This post was first featured in The Holmes Report.
Every time a recession looms, public relations prognosticators repeat the same conventional wisdom, that cost-conscious brand-builders will shift spending away from advertising and into PR in order to get more bang for their marketing buck.
And every time a recession actually hits, marketers fail to deliver the anticipated benefits.
This recession has been a little different, in part because its arrival coincided with a broad shift of marketing spending into new areas, most notably digital and social media, and because PR firms were able to demonstrate the ability to deliver digital and social content (covered in a separate article to follow) that build stronger relationships between brands and their consumers.
Kelley Skoloda, director of the global brand marketing practice at Ketchum, points out that “consumers have greater ability to skip ads and other branded communications,” and suggests that as a result, “brands that tell compelling emotional stories and enable consumers to ‘opt-in’ rather than being ‘marketed to’ will win. Think Toms and the compelling story that is the brand and that millions of consumers of all ages are buying in to, emotionally and literally.”
For that reason, the consumer public relations business has remained relatively robust throughout the current downturn—growing, and moving into a more central role in many client marketing organizations. It is against that backdrop that we invited consumer PR experts from around the world for their outlook on the year ahead, and found plenty of optimism.
“We are seeing big growth in the consumer marketing sector” says Tom Coyne, founder and chief executive of New Jersey-based Coyne Public Relations. “The economy, which previously made everyone from consumers to companies unsettled, has now become the ‘new normal.’ People are now interested in getting back to making purchases they have been holding off on for a number of years and companies are ready to get back to previous levels of communicating with them every day.
“Companies need to remember that in the ‘new normal’ the consumer is much more savvy and thoughtful of their purchases so it is even more important than ever for companies to stand up and tell their story of why them.”
Larger agencies, meanwhile, are seeing greater demand for global programming, with an emphasis on developing markets
Says Lisa Sepulveda, president of the global consumer practice at Weber Shandwick, “Brands are more and more thinking global, where historically these multinationals or global brands have operated on a very local level. With the proliferation of social media and immediate access to information anytime/anywhere, an increased spotlight on emerging markets like India, China and Brazil, and the overall ‘flat’ world we are living in, that is all changing.
“We are being asked to provide global communications strategy, both for traditional PR and social media. Additionally, we are responding to more global RFPs for brands, which was uncommon for consumer marketing a few years ago.”
Content is King
The opportunity for public relations firms in developing a wide range of digital and social media content will be examined in greater depth in a separate article, but the creation of digital content has opened a door for public relations firms to get more broadly involved in content creation—including live events.
“Five years ago many PR campaigns would have taken a lead role in prescribing sponsorship as a strategic route to building PR content,” says Richard Brett, managing director of UK consumer consultancy Shine. “However pure badging of events has been largely challenged by brands’ desire to create their own bespoke, wholly owned ‘live’ marketing initiatives and the way that these can live not only in the real world, but also in the online world.
“O2’s approach to the Dome has been an excellent and extreme example of best practice of this strategy. It’s wholly owned venue integrates across channels and is a communications dream as it provides a vehicle for customer engagement, brand loyalty incentives and constant tap of content and social exchange.”
According to Rana Reeves, founder of UK creative shop John Doe, “2012 is going to be a continuing year of belt tightening as consumers look for better experiences. Recessions always provoke leaps in cultural creativity as people simply have more time on their hands both in terms of attending activity and creating activity; they also mean more creative spaces up for grabs in urban centres as businesses exit or are more amenable to other useage.
“Brands can harness this as they are the obvious patrons to provide free experiences and activities for cost-conscious consumers.”
The Convergence of Corporate and Consumer
There is no doubt that the lines between the consumer marketing realm and corporate reputation building are blurring as consumers have greater access to information about the companies behind the products they buy.
Micho Spring, global corporate practice chair at Weber Shandwick, says: “We’re seeing a sharp increase in client requests for help in creating a compelling, unifying enterprise brand idea and bringing it to life across all audiences, not just the traditional corporate stakeholders. Corporate reputation is no longer about identity and image; it’s about values and engagement and a strong enterprise brand is at the heart of this.”
She points to recent Weber Shandwick research showing that 87 percent of senior executives across the UK, US, China and Brazil agree that “a strong corporate brand is just as important as a product brand” and that 70 percent of consumers avoid buying products if they do not like the parent company.
According to Marcus Wenner, head of planning for Swedish consultancy Prime, “One area where we see big growth potential is a merger of consumer marketing and corporate reputation, where strategies and concepts are required to deliver both corporate positioning and consumer preference and sales.” The firm points to its SABRE-winning work for Electrolux, which it calls “a hybrid project delivering marketing effect and used in corporate communication towards all stakeholders, in CEO speeches and on the cover of the annual report.”
That’s a trend we will examine in more depth in our look at what’s hot in the corporate reputation sector, but there’s no doubt that in the consumer realm it is driving an expanded interest in cause-related marketing and emphasizing brand values and purpose.
Purpose and Responsibility
Carol Cone, global practice chair of Edelman Purpose, says that purpose, which she defines as “an organization’s values in action, manifest through a variety of actions ranging from materials sourcing, supply chain partners, CSR reporting, ethics and governance,” will be increasingly important in 2012, with companies focused on how purpose can be “strategically integrated and operationalized” throughout their organizations.
“Watch for existing Purpose platforms to grow legs into each element of the business, and those organizations without values-based leadership to flounder in light of plummeting consumer confidence and trust,” Cone says. “With the upheavals of the last year still fresh in our minds, business leaders and agencies alike would be wise to consider, and take seriously, the power of citizen consumers to humanize or demonize brands and corporations.
“Purpose drives trust, differentiation and innovation—but it must be executed well, with depth, authenticity and a long-term commitment to impact.”
Ogilvy’s Smith sees things a little differently: “The last five years has seen companies go in search of their ‘purpose.’ In 2012 we predict that companies will go in search of their ‘relevance.’ Companies understand that increased transparency means they can no longer hide behind their products. This has been going on for a number of years. But more evolved companies have been grappling with becoming proactive in communicating with consumers about their organization, their values and purpose in society.
“For some the stumbling block they hit is how to make themselves relevant to mass consumer audiences in a way which engages consumers in a conversation. The simple fact is more consumers are interested in whether a company is well run and ethical than are interested in the business of business. Many consumers will want to have a conversation online about social responsibility practices but few of those people care to engage in a conversation about innovation, investment plans or the five-year vision.
“Corporate communications professionals need to listen more to their marketing colleagues to understand how to create relevance with consumers. We predict that 2012 will be the year when companies truly try to crack this difficult and nuanced challenge. It will also be the year we look back on and say this is when the disciplines of PR and marketing communications really started to collaborate in powerful ways to build corporate brands in the minds and hearts of all audiences.”
Liz Kaplow, president of New York’s Kaplow Communications, sees a similar opportunity in the broader corporate social responsibility arena. “The modern consumer wants to know the brand behind the product, and the company behind the brand—and they have the resources to find out. This means that companies now have to ask themselves ‘who are we and what do we stand for?’ Naturally, this has made authentic CSR an integral part of a company’s forward planning and initiatives.
“Authentic CSR means it is integrated into the company’s corporate DNA, so that it is evident in everything the company does. This includes marketing and social media, CEO thought leadership, employee relations, and more. Authentic CSR is not about whitewashing a company’s image. It’s about supporting humanity, being passionate about a cause, and connecting emotionally with consumers who at the end of the day want to know that companies care about the world and the people in it.”
That’s all part of a growing demand for greater interaction between consumers and the companies they buy from, and for a more personal touch.
“Consumers are tired of dealing with faceless brands that fail to deliver on their promises and aren’t afraid to vote with their feet if disappointed,” says Stuart Wragg of Australia’s n2n communications. “In the year ahead, personal communication will be an increasing priority as enterprises focus on targeting individuals, not market segments. In 2012 it’s about human communications not marketing communications.”
But companies need to be careful. Consumers are increasingly sophisticated in their ability to identify when a company is making a genuine commitment to a cause, and when it is merely paying lipservice.
“In this age of transparency, it will become increasingly difficult for any corporation to gain reputational benefit from badging or sponsoring social or environmental initiatives, without actively engaging on the issue in question,” says Andrew Last, a partner at UK consultancy salt. “For those who are actively engaged, such sponsorships provide useful platforms to tell their story and build their reputation. But for those who aren’t, they will simply serve as an invitation to activists and pressure groups to look behind the sponsorship and find out what the company is really doing.
“This will lead to accusations at best of spin and hollow claims, and at worst of hypocrisy, where the reality of their operations and supply chains do not match the rhetoric. The fear of opening up to such scrutiny and the impact it will have on corporate reputation will lead to a decline in the number of organisations prepared to sponsor such initiatives until their own house is in order.”
When it comes to industry sectors where industry experts are predicting growth, consumer health is right at the top of the list.
Ketchum’s Skoloda cites demographic trends such as increased longevity, as well as the prevalence of obesity and chronic disease, as evidence that consumer healthcare products, “those at the nexus of mass retail consumer goods and pharma,” will be hot this year.
“We continue to see huge growth in the consumer health sector, especially as many pharmaceutical companies struggle with weak Rx pipelines and are putting a bigger focus on both their OTC brands and Rx to OTC switches,” says Sepulveda. “Globally, there are new areas of consumer health emerging such as products designed for people with special nutritional needs, including elderly patients, patients with diabetes, cancer and other illnesses.”
And growing interest in healthy lifestyles will mean more activity in the food and nutrition category.
“The food and beverage and nutrition category has been called recession-proof,” says Mark Raper, principal at CRT/tanaka. “But these businesses also are evolving as consumer behaviors and preferences change. We believe that a more clinical, nutrition-based approach and a greater focus upon fresh, healthy foods will yield the greatest success.
“Consumers, retailers and trade influencers continue to learn the importance and advantages of fruits, vegetables and healthily prepared foods. Therefore the opportunities are not only consumer directed, but also B2B.”
Not everyone is quite so bullish, however.
PR spending in the food and beverage sector is likely to be flat in 2012, says Liz Beck, executive vice president and US consumer practice leader at Cohn & Wolfe.
“Commodity costs are on the rise, which is forcing up cost of goods and putting extreme margin pressure on manufacturers. And, while there has been some improvement in consumer confidence, all indicators point to ongoing consumer caution in terms of household spending. Private label brands are capturing increased market share across many categories. Consumer packaged goods brands are maintaining a cautious approach to marketing investment. Many are focusing on tried and true campaigns with proven results and are shying away from investment spending.”
What’s Not Hot?
From the Australian market, the outlook for the consumer sector as a whole looks somewhat bleak. According to Liz Dougall, executive group manager at Rowland, “Consumer marketing will continue to struggle through the ongoing impact of the debt crisis that has followed the global financial crisis. All consumer marketers face the critical challenge of connecting with those consumers who are able or looking to spend. In Australia the ‘two speed’ economy and a rising Australian dollar have hit the retail sector hard and brands will look to ensure they have a clear brand message, which they communicate consistently through every touch-point.
“We predict it will be the lean, clever and agile marketers with strong brand loyalty and a willingness to adapt to new technologies that prosper in a difficult year ahead.”
Others say the outlook for travel and tourism remains bleak.
“As belts tighten more consumers are looking for local experiences to enrich their lives and offer mental escapism this will make the mainstream travel market a highly competitive battlefield,” says John Doe’s Reeves. “Luxury and possibly low cost will grow but mid-range venues and operators are going to feel the pinch.”
Four Communications principal Nan Williams sees a similar issue: “In the travel industry, mainstream tour operators such as Thomas Cook are struggling. Meanwhile UK brands such as First Choice are differentiating by going fully all-inclusive. Radical times need radical product and communication strategies.”
Speulveda, meanwhile, says she continues to see weakness in the retail sector, citing Deloitte research showing that 183 retailers in England and Wales went into administration in 2011, up from 165 in 2010, including high street staples Barratts, Oddbins and Habitat. “Even luxury companies like Tiffany, which seem to have been recession-resilient, have reported that weak sales growth during the holiday season in the US and Europe, raising fears that the wealthy may be beginning to cut spending.”
Ongoing economic weakness means companies still need to look for new ways to differentiate themselves and connect with cost-conscious consumers.
“We did our first ‘brand-building in a downturn’ client planning session in early 2008,” says Kelly Walsh, CEO of MSL London. “We’re on version five now. Back in 2008 we put forward the idea that brands would come under pressure from deal seekers and margins would be squeezed. We predicted that consumers would grow to like ‘the deal,’ and even when we got back to growth the new consumer norm would be ‘buying well.’”
That prediction has come to pass, she says. “The deal seeking consumer has had time to evolve; our insight now is that necessity has shifted to gaming the system for fun and personal status.” She cites discount retailer Aldi, which earned a reputation as a place where the rich liked to shop as well as a place where the poor had to shop. Says Lynch, “Deal seeking doesn’t have to be the preserve of the desperate: it can be about the thrill of the chase, the nous demonstrated, the status incurred—and the wealth retained.”