Word leaked out that it had made huge losses on a futures deal. Absa initially told the market it lost R52m. Six months later, after a newspaper investigation, it admitted the figure was R1bn. The bank's repeated refusal to come clean caused considerable reputational harm.
Publicists and PR experts will present a convincing argument on why their services make sound business sense. They might sometimes be right. But PR done badly can hurt the bottom-line. "Getting bad publicity or publicity that is factually incorrect can be harmful to an organisation's reputation and difficult to turn around," says Sue Brewitt, director of Corporate Communications Consultants. "All public relations activities need to tie in with the strategy of the organisation. In a tough economic time it is especially important that resources are used effectively."
Sometimes companies prefer keeping mum on a controversial issue in the hope the problem will go away. They believe no publicity is better than bad publicity. "No media coverage means you're at a neutral level in public perception rather than in a negative reputational space," says publicity specialist Marcus Brewster. "As negative reputational scores affect brand equity, this can have damaging consequences for a firm's market valuation and therefore share price."
But what happens if a crisis hits your company and the press is all over the story? "If you have no media liaison person, you will take a drubbing of the worst kind," says Brewster. "It would be reckless to not have professional PR to mitigate the negative coverage and move the tone of the story arc to neutral and ultimately positive, where the organisation is praised for its handling of the matter."
So how can you avoid wasting money on PR? Says Brewster: "Professional PR is a business imperative, the engine to growth and recovery. Any PR activity that generates a return on investment cannot be considered wasting money."
Grant Henry, local managing partner at FD, one of the world's leading media and investor relations consultancies, agrees. "PR is probably the most cost-effective tool in the communications spectrum. In downturns, reputations dip too, so people want to hear your thoughts on how you're managing your world. Many firms make the mistake of picking an agency on price alone, but that's short-sighted as cheap can be very expensive if they do a poor job."
A good idea is to agree to success measurements - such as appearances in targeted media titles or keeping the client out of the media - in advance. "It's easy to then look back and gauge the effectiveness of PR, regardless of economic conditions," says Henry.
Brewitt adds: "If PR is managed carefully in a structured way, an organisation's profile can be developed and enhanced in a cost-effective way during a recession. The credibility that PR as a tool lends will protect your brand's reputation during tough times."
As a first step towards cost-effectiveness, avoid agencies that send out hundreds of untargeted PR messages. It's a waste of time and money, and does nothing to improve the bottom-line or reputation. "It just annoys journalists and in the process probably tarnishes your reputation by association," says Henry.
A structured approach is essential, says Brewitt. "In the early stages of working with a PR consultancy, you should ask to see a media list."
So what are the advantages of good PR? If it's aligned with your business objectives, it can, for example, attract new clients and business. A case in point is a major corporate law firm that won new business after some of its deals were publicised. "It's a powerful example of showcasing intellectual capital in the right media to get the phone to ring," says Henry.
Before choosing a firm ask . . .
What am I paying for? Beware of agencies that fall back on the platitudes of "time" and "publicity". You may be paying for someone to spend a set number of hours writing press releases. That's a polite way of saying: "We spam the media, and you pay for sending out verbiage." Publicity output is not the point: you want outcomes.
- How is the PR firm going to make a measurable difference to your business? How is its strategy linked to your company's commercial objectives?
- Question agencies' areas of expertise: Who are their clients? What is the calibre of people working on the account? And what are their experience, knowledge and relationships with the media? Demand case studies and references from clients as well as an indication of their knowledge of communications and their ability to be creative.
- Will the agency have the courage of its convictions? Will it offer the best advice even if it knows you disagree or won't like what it suggests?
- What is its overall approach - is it reputation management, not just PR?
