Spin masters: How PR is taking over the world
By Jeremy Hazlehurst Tuesday, 01 January 2013
There are now four PRs for every journalist working in the global media industry. These 'public relations executives' enjoy more influence than ever before. The question is, how will these powerful spin masters shape the future of corporate communications?
One afternoon last November, at the height of the Lord McAlpine drama, Tim Bell was sitting alone in his small office on the fifth floor of a modern building in Mayfair, central London. As the 71 year-old puffed on cigarettes, he took calls from journalists and lawyers on behalf of his old friend, wondering who to sue and who to leave alone. It's not a glamorous office. There's a computer, a TV tuned to BBC news, a bookshelf and an ashtray with a pack of B&H beside it. Not the office you'd expect to be housing an individual who was once the most powerful PR man in the country, the man who masterminded Margaret Thatcher's press campaigns during her three successful general elections. Or, more recently, who has advised the governments of Saudi Arabia, Iraq and Belarus.
Although the McAlpine story played out on Twitter, there was something deliciously old-fashioned about the scene: the well-connected PR man righting wrongs, making mischief and settling scores. Bell is old school par excellence. The world of social networking was decades away when he was in his pomp, but his skills are evidently still much in demand. 'It's a very transparent world,' he says. 'I liken transparency to opening Pandora's box. There is no guarantee that what comes out is good and fun to read. Much of it is horrible and vile and not true.'
Tapping his cigarette on the ashtray, he adds: 'Twitter is a sewer. The internet is a sewer. If you want to live in a transparent world then someone has to give the information about you. If you don't want someone else to, you have to do it yourself. That's what PR people do.'
It comes as no surprise to him that PR is booming. The industry became a $10bn business in 2011, and now employs 66,000 people worldwide, according to the Holmes Report, which ranks PR firms. The industry grew by 8% in 2011, and the same the year before. A US study has estimated that in 1980 there were 1.2 PRs for every journalist. By 2010 the ratio was 4:1.
PR people are starting to make it to the top of businesses. John Fallon, ex-corporate affairs chief at publisher Pearson, will become its CEO next year. At pharmaceuticals giant GlaxoSmithKline, Duncan Learmouth, ex-head of global communications, took charge of a new emerging markets division in 2010. The director of the Institute of Directors is Simon Walker, formerly of City spinners Brunswick. And our prime minister was once head of comms for Carlton Television.
In the 1970s and 1980s, it was advertising and marketing types who had the ear of the boss. In the 1990s, it was the strategists' turn, while in the noughties it was HR people leading the war for talent who were in favour. Now the comms chief is the individual that the CEO and chairman require to be right behind them. They are the eyes and ears of the organisation in uneasy and austere times, the consigliere, the trusted adviser.
Many people find this deeply disturbing. PR is seen as a dark, arcane art and PR professionals purveyors of fluff at best, deception at worst. Flacks, goes the cliche, spend their days chatting up hacks and burying bad news. Bell says that's not the case. 'Although people constantly accuse us of being the most evil, corrupt sons of the devil, we aren't,' he says. 'We are actually the most truthful people in the world, because we know that the truth works.'
Be that as it may, there's another reason to feel relaxed about the rise of PR: the profession has changed beyond recognition in the past decade. Although media relations activities have burgeoned, involving the paper press, online publications, television and bloggers, it is only a small part of the job now. Press offices have been swallowed up by communications departments that deal with investor relations, analysts, shareholders, regulators and government. All are the guardians of that most precious, and difficult to measure, of assets - corporate reputation. Global corporations will also talk constantly with the EU and other international organisations. And at consumer-facing companies, PRs might well be 'content generators', engaging customers on Pinterest, Tumblr, Facebook and Twitter. One PR firm is said to run 130 Facebook pages. Take a glance at the jobs pages in PR publications and words like 'social' and 'digital' regularly crop up.
There are more PR people not because there is more deception going on, but because the world has changed and communications has become more immediate, more important and varied.
Modern PR has had to evolve to cope with social media. Once, people would complain about a company to their mates in the pub, but now they may be able to tweet the CEO directly about it in language as blunt as they like, and it's there for the world to see. Businesses are more aware than ever before of what people think and say about them, and if they don't respond - or respond wrongly - it can be disastrous. The world is now incredibly transparent, alarmingly so for businesses.
'We have entered the world of public relationships,' says Jane Wilson, CEO of the Chartered Institute of Public Relations. 'Probably for the first time in its existence, PR is doing what it says on the tin: it is not third-party intermediary relations, it's actually public relations.'
These days, she says, people are more cynical - 'the fog of advertising clears quickly' - and they have more information with which to form their opinions, views that they can broadcast instantly. PR disasters can equally occur in a moment, so reputations have to be constantly formed and values reaffirmed.
'Companies that wait till a crisis hits before they think about their reputation will never weather a reputational crisis well,' Wilson adds. 'Your image is what you put out, your reputation is what comes back at you. It's what you do in peacetime that counts.'
Yet there is nothing like a gruesome crisis to increase the power of the comms team: organisations tend to become utterly reliant on them when the bullets start flying. A good crisis should never be wasted.
Globalisation has also changed things. In 2010, the NGO ActionAid began a campaign claiming that SAB Miller had not been paying its taxes in full in Ghana. 'It was able to mount a campaign in multiple jurisdictions, which wouldn't have been possible before,' says Sue Clark, who rose from a corporate affairs background to become MD of SAB Miller Europe in June. This sort of thing means that the remit of PR or communications becomes broader. 'You need more legal people involved; these issues require the analysis of large amounts of complex data, so you need more people with a business background who are financially literate. The profile of people involved has changed radically.'
Another trend putting PR at the centre of businesses is the simple fact that public opinion matters more. 'The world has changed in the past 20 years and there is less deference in society now,' says Simon Lewis, former PR for the Queen, Centrica, Vodafone and Gordon Brown and now chief executive of the Association for Financial Markets in Europe. 'Leaders have to listen to what is being said about them, and that is what is driving more PR people on to senior positions.' These days, even brands that were once implicitly trusted can't depend on people giving them the benefit of the doubt. Just look at the BBC.
In our connected world, stories that can threaten entire businesses emerge in the blink of an eye. And if you're a multinational, these eruptions can occur right across the globe. People on Twitter can be self-righteous and quick to form opinions, so you have to react with equal speed. Reputations are vulnerable as never before and it's no wonder that PR's domain has extended, giving it considerable sway within businesses.
The 38,000sq ft London HQ of Edelman, the world's biggest PR firm, with clients that include Johnson & Johnson, Levi's and MTV, is a trendy place. There are Eames chairs in the meeting rooms, the Smiths' Everyday Is Like Sunday plays in the reception area, there is a Starbucks on site and youngsters in skinny jeans and check shirts wander about chatting and laughing. Robert Philips is stepping down as the firm's EMEA CEO this month. He's evangelical about PR. Ideas tumble out of him, his conversation is peppered with talk of radiation points, hourglass pyramids and inside-out organisations. He refers to Hobbes and Hegel. And he believes that PR can make the world a better place.
In the modern world, he says, the most important commodity for a business is trust, and gaining trust is about giving people what they want. Who knows what people want? PRs do. And that's why, with the collapse of the old elites, PRs are at the centre of the new world order. 'If you want to be trusted, don't go on about making money, do some social good,' says Philips. 'There is pressure on their licence to operate, so business will have to transform. And if communications firms advise businesses to transform, society will theoretically improve.'
Power is shifting to businesses. Some, he points out, are already bigger than nation-states. 'And if these start to address societal issues, there can be real change,' he adds.
Utopian? Perhaps, but it's not crazy. Sustainability, once dismissed as the quintessential PR issue - in the sense of 'peripheral' or 'unserious' - is being injected into the bloodstream of businesses. Look at M&S's Plan A, which is integrating sustainability targets into the business. Board members are even awarded 20% of their bonuses on their ability to deliver Plan A targets, and suppliers are being forced to change their ways to win M&S business.
Or take the Unilever Sustainable Living Plan, which aims to double sales while halving the company's environmental footprint by 2020. Ikea plans to use 100% renewable energy by 2020. All these missions come from customers; people want this stuff, and it's PRs who tell businesses so. PRs, in a sense, rule the roost.
It would be wrong to generalise from the examples of a few mega-corporations, but it's true that people expect more from their businesses these days, and if they don't like what they see, they'll take their money elsewhere. In other words, PR disasters are disasters, full stop. Take the recent revelations about how much tax Starbucks, Amazon and Google pay in the UK (see box below). Starbucks has already caved in to the backlash, vowing to pay £10m in corporation tax annually for the next two years 'regardless of profitability' (so it's less a tax, more of a donation). Will others follow?
'The mores of acceptable behaviour change over time, says Andrew Grant, founder of City PR firm Tulchan, 'and companies have to keep in touch with the public mood and make sure they are in tune with it. As a customer, you don't want to buy from a company that you don't like. You don't want to work for a company whose standards you don't approve of, and if you're a shareholder, you don't want to invest in a company that doesn't have the support of its customers and employees.'
Who communicates these mores? PRs do. More and better PR, goes the argument, insulates you against these calamities. So should businesses put the PR people in charge? Is the new PR a turbocharged version of the old one, a force that is able to equip businesses for the modern world?
Evidently, something has changed, but in some ways PR remains the same. (And it pays to be sceptical, of course, about the grand claims of PR people, delivered in their trademark emollient tones.) There's a perception in some quarters that PR is just about transmitting a message. It's not. It's first and foremost about interpreting reality, 'reading the Zeitgeist', says Lewis, who has his work cut out arguing the case for banks struggling with their new status as public enemy number one. That requires some distance from the status quo. 'A good PR has to be a bit of an outsider,' he adds, 'and be prepared to tell people hard truths.'
That would be familiar to Tim Bell. Back in the late 1970s when he was advising Thatcher, he realised that voters were put off by what they perceived as her harsh, high-pitched voice. He persuaded her to lower it, and she got reelected. Good PRs listen to people, and politicians realised long ago that it would be beneficial to take heed of what they say.
Now that businesspeople are, in some ways at least, as powerful as politicians, they are doing the same. Clever ones will make sure their communications people are in positions where they can be heard. Whether more listening makes for better businesses remains to be seen. But it's certainly a funny old world, where the people who speak truth to power are corporate PRs.
The severe damage done to companies by reputational crises was confirmed recently by a survey conducted by Freshfields Bruckhaus Deringer. According to the law firm, which surveyed 16 global stock markets: '"Behavioural" crises triggered by companies acting illegally or questionably or by rogue employee activity spook investors the most and can cause shares to crash by 50% or more on the day they become public. In contrast, "operational" crises impairing a company's ability to function, such as significant product recalls or environmental disasters, have a modest impact in the first 48 hours of a crisis breaking but typically cause the greatest long-term effect on shares.'
To oil spills and recalling faulty cars, one could now add the risk of being caught as a corporate tax avoider. The furore whipped up by revelations about low levels of tax paid in the UK by US firms such as Starbucks, Amazon and Google has had marked effects. This is not unexpected during an age of extreme austerity, where we are all supposed by be 'in this together'. The reactions of these three firms were, however, very different. While Amazon and Google were stonily unmoved - even when it emerged that despite Google's 'Don't be evil' motto, the company had hidden some $9.8bn of revenues for 2011 in a Bermuda shell company in order to avoid paying tax.
By contrast, Starbucks - which is advised by Edelman - appeared to bow to the winds of outrage when it came to the strange decision to voluntarily make payments of £20m to HMRC in an effort to assuage its customers' disquiet. Starbucks said its action was 'recognising that we need to do more than (is) required today'. A charitable donation to an impoverished nation seems to be the way to go, but it sets a tricky precedent.
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