Playing At Public Relations: Rolls-Royce Asks Will It Pass?

People often misunderstand that there is a virtual chasm between public relations and media relations. Rolls-Royce might be one of them.

While the grounding of Qantas Airways Ltd.’s Airbus SAS A380 fleet after an engine explosion may cost as much as $204 million, the airline will likely recover financially even if it does take significantly more time to rebuild the brand. For the most part, Qantas has taken a traditional crisis communication approach, communicating to various publics through multiple channels. It was and still is highly engaged with the media after one of its flights suffered engine failure.

But what about Rolls-Royce? By most counts, Rolls-Royce was largely silent about the failure of its engine about a month ago. The intent seems to follow the forgetfulness of the public by remaining in the background of public discourse.

It's not an uncommon approach. It's the same approach Halliburton took during the BP oil spill crisis. For Halliburton, it seems to work.

Does Communicating Less Work?

For Rolls-Royce, it's not. While the company continues to perform with diversified products and services, it seems clear enough that the engine failure, repeatedly called a design flaw, is weighing heavily on the company. It's not enough to kill it, but it is enough to stall it for an indefinite amount of time.

While the public might be satisfied to hear from Qantas, shareholders and industry experts following Rolls-Royce were not. What did the company offer up to its publics?

“This event and the consequent actions will have an impact on the Group’s financial performance this year. However the scale of our order book, the breadth and mix of our portfolio, the global nature of our business and our strong balance sheet makes Rolls-Royce a resilient business, and we expect continued underlying profit growth in 2010,” Sir John Rose, chief executive officer said.

With that measure being pushed forward to investors, a different message is being put forth to potential customers. Since the interim report, Rolls-Royce has put out a steady stream of releases focusing on innovations and contract wins.

While it is no more or less than it did three months ago, what does seem different is a drop off in softer news. Rolls-Royce is communicating, much like it did to shareholders, that it is all business. And while it has expressed some regret over the incident, there isn't anything to account for in terms of an apology or empathy.

The most current pre-incident forecast by Rolls-Royce was that during the next 20 years, 141,000 engines, worth more than $820 billion, are predicted to be delivered, powering 65,000 commercial aircraft and business jets. Specific to the most popular engines, Rolls-Royce maintained a 50 percent market share. In the past, it contended that the market is pretty unforgiving.

To date, it seems more than the civil aviation market is unforgiving. Investors did not appreciate that the company considered the Trent incident to be "partially mitigated by better performance in the Marine and Defence businesses." Companies that fail to communicate to their publics' satisfaction take much longer to recover than those out front.

Companies Cannot Afford To Be Too Quiet During A Crisis.

The exception, Halliburton during the Gulf Coast oil spill, was only possible because BP public relations missteps had distracted the public. Sometimes that may help a behind-the-scenes company forego public scrutiny in the short term. However, once the bigger bungler is removed from the equation, the behind-the-scenes players step into the spotlight. Case in point, Halliburton no longer has someone in the foreground.

While this story is still developing, the early lesson is that even if a company can escape short-term consequences by not communicating, that does not absolve it from long-term consequences. But more specific to the original observation, Rolls-Royce might already be doing better had it communicated well to select publics (customers and investors) even if it chose to let Qantas handle the media. Case study in progress. (Hat tip: Recruiting Animal.)

Branding Expansion Or Dilution: Train Wine Club

Co-op advertising and business partnerships are nothing new, but some upcoming pairings will certainly feel that way. San Francisco-based rockers Train have recently paired with K&D Wines and Spirits in New York to create the Train Wine Club.

"Hey all. My name is Jimmy Stafford. I’m in that band Train, and I happen to like wine. Welcome to our wine club! We talk about our favorite wine, the places we find it, what our favorite bottles are talk (sic) and some of our other wine-related shenanigans too." — Jimmy Stafford

The club offers a good value, even though plenty of people will find it pricey. It ranges from $120 to $480 per month for two California wines monthly, tasting notes, and eight exclusive songs from a live Train concert. Basically, $20 per bottle with some Train mp3s too.

So far, the club has attracted 3,000 registered members. Assuming they are all in for a year, the wine club generates about $1.4 million in revenue. Even so, Crush Management in New York told The New York Times it isn't about money. Bob McLynn, a partner there told the Times it is about “building a cult” around the band, using “the cult of wine.”

Brand Expansion Or Brand Dilution?

The concept of cult is hardly new. Gene Simmons was a mastermind when came to creating the Kiss Army. And even ventures like Sammy Hagar's Cabo Wabo have mass appeal even when the new music might not. Simply put, musicians include outside investments as part of their retirement packages these days.

But what seems a bit more unusual this time around is that the cult presence sought by Crush Management is beverage related as opposed to music and lifestyle (Kiss) or entertainment (Hagar). It's about wine, which seems far off from music — even more off than the single Meet Virginia was from anything found on Train's settled down album Save Me, San Francisco (which fit sipping wine).

On one hand, Train doesn't seem to be doing anything different than people who attempt to use social media to gain popularity and transform it into product peddling, except they are coming at it from celebrity down as opposed to amateur up. On the other hand, one really has to wonder how many bands would like to be remembered for a wine club, good (or not) as it might be.

It feels kind of weird, but perhaps it won't as more musicians move from selling songs to accepting sponsorships and creating signature products (e.g., Michael Anthony's Mad Anthony hot sauce) to product partner salespeople. Then again, it's hard to imagine Jimi Hendrix ever writing a blog post talking about how much he loves soap or something.

The real question for marketers is how much they are willing to gamble on the brand dilution. Anyone can appreciate Crush's point that bands can no longer make a living on music alone. However, you also have to wonder whether commercializing a brand away from the work that created it will save it or hasten the pace toward irrealivance like some had risked via reality shows.

You know. The music isn't great lately, but they know good wine. On a side note, there is no judgment here. It's more of a question, especially because some public relations professionals have been doing the same thing, picking up perks while being online spokespeople for companies or themselves.

Learning The Hard Way: Three Anti-Case Studies

There is another side of measurement that people are sometimes afraid to talk about. It can best be described as reverse benchmarking — what happens when companies experiment with social, over focus on numbers, and then prematurely cut programs?

Sometimes they find out months later that their decision was a bad one. And sometimes, not always, it's too late to recapture the momentum. Here are three case studies and some lessons associates of mine learned a few years ago. All that is missing are names to protect mostly those who mean well.

Three lessons learned the hard way.

• An engineering firm set out to position itself as a subject matter expert, employing social media as one of the tools. The owner understood it, but the team of engineers did not. Two months after the program was suspended, the firm was asked to bid a $1 million job because of something read on their undervalued marketing asset. The return could have paid for the program for years, even if they would have never seen another bid (but they would have).

• An nonprofit organization switched from a social media expert to a public relations firm that promised bigger network numbers. They received bigger numbers on social networks as promised, but their annual fundraiser earned 10 percent less than the year prior. The excuse was the economic climate, but the truth is switching from engagement to broadcast was the difference. Higher numbers did not translate into higher donations because the firm didn't consider the connections or communication.

• A restaurant decided to reduce its social media budget, one of the heftier cuts from an overall marketing budget while entering a traditionally slow season. The owner didn't think twice because they didn't consider their presence significant based on social network numbers. But what they missed was that the real order boost was coming from people who promoted them on one-off networks. Incidentally, they also didn't know social accounted for their fastest-growing revenue stream (four times the investment) because people would check in but not redeem discount codes.

When you focus on the wrong measurements, you will lose.

While pursuing direct response sales is often pointless in social media, marketers need to remember that all communication decisions can eventually impact revenue weeks and months and years after the decision is made. It's something to think about, especially because social media numbers tend to lie on the surface. You have to dig deeper to get at the truth.

Finding Mobile: Smart Phones Make The Web Mobile

On Friday, comScore, Inc. released its quarterly key trends in the U.S. mobile phone industry during the three-month average period ending October 2010. The report ranked the leading mobile original equipment manufacturers (OEMs) and smartphone operating system (OS) platforms in the U.S. Some of the findings are surprising. Some are not.

In October, 234 million Americans ages 13 and older used mobile devices; 60.7 million people in the U.S. owned smart phones. What is not surprising is that Samsung still commands an edge over LG on OEM devices. Apple (iPhone) and Google (Android) are continuing to carve up what used to be an RIM only market.

What is surprising is how people use their phones when they are not using them as phones. Second only to text messages, people use them to surf the Web and access social networks.

The Way Consumers Use Phones Is Changing.

• Sending text messages increased from 66 percent in July to 68.1 percent
• Using a browser increased from 33.6 percent in July to 36.2 percent
• Using downloaded apps increased from 31.4 percent in July to 33.7 percent
• Accessing social networks (or blogs) increased from 21.4 percent in July to 24.2 percent
• Playing games increased from 22.3 percent in July to 23.7 percent
• Listening to music increased from 14.5 percent to 15.4 percent

Given the short six-month timeframe, it demonstrates the rapid adaption of mobile technology. But more importantly, it demonstrates the seriousness of businesses thinking differently about their social media programs and Internet presence.

While apps have gained significant attention, Web browsing is still the fastest-growing segment of adaption. Specifically, with exception to networks, people are searching the Web from their phones. And, I don't know about you, but most Web pages aren't very phone friendly. It's something to think about. Keep it simple and give them a chance to engage your company.

Moving Backward: Fresh Content Project

While the old saying "the more things change, the more they stay the same" has reached a cliche-like status, there is some truth to it. For all the good social media provides, it cannot fix problems that occur at the core. It can however, amplify them.

The government can still be among the most ineffective communicators despite having the best tools to do it right. People are still mesmerized by popularity, whether or not those popular folks know what they are doing. We still need objective reporting even if people tend to tune into opinions that affirm their own. Businesses still think in terms of broadcasting messages, even when they operate in a space where people talk back. And Google, once again, is making a change to help curb SEO gaming.

Best Fresh Content In Review, Week of November 15

• Will Your Site Survive the Google Shrink Ray?
Pamela Wilson takes a look at the Instant Previews being enabled by Google. What that might mean is that the heyday of SEO trickery is finally coming to an end. It might not be enough to have the right words. If people start using the little magnifying glass, they can tell in an instant whether or not your site is worth the visit. And some of it may be made on the snap judgment related to its design. Wilson then offers up some tips to clean up the clutter. (By the way, some over-produced sites pop up as nothing more than a puzzle piece!)

• 5 Steps To Thinking More Socially About Communications.
Dave Fleet has always been good about writing with solid topic breaks. In terms of social, he sums up some steps that a few people need to read again: Think "inbound" instead of "outbound" (e.g., broadcast); think long term and not short term; adjust your definitions of measurement; integrate your channels; and expect some two-way communication. For many people working with social for some time, it might sound like old hat. But you know, there are plenty of people who still need to learn it.

• How Not To Use YouTube by Ike Pigott.
Ike Pigott's mash up post on the failing and flailing TSA social media program is a fun way to point out that the ease of social media tool usage doesn't mean everybody ought to use them. One person who doesn't belong in a high profile spotlight as spokesperson is John Pistole. Pigott points to everything that is wrong about the video, which can be best summed up as producing it in the first place. The only thing they did right, he says, was disable comments.

•Journalism Skills For Everyone.
A few years ago, Geoff Livingston and I got into a fight about whether bloggers could become journalists if they wanted to be. So, I find it ironic and amusing that he has come around with a wish list of bloggers who want to be more than hobbyists and give real reporting beyond an invented reality a try. What makes the post stand out is that Livingston, much like I did a few years ago, hopes that the amateur might step it up to help fill the void as many papers are left diminished. I hope so too, but expect we might have to have another run with a few yellow journalism empires before people see the need again.

• The Problem With Influence.
Danny Brown has been writing with a new found fire since breaking free of some social media fishbowl posts. Nowadays, he is tackling the tougher issues like the problem with online influence measures and the bastardization of the word. There is an underlying irony in the post presented by Brown in that social media "experts" were the first to tear down fictitious measures of importance that some people held, only to resurrect them in some equally bizarre way — online popularity.

Shopping Psychology: Why Retailers Attract Bargain Hunters

According to an article in The Wall Street Journal, shop owners are leaving lures around their stores to attract more holiday spending. Many of them are placing inexpensive items in the windows that lead toward more expensive fashions in the back.

"No one wants to buy anything for themselves anymore, you've got to get them through the door," one store owner told The Wall Street Journal. He's not alone. Another one says he added items that clash with his contemporary aesthetic. And yet another is targeting children at the door in the hope their parents might buy something else.

Why Are Retailers Tossing Out Bait While Fishing With Dynamite?

While the National Retail Federation is estimating that Thanksgiving weekend sales were up 8.7% over last year, retailers are still scared of their third down season in a row. So many of them are skipping out on customer service and trying out tricks instead.

Ironically, if they thought more about their customers, they might not have to. For all his street smarts, the shop owner who said nobody wants to buy anything for themselves is wrong. Chances are, he's just not selling what they want for themselves. He also might be attracting the wrong buyers for his store.

The Real Psychology Behind Holiday Shoppers.

According to the Kellogg School of Management at Northwestern University, shoppers will be buying items for themselves. Those who can be described as more materialistic will allocate as much as 34 percent of their holiday budget on themselves. Those who are not materialistic will still spend 17 percent of their budget on themselves.

Not surprisingly, the size of those budgets will be primarily dictated by whether shoppers feel secure about their jobs or not and whether they realized an increase in income this year or not. The attitude between these two shoppers can be best described as "deal shoppers" and "value shoppers." The deal shoppers are looking for cheap. The value shoppers want to treat everyone to more, but are looking for the right value.

With this in mind, now consider the first shop owner's strategy. What type of buyer do you think he will attract with cheaper trinkets up front? And then consider the buyer he might attract if he placed one or two luxury items with the right value incentive in the window?

Shop Owners Might Consider Their Own Psychology.

The Kellogg School of Management says its study reveals that an individual's perceived relative control over resources affects their shopping habits. The same might be said of store owners (or site owners for that matter). Their own insecurities might be driving them to attract less secure shoppers.