in capital. Some of this capital is in illiquid assets; nonetheless, that is capital that can be converted to cash if needed (or forced by the consequences of litigation.)
posted by dfriedman at 7:56 AM on August 11, 2010
I do agree that the knee-jerk reaction of "why are they advertising when they should be fixing their crap" is flawed (maybe categorized as a false dilemma). These companies spend money on PR no matter what, and the efforts are probably pretty independent of each other. I'm sure they are taking that reaction into account, they might even have some numbers that quantify how many people react that way and at how levels of education, political affiliation affect that. I guess they are aiming at people on the fence, trying to get at least part of their story out there to people that don't bother reading entire articles.
If they can keep some SUV owners from passing by BP stations to some other huge oil company's gas station, as some sort of conscientious objector, they'll be achieving their goal. But like others have said, this sort of thing is insanely hard to quantify.
There are interesting claims about more nefarious damage control PR about the California Raisin Advisory Board doing behind the scenes campaigning against an organic food guy's book tour. Theres a good chance there are some shady PR ninjas and astroturf commenters out working this BP campaign as well.
posted by yeahyeahyeahwhoo at 11:53 AM on August 11, 2010
If they can keep some SUV owners from passing by BP stations to some other huge oil company's gas station, as some sort of conscientious objector, they'll be achieving their goal. But like others have said, this sort of thing is insanely hard to quantify.
There are interesting claims about more nefarious damage control PR about the California Raisin Advisory Board doing behind the scenes campaigning against an organic food guy's book tour. Theres a good chance there are some shady PR ninjas and astroturf commenters out working this BP campaign as well.
posted by yeahyeahyeahwhoo at 11:53 AM on August 11, 2010
Spend money on exposing the affected population to messages that
- deny the issues
- re-frame the issues. Very important because it frames all discussions and even thinking on the desired topic. George Lakoff's Moral Politics lecture is a must-see! Framing issues is the specialty of think tanks in the U.S. ("Tax Relief" frames the tax relief for the rich, "Clear skies initiative," frames removal of pollution restrictions, "Healthy forest initiative" frames the bill allowing for clean-cutting forests etc. Orwellian stuff.)
- ad hominem (attacking individuals who identify the issues)
- enforce an image opposite to the issues
- imply that the issues are resolved / promise resolution
- create noise somewhere else to move attention away from the issues (wag the dog)
Feel free to add your favs below.
posted by andreinla at 3:23 PM on August 11, 2010
- deny the issues
- re-frame the issues. Very important because it frames all discussions and even thinking on the desired topic. George Lakoff's Moral Politics lecture is a must-see! Framing issues is the specialty of think tanks in the U.S. ("Tax Relief" frames the tax relief for the rich, "Clear skies initiative," frames removal of pollution restrictions, "Healthy forest initiative" frames the bill allowing for clean-cutting forests etc. Orwellian stuff.)
- ad hominem (attacking individuals who identify the issues)
- enforce an image opposite to the issues
- imply that the issues are resolved / promise resolution
- create noise somewhere else to move attention away from the issues (wag the dog)
Feel free to add your favs below.
posted by andreinla at 3:23 PM on August 11, 2010
This thread is closed to new comments.
Well part of it is probably just a comfort for the executives. They have no idea how to deal with this stuff, so they hire people who claim to. It's debatable whether or not they accomplish anything. But the execs probably feel like they have to do something.
As far as Toyota goes, though, other then the problem floor-mats. it's likely that it was the result of people confusing their gas and break pedals. There was a huge spike in reports and it died down just as quickly (over a couple months). If it was a long standing problem, there's no reason why it would spike in one particular month and then go away.
posted by delmoi at 7:36 AM on August 11, 2010