Management Newsfeed Update

When we think about how the rich and famous meet, we generally imagine face-to-face gatherings over champagne and crudités at high society balls, country clubs or the Sun Valley Conference hosted by Allen & Company. The reality is now quite different as the bright line between professional, charitable and personal lives for the super-rich is now blurred and with the evolution of their own virtual communities.

Just as MySpace and Facebook have created a parallel universe of communication along the horizontal axis to the mainstream media’s top-down vertical axis, there are other institutions doing the same with the super-wealthy. For example, the World Economic Forum is organizing a global platform for member discussion that is closed zone to outsiders, called WELCOM. CORE: a by-invitation only club in New York City, with 1,400 members of average net worth in excess of $100 million, offers COREaccess.net, a portal which aggregates information for members’ business and lifestyle needs. This too is a closed environment for member discussion of private issues; a Zagat-like guide on favorite restaurants/hotels; and even an exchange for goods and services. So in effect, the wealthy are in gated online communities equivalent to their secure homes. How can those of us in PR reach those elite consumers?

This niche market has long been served by elegant print media, such as Hamptons or the Robb Report; this universe is now expanding across platforms to retain its audience. We’re seeing the emergence of media such as Plum, a television, interactive and social network, solely for this group. Plum has achieved cable distribution in America’s gathering places for the rich and famous, including Aspen, the Hamptons, Martha’s Vineyard, Nantucket, Telluride, Sun Valley and Vail. According to Plum’s press materials, 60% of those surveyed in Plum markets watch Plum TV, spending an average of 4 hours a week or one third of their total TV viewing time. The viewers are super-affluent, with mean income of $630,000 and mean net worth of $8.7 million. Sixty percent of the viewers “make significant purchase decisions while in a Plum market.”

Plum is taking executives, such as Jennie Saunders of Core, and making them media personalities (note that CNBC has done the same with Michael Eisner and Donny Deutsch). Plum will be launching a half hour show in June called Connections with Jennie Saunders, interviewing “iconic individuals…titans of business…offering unparalleled access to their lives.” In recent months she has organized discussions at her club in New York City on charitable activity with George Soros, pre-release screenings of films with George Clooney, forums on health with Dr. Mehmet Oz, and literary chats with Walter Isaacson, author of EINSTEIN. So Plum gets access to better content, while Jennie Saunders is positioned as a taste-maker in her target markets, a perfect symbiotic relationship.

As we compete for the attention of these high-end consumers, we will need to work with mainstream media and with this new niche media. We must also create opportunities for communications direct to opinion formers. At Edelman, we are now regularly incorporating permission-based emails to 1,000 academics, business leaders, financial analysts, NGOs and community figures, in effect our own version of an RSS feed to those who might have an interest in a specific issue or product. We are creating easily repurposed video content that can be sent along by these influential people to interested parties. I would appreciate your comments as always.

This is not the business plan for a new retail chain; it is the story of my college tour with my 17 year old daughter who is now a junior in high school. We visited Rice University in Houston, Carleton College in Northfield, Minnesota, Northwestern University in Evanston, Illinois and Middlebury College in Middlebury, Vermont over the past five days. Here is what I can report:

1. Most Fun Event—The Beer Bike Day at Rice—We showed up on perhaps the most fun day of the year. Students in each of the nine Rice colleges wear their dorm colors, dab war paint on all extremities, load up trucks full of water balloons and proceed to have a free for all on a mile and a half route around campus. This is followed by a bike race around the velodrome. The sheer inanity of the watery warfare was a perfect start to our visit.

2. Most Touching Scene—4,000 small American flags in snow at Middlebury—To commemorate the fifth anniversary of the US presence in Iraq, students placed small flags in honor of the dead soldiers around the central green on campus, then read out the names of each of the deceased from the steps of the college chapel.

3. Most Nostalgic Moment—My wife, Middlebury class of ’76, realizing as we ate lunch at the Grill, that she had practiced for countless hours on the school diving team in that very facility because it had been the pool before a major renovation a decade ago.

4. Most Interesting College President story—As we toured the Carleton campus, our guide told us that the President teaches a very popular fly-fishing course in the spring. This is the stuff of urban (or in this case rural) legend. A close second was the photo of David Leebron, Rice University president, from his Harvard 76 yearbook in the Rice student newspaper, with a cut line referring to his sex appeal.

5. Moment I Would Rather Not Have Had—At one school, we visited my daughter’s friend, who then introduced us to a roommate who is in bed with her boyfriend. Talk about seeing the future before it happens!

6. Most Consistent Theme—Every school wants to have a global connection. Middlebury takes in 10% of its class from outside of the US; it also maintains 18 campuses abroad, encouraging students to take a junior year off campus. Other institutions have established links with the most prestigious universities in China, Spain etc. on the basis that students are better served by being integrated with nationals than studying only with peers from their own school.

7. A Building Boom—Every school we visited has significant construction underway. At Rice, there are two new undergraduate colleges and a recreation center, at Middlebury a new center for visual studies and arts, at Northwestern a gigantic science facility, all part of the heightened competition for the best students.

8. Different Philosophies on Greek System—Only at Northwestern did we find an important fraternity and sorority scene, with 40% of undergraduates participating in this social outlet. In fact the other schools actively discourage this.

9. Go to School, Find Your Mate—I used to joke with my wife about the high rate of Middlebury College student intermarriage. Little did I know that my comments were accurate; nearly 20% of Middlebury graduates marry each other; the same is true at Rice.

10. High Teacher to Student Ratio—When you wonder why college tuitions are so high, consider that the teacher to student ratio at each of these schools is 6:1. Professors actually teach, they don’t just lecture.

It was an impressive and informative five days. Of course, it is bittersweet for a parent, recognizing that the tour is the beginning for your child but the end of her childhood. I would appreciate your comments as always.

It appears that the United States is officially in a recession. One need only pick up the business section of any newspaper to be depressed about declining retail sales, reductions in employment and tumbling home prices. During the last economic slowdown, the PR industry was slammed. Technology boutiques went out of business and full-service PR firms endure up to a 30% decline in revenues. While I believe the industry is better prepared this time around– with a more diversified business mix and more stable client base than the dot-coms that propelled growth in the late 90s–we still need to make a compelling case for PR in the face of looming budget cuts. We need to ensure clients are equipped to convey PR’s ROI and credibility advantages over other communications disciplines.

Here are a few ideas:

First, the media has changed in a fundamental way. Marketing clients can no longer rely exclusively on mass media, especially television advertising, to deliver the message. According to Pew the average informed person reads or listens to seven sources of information daily. Given this dispersion of authority a company must be able to move with alacrity to be part of the on-going discussion. As Andrew Heyward, former president of CBS News, says, “Every company is a media company.” That means we must help clients provide their own original content and enhance the dialogue with credible and creative material. We need to continue to convince clients about the importance of including bloggers in the outreach to media, of allowing their own executives to speak spontaneously, because there is a clear dialectic between control and credibility.

Second, PR offers a credibility advantage because information is thoroughly vetted and examined by the media, bloggers and independent third-parties. According to Forrester Research, nine of ten people do not trust advertising, while nine of ten people do buy on the basis of peer recommendation. In the Edelman Trust Barometer, we have found a substantial rise in opinion leaders’ trust in media across nearly every one of the 18 markets we surveyed in the past two years, which we attribute to; the rise of social media; increased consumer generated content in mainstream media and easier access to media across platforms.

Third, PR engages and involves multiple stakeholders simultaneously, not just consumers. There are no longer silos between constituencies; investors and consumers listen to views of non-governmental organizations; regulators are influenced by rank & file employees. The line between brand and corporate reputation is evaporating as business recognizes the utility of selling products with “good purpose”—that enable consumers to support sustainability– as “green equals green.” Companies are taking on issues that matter to the world, making money while doing the right thing.

Fourth, PR preserves the license to operate in a more complex environment. Scientific advances such as genetic modification are not automatically accepted as being in the public interest. In the highly charged political season, trade pacts such as NAFTA are under fire. This requires us to cultivate opinion formers, but also win the hearts and minds of employees, who can help to spread the word to friends and family as part of the education process. We should go beyond the rational benefits to explore the emotional concerns that are provoked by rapid change.

Fifth, PR is a unique accelerator. According to former Kraft CEO Betsy Holden, now at McKinsey, brands get a disproportionate return on investment from well executed PR initiatives, such as the Dove Campaign for Real Beauty. She argues that PR is the venture capital aspect of the marketing budget, with the goal of being a catalyst for the public conversation by tying into an important trend. PR’s approach is premised on listening, dialogue and continually incorporating feedback, which leads audiences from conversation to participation in the brand and company.

We need to advocate that PR is an essential part of modern communications. We have gone beyond ‘small box PR’ to strategic counseling; engaging multiple stakeholders including “new voices” such as NGOs; and using digital platforms to enable brand and issue participation. Now get out there and sell!

There are seven women who are integral to my life: my mother, my sister, my wife, my three daughters and Pam Talbot. Now that Pam has elected to retire from her job as President and CEO of Edelman US, to move to a consulting role at Edelman, it is time to take stock of her many contributions to the profession and to our company.

For the past thirty years, Pam and I have worked together at Edelman for my father, Dan Edelman. In that time, our company has grown beyond anything we could have dreamed possible, from $6 million to $415 million in fees, from six offices to fifty offices. Without her, none of this would have been possible. When I think about Pam, I am reminded of the comment by French Revolution leader George Danton, who said, “De l’audace, encore l’audace, toujours l’audace,” which translated means, “We have to dare, to dare again, always to dare.”

Pam’s career mirrors the development of modern public relations. She took the art of marketing PR to a new level, beginning by linking the media tour to the political season–who could forget Mayor Ed Koch leading the cheers for Morris the 9-Lives Cat on a NY City campaign stop on the feline’s presidential bid in 1988. Pam recognized the potential for the convergence of classic consumer marketing with health care and technology. For example she helped Microsoft introduce its line of CD-ROM based games through a bus tour (the Explorasaurabus) around America. Her recognition of the power of environmental stewardship led her to broker a deal for long-time client HJ Heinz’ StarKist Tuna with Earth Island Institute on the adoption of a dolphin-safe fishing standard, leading to endorsements from celebrities such as actor Ted Danson. Her sense of the consumer mood persuaded Microsoft to hold the first major public event in New York City after 9/11 with a spectacular midnight Times Square launch of XBOX. She recognized the need for consumer clarity on nutrition amidst the confusion on the web, partnering Kraft with Tufts University on a Nutrition Navigator. With the rise of a “person like you” as the most credible spokesperson, Pam played a central role in the Dove Campaign for Real Beauty, which provides a platform for ‘real’ women to tell their stories about self-image.

She has been the most valuable executive in the firm, always willing to take on the most difficult management challenges. She convened a global task force to confront Edelman’s reputation as a “hit and miss” firm, and then implemented the Quality program. This has provided regular client feedback on our performance and lowered client turnover. The Global Client Relationship Management initiative, begun three years ago, has allowed Edelman to deepen its ties with its largest clients as we serve more of them throughout the globe. She has been a tireless proponent of creativity, advocating concepts that have social purpose or just great publicity value. She has been a mentor to many of our brightest young people who will now attempt to fill her shoes; she always takes time to advise on career and personal issues, as a friend as well as boss. Her excellent stewardship of Edelman US has allowed us the capital to invest abroad while continuing to grow the domestic business.

As this is a blog, I want to share a few stories about Pam and me. When we went out to Minneapolis to visit a few companies, in true Edelman style, we took taxis, not limousines. By the time we reached our last appointment at General Mills, we realized that between us we had $20. We had to ask for cab fare from the prospect, Craig Shulstad, the PR director, so we could get home. For three years, we traveled the West Coast on a Trust Barometer tour, four stops in four days, pretending to be political candidates. As we slumped in our seats on the flights, we talked about the possibility that public relations could evolve from a “Talk only” to a “Talk and Listen” business providing content that improved the continuing on-line discussion. Pam was the bridge between me and my father as we achieved the generational passing of the torch over the past decade and served as the liaison between the Edelman family and our employees, pushing for better health benefits, a more predictable bonus plan and stock for key people. She also helped me to evolve as CEO, to get beyond the Winston Churchill concept of “To improve is to change; to be perfect is to change often,” to recognize that a strategy needs time to mature. Our skills and styles have been so different yet so complementary, perhaps a lesson to those in business who seek to recruit only those in their own image and who blindly follow orders.

To watch Pam at her desk, handling incoming calls on client issues, then smoothly shifting back to a conversation with me about company strategy, is to watch a master at work. Pam–we thank you for all that you’ve done to date, and we dedicate ourselves to continue the work that you begun.