Putting Profits Before People: Just How Much Bad News can Apple’s Brand Withstand?

The damaging news just keeps flowing out of Foxconn’s “employee barracks” in China, where Apple’s iconic products are made.

In August 2012, the Fair Labor Association released the results of an investigation it had conducted at Apple’s request after reports of employees rioting and committing suicide over excessive work hours, inadequate compensation and unsafe working conditions.

The FLA reported that Foxconn had addressed most of the problems regulators said must be fixed, including ergonomic breaks and equipment redesign to prevent repetitive stress injuries, cutting excessive overtime hours and updating safety and equipment-testing policies.

But new trouble at Foxconn is creating yet more bad publicity for the Taiwan-based manufacturer – and for Apple.

The Economic Policy Institute reported earlier this month that the FLA’s assessment of Foxconn’s progress was too “rosy,” that high demand for the much-hyped iPhone 5 has essentially undone what few improvements have been made and gave a sharp criticism of the most valuable company in history:

“The paramount issue remains whether Apple will ever choose to apply its legendary business prowess and spirit of innovation, and its enormous financial clout, to the goal of protecting the basic human rights of the people who make those products."

Ouch.

The news comes at a time when the gadget giant is dealing with several PR hits it has taken over the past few 

months.

• In early September 2012, during the run-up to the big announcement of the iPhone 5’s impending release, Forbes reported that Apple’s patent court battle with Samsung was drawing criticism even from its fans, many of whom felt Apple is filing frivolous patents and is afraid of Samsung’s competition.
• Shortly after that the Maps debacle that left many befuddled iOS 6 users “iLost” dominated tech media for several weeks.
• More recently, research firm Strategy Analytics released a report showing that iPhone owner loyalty is in decline, with 75% of Western European iPhone owners planning to buy their next phone from Apple, down from 88% last year. In the US, repeat purchase intentions have also declined since 2011, from 93% then to 88% now.
• On November 8, former Apple exec David Sobotta told CNet that Steve Jobs’ successor as CEO, Tim Cook, is a technological “lightweight.”

And now there’s the latest episode in the ongoing Foxconn saga. If human rights violations continue unchecked at Foxconn, it could mean a very serious hit for Apple notwithstanding the powerful halo effect I’ve written about that seems to protect the company’s reputation and bottom line.

So I am in full agreement with the sentiment the EPI investigators expressed in closing their report. If Apple were to use its huge economic and cultural clout to force Foxconn to truly improve conditions at its Chinese factories – and I mean improvements verifiable by independent investigators, not those acting at Apple’s behest – it would not only make worker’s lives better (the most important thing), it would have the side effect of being a great PR coup for the company.

Pushing to put people before profits could protect Apple’s halo and advance its once-untarnished reputation. Will the tech behemoth put aside shareholder pressure and have the guts to do it?  I don’t think Apple will, but in this case, I would love to be proven wrong.

Communication Gap and an Un-American Decision: Sandy Sinks More Than Property

By: Vanessa Horwell, Chief Visibility Officer

Sometimes 140-characters isn’t enough.

In my continuing efforts to practice what we preach at ThinkInk when it comes to the importance of social media, yesterday I tweeted about two retailers, The Gap, and American Apparel and their careless  (some would add heartless and foolish to the list of descriptors) marketing ploy. Both tried to weasel their way into “competitive advantage” following the devastation and destruction wrought across the Northeast and Mid-Atlantic by hurricane/super storm/nor’easter/post-tropical storm/Frankenstorm Sandy.

Both companies reached the absurd conclusion that marketing to customers during a tempest that rivaled the ferociousness of weather not seen since 1888 was a smart idea - and a novel way to win loyalty.

Wrong. And this Tweeter needed to go on her own tear.

American Apparel’s 36-hour, 20% off “in case you’re bored” sale was geared toward residents in nine of the 11 states in the grip of the crisis: New York, New Jersey, Pennsylvania, Maryland, Delaware, Virginia, North Carolina, Connecticut, and Massachusetts. Why Rhode Island, a New England state where summer cottages fell into the sea and West Virginia, pounded with some 3 ft. of snow in higher elevations, were left off the “generous” list remains unknown. For its part in the PR fail, Gap sent out a tweet that while telling people to be safe, also nudged them to consider a dose of retail therapy.

Needless to say, the public reaction has been swift and the Twitterverse is alive with derision, with “the lowest of low,” being a very common tweeted and re-tweeted sentiment.

Misery loves company as the saying goes, so of course there are plenty of examples of Gap and American Apparel-like PR blunders. Just last year Kenneth Cole’s Twitter account tweeted:

“Millions are in uproar in #Cairo. Rumor is they heard our new spring collection is now available online.”

Really?

But returning to the recent crisis at hand, as a PR professional I wanted to go on record and add my voice to the chorus of disapproval. It’s truly disturbing that someone, somewhere, likely paid a decent to very decent salary, had the light bulb go off in their head and thought, “Wow, I’ve got the brainiest of ideas! Let’s use a natural disaster for our own gain and corporate greed.”

Well, I’m sure that in many Gaps and American Apparels across the Northeast and Mid-Atlantic their light bulbs (and their heat, and phone lines, and computer systems) really are off now. Perhaps time spent in the cold and dark, thrown back for a moment to simpler times, will remind executives and higher ups at these retailers and beyond that the almighty dollar is not always king.

Many of our clients speak about the importance of driving quality experiences. Having a dose of humility and knowing when not to hard sell, soft sell, or anything-else sell is also a respectful way to move beyond the pettiness and triviality of our daily lives.

When New Jersey Governor Chris Christie, a staunch Republican, praises President Obama for a job well done handling this historic calamity, you know you’re approaching the humility, honesty and transparency of which I write.

Eventually, every state impacted by Sandy’s arrival will rebuild. Beaches will open for summer. Amusement parks will charge overpriced tickets. Communities will come together and the lights will come back on. Just know that for every American Apparel and Gap blunder, there are other companies, nonprofits, communication companies, and everyday citizens all-too-eager to lend a hand and help.

None of them come 20% off. They’ll be there 100%.

Shame on American Apparel and the Gap – two companies whose despicable actions won’t fast be lost to the waves, nor this PR executive.

And if you would like to help your fellow citizens who were impacted by the storms, here are a couple of links where you can donate money or blood to the relief efforts.  If they were half-clever, that’s what American Apparel and Gap should have been encouraging people to do, not banking on others’ misfortune.

The Plague of Plagiarism

The following article by Vanessa Horwell, Chief Visibility Officer of ThinkInk, originally appeared on Marketing Daily.

I promised myself I wasn’t going to gloat. One professional’s sorrows are no cause for celebration, especially when discussing an esteemed journalist like CNN and Time magazine star Fareed Zakaria, center of last week’s plagiarism cause célèbre. In fact, many of my MediaPost columns go to great lengths calming the public relations versus journalism debate, draining the back-and-forth venom. You know -- that whole Lincoln-inspired, “we’re not enemies but friends” mantra.

So if this article isn’t a gloat, let us label it a galvanizing call -- a call for both sides of the industry to aspire to the “better angels of our [collective] nature” and put an end to plagiarizing and falsification once and for all.

Considering the almost absurd glut of easily accessible digital information produced on the order of some 2.5 quintillion bytes a day (according to IBM), one would think finding information or becoming inspired with new ways to mold, argue and utilize that data would be similarly limitless.

And maybe that’s part of the problem. Maybe the reason Zakaria is but one example of a long chain of related miscreants is that plagiarism today is as easy as hitting copy and paste. What’s more, in the crowded blogosphere and the 12 terabytes-a-day spewing Twitterverse, opinions -- professional or otherwise -- are about as rampant as Colorado wildfires were back in July. It’s so easy to get "keyboard happy."

This latest bout of plagiarism serves an important PR lesson -- and a reminder. Too often the "Us" versus "Them" internal communications industry debate is predicated on the false notion that journalists consistently maintain the moral high road or file their copy in a purely agenda-less vacuum. Not true. Journalists can be (and are) every bit as flawed -- tempted by the easy way out of lifting a sentence here, and "borrowing" an idea from there.

That doesn’t mean PR execs are factual saints -- far from it. After working my way up in the industry over the past 20 years, I’ve seen my fair share of beauties. But let us all put our collective journalist caps on for a moment and think about what exactly Zakaria did. The truth is Fareed’s failings aren’t as black-and-white as the copy-and-paste reference above either. Do you really think a Harvard-educated man could be so brazen? And stupid? Not likely.

Plagiarism isn’t always so cut and dried. Let’s remember that it isn’t as if Zakaria lifted verbatim the red-flag paragraph in question of his August, Time magazine column, The Case For Gun Control. There was at least an attempt at finesse -- of covering his tracks, so to speak -- and perhaps a subconscious nod toward rationalization. “How much tweaking and rewording must be done so that what springs forth from my keystrokes will be truly mine and not regurgitated drivel?” he may have well asked himself over and over. And if it were such an easy offense to avoid, it is very likely the topic would not occupy so much lecture time in grad school and undergraduate journalism classes.

Underscoring my point, the CUNY Graduate School of Journalism lists the course “Legal and Ethical Issues” as number two in its roster of five core modules. The description:

“Through a rigorous examination of court cases and ethical controversies, students will learn to anticipate, recognize, and properly address ethical and legal concerns in journalism.”

Whether a class like this goes by formal title or if it comes in a weekly editorial and reporter meeting, you can be sure in newsrooms across America, in papers large and small, similar “rigorous examinations” are being discussed, debated and acted upon. So while Zakaria’s actions weren’t necessarily black-and-white, there clearly was a definitive right or wrong about the issue -- an admission that he was fast to recognize in his blunt apology.

And maybe that rapid-fire apology stemmed from his expectation -- one that is proving true -- that after the tumult settled, after the “fall-from-grace” explosion of 20/20 media hindsight, in the end the professional response would be a proverbial slap on the wrist. After announcing suspensions, both Time and CNN did just that when they quickly reinstated Zakaria.

But month-long suspensions and disciplinary review don’t cut it. If addressing legal and ethical issues are as central to the communications industry we all give lip service to, then the penalties for trampling on those lessons should be equally severe.

Have Time and CNN set a precedent for other journalists? Quite likely. Will plagiarism be going away anytime soon? Not likely. And as for Zakaria, his mea culpa has been accepted by media and the masses and life will go on.

Some have argued that this is much ado about nothing, that writers and journalists are inspired by so many sources it becomes difficult to distinguish where our own ideas and original content intersect and blur with others. As a writer, I can understand this argument.

But inspiration and plagiarism are two different animals. In our age, and in our industries, where we are tasked with creating original, compelling and clever content at breakneck speed, we absolutely know this distinction -- we just don’t care to admit it.

The following article by Vanessa Horwell, Chief Visibility Officer of ThinkInk, originally appeared on Marketing Daily. 

Even Decade-Old Lies and “Omissions” Can Wreak Havoc on a Brand.

One would think that in our 24/7 news cycle and oversharing age, companies and celebrities – who depend on public goodwill to remain famous and profitable – would resist the impulse to lie or cover up less-than-flattering information.

Perhaps guess GlaxoSmithKline and “Dr. Drew” Pinsky missed that memo?

Last week it was revealed that Dr. Drew, an addiction specialist and host of Loveline and Celebrity Rehab took more than $250,000 from the British-based pharma giant in the late ‘90s to talk up its antidepressant Wellbutrin on Loveline.

Even as he touted the drug for its effects – or lack thereof – on libido, the good doctor neglected to mention he was being paid to promote the drug.

$250,000 is a rather handsome sum of money, but in failing to disclose his financial link to GlaxoSmithKline, Dr. Drew ended up doing a great deal of damage to his own brand – more than a decade down the line.

As a PR practioner, I’ve said this so many times to my colleagues and will continue to until I’m blue in the face: Dishonesty will always come back to bite you on the behind

The GSK kerfuffle could end up costing Dr. Drew far more than money – just read some of the comments following a recent CBS News report:

“Dr. Drew, too bad you can't put the toothpaste back in the tube once it is out. You are now and will forever be a pharma shill. Unlikely that you will ever be seriously considered an astute medical practitioner.”

That’s what I mean about being bitten in the bottom.  I wouldn’t want to be associated, even tangentially, to what officials are calling “the largest case of healthcare fraud in US history.” No sum of money can make up for such a loss of credibility – in my mind, at least.

I recently wrote a post about the massive PR blunder committed by lobbyist Stephanie Harnett of Mercury Public Affairs on behalf of Wal-Mart: she posed as a reporter to infiltrate a meeting of union members opposed to a planned Wal-Mart in Los Angeles. She was caught, then fired and managed to garner some (more) negative press for Wal-Mart, the exact opposite of what she – and her previous employer – had intended. Not that Wal-Mart is a stranger to awful press, of course.

While these are two distinct scenarios, they both raise the issue of lapses in professional ethics and serve as yet another reminder that dishonest behavior in business, particularly in our always connected age, can backfire disastrously.

So what have we learned from GlaxoSmithKline and “Dr. Drew” Pinsky?

Credibility is our most important asset. If we don’t have that, we don’t have a business. At least not a business worth having.

Daily Deal Dilemma: Does Groupon Need a Refund, a Reboot, a Stern Reprimand or Just a Little Maturing?

The answer depends on whom you ask. If you ask Groupon CEO Andrew Mason, 31, he’s likely to say the latter.

But before we get to Mason, let’s recap.

Back in February 2012, I wrote about how Groupon, the daily deals “Mecca” was launching a PR blitz to help rewrite its then recently soiled reputation after a slew of communication missteps:  a fumbled Super Bowl ad and a case of fuzzy earnings math just prior to its November 2011 IPO.  It revamped its website and added the public relations might of Paul Taaffe, the former chairman and CEO of Hill & Knowlton. (For history buffs, that’s the 85-year-old Manhattan-headquartered PR agency once known for its support of Big Tobacco and its infamous “A Frank Statement to Cigarette Smokers,” 1954 newspaper ad, that claimed the “statistics purporting to link cigarette smoking with [lung cancer] could apply with equal force to any one of many other aspects of modern life.”  Gotta love this industry!)

In that earlier post I puffed on about the tough job that Taaffe had ahead of him, referring to the journey as a “rocky road” while going on to say that, “taming the daily deal beast just doesn’t seem like a job anyone should embrace,” and that “public relations leaders can only craft a message so far. Too much spin and a message – and a company – can spin out of control. Let’s see what happens next.”

And (nearly) spin out of control it has.

Earlier this month it was reported that the Securities and Exchange Commission had begun a preliminary investigation into Groupon’s questionable financial accounting practices after the company announced that it was revising its 2011Q4 earnings, cutting it by $14.3 million to $492.2 million from $506.5 million. The announcement left many Groupon naysayers crying, “I told you so,” while investors are jumping ship in search of…. better deals.

Fast forward a few weeks since the troubling news and Groupon’s stock slide continues. On Thursday April 26, 2012, Groupon’s stock price was nearing bargain-basement levels, trading at $12.06 a share, after its $20 a share opening in November and its 52-week high of $31.44. The reason for the downward revision? Groupon hadn’t set enough money aside for customer refunds.

So in light of all this communications turmoil, one would expect that Paul Taaffe and his team would be out in full force defense and crisis mitigation mode.  To date, however, Taaffe’s strongest defense was when he told reporters: “Every three months Groupon is a different company.”

Somehow I don’t think that’s what investors wanted to hear.

But to give credit where it’s due, Groupon CEO Andrew Mason at an informal town hall meeting on Wednesday admitted his company no longer has “any margin for error,” adding that Groupon is “still this toddler in a grown man’s body in many ways.” In helping the company grow up, the company has announced plans to bring on board additional senior management, and according to a recent Wall Street Journal article, at least two new board members – all designed to show that the company can mature, mature quickly and rebuild investor confidence.

As a public relations professional, one of the most important pieces of advice I can give is telling clients to be up front about their actions and intentions and if there’s no substance behind a marketing campaign, then there’s no point selling the message.

Frank town hall meetings that get section-front coverage in the Wall Street Journal (check out Marketplace in the print edition) is probably not enough to quell all investor fears. But as Groupon closes out another challenging month and is only two and a half weeks away from its next quarterly earnings report, it’s nice to see a maturing response.

Perhaps then – and in an ironic way - Paul Taaffe was on to something after all. Just maybe, Groupon is beginning to change. And just maybe this change is here to stay and the company will not be something different three months from now.

We’ll have to wait and see.

Groupon’s Dodgy Deal: Can a PR Blitz and Site Overhaul Save the Company From Itself?

When it comes to Groupon, the daily deals digital Mecca, my, my, how the dot com angels have fallen.

Even as a public relations professional who’s seen and navigated her fair share of client missteps, I’m a bit gobsmacked by how a company that less than two years ago snagged the front cover of Forbes magazine with the eye-catching title “Meet The Fastest Growing Company Ever,” has managed to have its PR rug so skillfully pulled out from under them. What’s especially noteworthy is that Groupon’s recent rotten deal has been entirely self-made.

For readers who aren’t up on the latest Groupon happenings, the company has for the past several months, endured a barrage of PR setbacks, helping re-write the company’s until-now spotless public narrative. Here’s the errrr…..deal: In 2011 the Chicago-based company was roundly sacked following a Super Bowl XLV (45) ad that appeared to mock the decades’ long Tibet-China conflict. A few months later, and just ahead of Groupon’s November initial public offering (IPO), the company that had since its founding been branded based on its hyperactive growth, had to slice its reported revenue in half due to questionable accounting practices. Tsk tsk tsk.

Even the company’s opening stock price, fittingly perhaps, came in at a bargain $20 compared to an earlier valuation that said the couponing site was worth $30 billion. Re-tweaked fuzzy math brought that value down to $12 billion.

And while the company’s NASDAQ stock as of this writing is hovering near its opening price, only down .2 percent, and they’ve managed to start the new year with no additional public relations faux pas – that is if you exclude their announcement last week of a 2011 fourth quarter loss of $9.8 million – a sense of Wild West mentality combined with deck-of-cards-like fragility (some would say Ponzi scheme) continues to deal the company a PR blow.

To be sure, Andrew Mason, Groupon’s 31-year-old CEO, isn’t going down without a fight. In the effort to build back its image as a leader in the online deal-a-day world where coupons attract customers to once-hidden brick and mortar establishments and where everyone wins, the company announced this week major revisions to its website. Among the changes includes adding “thumbs up” and “thumbs down” capabilities so that Groupon users can help the site be more selective when doling out its latest offerings. And in another striking move, Groupon announced the hiring of public relations veteran Paul Taaffe to better manage the company’s image. His arrival comes after only a two-month stewardship by Brad Williams, formerly of EBay Inc.

Whether or not Taaffe, 50, paired with Mason,31, is the right combination of relative youth and relative years remains to be seen. But the fact that his arrival comes after his predecessor barely had time to break in his desk chair’s seat cushion, more than even erroneous math or disgruntled business owners crying foul over the supposed Groupon “deal,” is the best indication yet, that Groupon might be sick. Very sick.

As PR professionals we are tasked with helping keep our client’s message on track, being consistent and accurate with the media, and when calamity strikes, honest and up front about our mistakes. But that hard work should always be predicated on a company that gets its facts and its story straight –before it goes public. To do anything less is like having one hand tied behind your back during a boxing match. Or if you’re a lawyer, having your client reveal a critical detail that could alter a defense only moments before opening arguments. That type of handicap serves no one.

There’s no denying Groupon’s had a tough year. And while it may be easy to say “what’s 365 days in the course of a life?” Groupon, much like its leader, is still very young, having just celebrated its third birthday. But if you’re three years old and already a third of your life has been troubled with a mixed marketing message, what does that suggest going forward?

Taaffe’s got a rocky road ahead of him, for sure.

Good press or bad press aside, Groupon and its thousands of employees and millions of dedicated users aren’t going anywhere anytime soon. But taming the daily deal beast just doesn’t seem like a job anyone should embrace and revamping a website is just not enough. Public Relations leaders can only craft a message so far. Too much spin and a message – and a company – can spin out of control.

Let’s see what happens next.

The Pay For Play Conundrum, from Marketing Daily

The following piece was published in MediaPost's Marketing Daily on August 25, 2010

For the past few weeks, I've been following a discussion thread on a LinkedIn group for public relations professionals. The topic? Pay for Placement, which is really an offshoot of the pay-for-performance model.

In much of the business world, pay for performance (PFP) is quite acceptable. Attorneys do it with high-stakes cases. CEOs and executives' salaries are linked to their companies' and departments' overall performance. I've worked with ad agencies that have adopted (or least experimented) with PFP. Even the humble car salesperson operates this way.

Yet for most of the PR industry, PFP is considered a very bad concept.

That's because the perception of PR is not finite, at times ill-defined and intangible in many instances -- in contrast to, say, creating an ad campaign or defending a legal matter. In both these examples, there are tangible deliverables, an assumption of costs and an element of control.

Ad agencies will create ads and place them. They know exactly when and where their work will appear. Attorneys will build a strong case, prepare bulky legal briefs, go to court and win -- or lose. But in the case of PR, what responsibilities and tasks must a PR agency assume that go into scoring ink? Is it just one description, one objective -- to get placed "somewhere"?

Where does one PR campaign end and another begin when the client brief is simply to increase brand awareness and visibility? And what good is "buzz" when there isn't a strategic approach to managing a company's reputation and visibility? Because you have to assume that a company fixated on a PFP arrangement is not thinking about strategy as a priority.

But that really isn't the point. PFP may have been relevant 10 years ago before social media, blogs and free news content existed. It may well have worked when clients had a very limited choice of national broadsheets, and only a handful of print publications as their holy grails.

That model may have worked when we used to send press releases via fax, but this is now. And PFP doesn't work in PR and media now.

I would be a hypocrite if I didn't admit to toying with the idea in the past. I have been approached by companies burned by previous agencies to work on this basis. Their argument is always "you'll get paid if you get our name in print. That's what you do, right?"

Wrong. We do a whole lot more.

So here are a few arguments for why PFP doesn't work in PR and why you should scurry for the hills if a company asks for it.

1. We don't own media and can't guarantee you a placement in any publication because what we do is earned. We don't live in reporters' pockets -- we "earn" the right for your company or brand to appear in a given outlet. That's why you pay for advertising.

2. We can use our talents, storytelling and creativity to change perception and influence media (and readers), but we cannot force an article to appear no matter how relevant, timely or brilliant you think it is -- ever.

3. We work as much behind the scenes in getting media to pay attention to us and your story, i.e., researching trends, competitors, following reporters for months and of course creating an angle -- or several -- that is newsworthy. This doesn't happen overnight.

4. If we operate with a mindset that is focused on one fixed outcome only -- the proverbial ink -- doesn't it completely miss the point of integrating communications to deliver better ROI and results, which is what businesses are demanding of us now? And how does this affect the rest of the PR/marketing ecosystem; events, articles, surveys, whitepapers, social media and overall representation? Because we usually handle of all those, too.

5. And most importantly, how do we differentiate the value of placements? Is an online article that's been retweeted 4,352 times and lives in perpetuity more or less valuable than a mention in Inc. that is put out in the rubbish next month? Is the print version of The New Yorker more or less valuable than online? Or what about articles that get syndicated: does this mean you will pay for every article that gets republished once or 100 times? Is broadcast more or less valuable than print or online? Or what happens if the company is only mentioned and not "featured"? And what about social media -- is this not a placement as well?

There are so many questions in this case, but only one answer: No to pay for placement in PR.

In the words of Paul Del Colle, a fellow PRNews member: "If PR were a science, then PFP would make sense. If there were immutable principles and predictable outcomes, then PFP would be not only logical but the sole way of doing business." But it's not.

PFP is unethical; it lessens the overarching value of PR as a whole, and makes bad business sense for our industry on every level.

To read the article in Marketing Daily, click here