PR: a corporate guide

By Fiona Rotherham

Saturday 1st March 2003

One of Jeremy Moon's first moves when establishing his pure merino sportswear company Icebreaker was to write a public relations strategy into his business plan. But the fledgling company didn't have the cash just lying around to pay a big PR bill. The solution: Moon picked the brains of Andy Allison, managing director of Wellington's Presence PR agency.

"He broke down 10 years of experience on the dos and don'ts of PR strategy and set me up with principles on how to work with the media," Moon says. In exchange for his expertise, Allison received some shares in the company.

"Good PR is a good story well told," Allison says. "[Moon] had a good story to tell and didn't need help telling it."

It is unusual for a small company to think of PR up front but the strategy appears to have paid off. Icebreaker has received some good, targeted media exposure and turnover has grown to more than $10 million in just seven years.

How you handle your own company PR depends on your size, what you can afford and how important you rate it. Coming out of the marketing budget, PR for many companies tends to be an afterthought once they have done their advertising and direct mail.

"We need PR for PR," says Tim Marshall, president of the Public Relations Institute (Prinz), which represents around 700 of New Zealand's 2000-odd practitioners. Even the way the PR industry has thought about itself is "sucking on the hind tit", meaning it comes last in line in the corporate budget, Marshall says.

Icebreaker is a classic example of the PR industry's key problem - how to promote the value of what it does. The "public" in public relations is something of a misnomer because much of the work is backroom stuff. Few people know about Allison's role in Icebreaker's PR success, for example, because Moon implemented it himself.

"What makes people nervous about PR is we're the hidden part. When you watch the television news or get an annual report, we're the lot you don't see having input. Advertising is more obvious," says Porter Novelli's Cedric Allan.

PR's importance is changing, according to a new book The Fall of Advertising and the Rise of PR. American marketing strategists Al and Laura Ries argue public relations has become the most effective way to build a brand. Well known brands like The Body Shop, PlayStation and Harry Potter spend little on brand name advertising. Instead, according to the authors, they have become known in their respective industries through media-generated publicity.

So where do you start? First, determine who you want to reach, what you want to say and when you want to deliver your message. Consider whether you can do it yourself or need external help, or a combination of both. Ask other similar companies what they do.

Some high-profile New Zealand corporates competently handle their own PR without external massaging. Take The Warehouse. The Big Red Shed's public image is boosted by massive advertising and chairman Stephen Tindall's high profile. Chief executive Greg Muir is responsible for external communications and regular internal staff newsletters, while individual managers make direct contact with their business units. For instance, David Wilson, general manager of The Warehouse New Zealand, fronts a monthly video for his staff. "We review [in-house PR] all the time and as we get larger there may be a time we require external PR help in certain areas, but it has been a real cost-saver," Wilson says.

When you do need PR help to reach your target audience, it doesn't mean spending big bucks. Fashion designer Karen Walker has had huge success targeting overseas fashion editors with only a modest PR budget. You can tell you're doing something right when fashion editors wear your clothes and celebrities like Madonna buy your pants to perform in. Walker's husband and marketing manager Mikhail Gherman says they lacked the offshore contacts to do it alone, but overseas PR companies approached them after Barneys New York picked up Walker's 1998 collection. After struggling to find agents with the right fit for the product, Walker now uses one company for distribution and PR in Japan, another for PR in Europe and the US, and a PR agent in Australia. PR companies are vital for putting you in front of the right people, Gherman says, but the product still has to speak for itself. "It is a popular misconception that PR generates stories. It is the ideas [in Walker's case, the designs] that generate stories."

PR is an intrinsic part of doing business for larger listed corporates. Carter Holt Harvey has an eight-strong communications team covering everything from external PR to government lobbying. In addition, it has another six PR people in subsidiary businesses and uses external agencies in Australia and preferred supplier Sweeney Vestey for specialist help and during work gluts in New Zealand. Communications manager Delwyn Stuart says a big advantage of using agencies is getting an external perspective on your corporate message.

Companies cut costs by directly outsourcing or doing a lot of the day-to-day work themselves that PR consultancies used to do, such as annual reports and staff magazines. And writing press releases and wining and dining journalists now plays only a small part of the job.

But Allison reckons too many in the industry provide strategic advice they're not fully equipped to give. "It is better to have some senior people spending fewer hours on your business than be smothered with mid-range people who don't have the experience."

To help your PR planning, here are nine Unlimited tips.

1. What the hell is PR anyway?

Basically, it is communicating with all the people you see as important to your business. It can be anything as mundane as writing to suppliers about a new product, to lobbying government, to staging major corporate events. The weighty tome The New Australian and New Zealand Public Relations Manual gives a thorough rundown on the transtasman PR industry, if you can stay awake.

2. Can you do it yourself?

To answer that, ask yourself these questions:

What is it you want to do? You're likely to need expertise for a special project such as a business merger but may be able to handle lifting your everyday profile.

What size are you? The more audiences you need to address, the more complicated it becomes.

Are you in a high- or low-risk business? You may need help if you're a high-profile tourism operator, for example, dealing with safety issues and the public.

What expertise do you have in-house and what executive time is available? Will training overcome any deficiencies?

Doing your own PR can save money, but that should be a consequence rather than the reason for doing it, says Fletcher Building chief executive Ralph Waters. When appointed, Waters took over the PR and investor relations jobs previously handled by dedicated corporate staff. "Who better to explain our position than the chief executive or chief financial officer? I do not subscribe to the 'I'm too busy to talk to the media' or 'that it is a task beneath the CEO' theory."

Here are some tips for do-it-yourself PR from former PR consultant-turned-journalist, Lesley Springall:

Decide what you want your business to be famous for, and make your vision and values realistic. There is no point telling people you're going to take over the world if you're a baker from Gore, but you can say you want to be the best baker in Gore.

See if your vision matches how you are perceived. If not, ask why. You may need to fundamentally change the way you do business. Make the changes first and then announce them.

Who are your audiences? Don't forget staff (who are important company ambassadors), potential staff (so you attract skilled people), suppliers, customers, investors, potential investors and, lastly, the media - trade, general, national and local.

How well do these audiences know you? Research can identify what you need to do. Ask about your good and bad points. Fix any problems and then tell people who were concerned what you have done.

Identify the best way to reach your audiences. Direct communication ranges from newsletters, staff parties, exhibitions, brochures, business breakfasts/lunches with your peers to investor roadshows. Indirect methods include sponsorship of a local sports club or event, press releases and advertising.

Nothing stands alone. The same consistent message needs to be communicated to all audiences but repackaged correctly for each.

Once you have brainstormed what you want to say, form a plan, prioritise it and, after six months or a year, analyse how it worked.

3. Choosing an in-house PR person

You have to be reasonably large to need a full-time, in-house PR practitioner, although it is estimated their numbers have grown two to three times faster than the overall growth in PR numbers in the last decade.

Fonterra bucked this trend, replacing its in-house PR team last September with external agency Baldwin Boyle Group, following criticism of the company's "extravagant culture" and shareholder relations.

Chief executive Craig Norgate says the dairy giant is not saving money from the move but is getting better value. "Given the issues we're facing, we needed the best PR advice and it is hard to find that in an employee. There are also benefits from having that advice at arm's length."

Joseph Peart, the man responsible for churning out Auckland University of Technology PR graduates, has these tips on what to look for in an in-house PR staffer:

Is the person a generalist or a specialist?

What is their track record, qualifications and experience?

Do they have an appreciation of business?

What knowledge do they have of your industry?

Can they write quickly and clearly?

Will they present well in a public setting?

Will they relate well to the attitudes of a range of stakeholders?

Do you like them?

4. Going the agency route

Word-of-mouth referral is how most PR practitioners get hired. As a starting point you need to consider what services you want, what experience is necessary and whether you are comfortable with a large or small agency.

Competitive pitches are also a common way to get a PR consultant, and are mandatory for government departments. But Consultus's Jane Sweeney warns it can be a "poor process" if not handled right.

The New Zealand Stock Exchange's search for a PR consultant last year is a great example of how not to do it. The exchange raised industry hackles first by sending out a detailed brief with a tight deadline to a large number of practitioners nationwide, inviting them to pitch for its business. (Rumour has it names were picked at random from the Yellow Pages). The NZSE didn't reply to suggestions it narrow the pitch to five agencies and meet with those. Incumbent agency Sorensen Group was not forewarned of the competitive pitch. Then, after several agencies spent significant amounts of money on the pitch, the NZSE changed its marketing strategy and decided to appoint an in-house PR person.

Sweeney has some advice on pitching.

Ask your industry peers what PR agencies they recommend.

Make a shortlist of three consultancies. Meet them individually as a good test of how much homework they've bothered to do on your company and industry.

Check the chemistry. "Maybe the client can't stand women with ginger hair because they remind him of his ex-wife," Sweeney says. "I've had clients decline our business because we looked too corporate or because too many men pitched."

Narrow the shortlist to two agencies, then work with them (hey, all the advice is free at this stage) on refining what you want to achieve with your PR spend. See how the agencies critique it and what they propose. (At least one agency now copyrights its proposals to prevent them being used if a rival wins the business.)

Focus on the individual or team who will be working on your account. Sometimes the agency's principal will front a pitch but you'll find a junior account executive carrying out the actual work.

Have a final meeting before making your selection.

5. PR and the chief executive

PR practitioner Sue Woods says too often PR is an add-on to the marketing department instead of a separate and distinct discipline. "One of the most important decisions a company has to make is what priority to give PR and where to place it within the organisational design."

Pharmaceutical company Merck Sharpe & Dohme decided in the mid-1990s PR was a core competency it wanted within the company rather than relying solely on external agencies. In-house PR man and former journalist Phil Johnstone reports directly to the chief executive. "It is really important to be part of the company's overall planning so you can help explain the implications of any decision on the company brand and message," he says. He reckons the value of an in-house PR person accrues over time as you gain confidence to propose things an agency may be wary of suggesting.

The counter-argument from the agencies is that in-house PR people can get captured by the corporate culture and not listened to. PR man Allan Botica says you're no longer useful if you don't play the devil's advocate role. "It is like the archetypal fairytale The Emperor's New Clothes. If you can't tell the chief executive he's naked, you're no bloody use."

6. When disaster strikes

DB Breweries managing director Brian Blake has changed his PR strategy after ending up in the hot seat with West Coast drinkers when the company decided to shut its Greymouth brewery and shift Monteith's beer production to Auckland. On advice from a hastily called in senior PR practitioner, DB reversed the decision within 48 hours but a lot of damage to the company's image had already been done. (Though one bright spot - the exposure boosted Monteith sales 30-35% the following month.)

For many years the company had an in-house PR person (including Michelle Boag, later National Party president), then after downsizing switched to an external agency. Blake now says he's handling communications in-house again, using just a senior external consultant for strategic advice.

The rule of thumb for a business crisis is to be honest and upfront with what has gone wrong. Don't point the finger at someone else, use legal threats or keep silent. A company needs to have a public face - preferably the chief executive - conveying empathy for what has gone wrong, saying what is being done to fix it and how the company is going to make sure it never happens again. A surprising number of chief executives let their PR person deliver bad news while they front only goods news announcements. PR practitioners say it is better for them to play a background role and for the chief executive to front the media any time. Obviously this advice gets ignored a lot, given the amount of times you see PR people quoted.

Risk audits are a vital PR tool to show where a company is vulnerable and to establish a team that can make decisions when things go wrong. It pays to do media training before a crisis hits so you don't look like a possum caught in car headlights.

7. Handling the media

PR used to involve simply writing a press release, sending it out to a list of media and hoping they'd print it. Actually, some companies still do that and naive executives can't understand why these don't appear word-for-word on the Herald's front page. Staff at a PR firm should know what stories reporters will be interested in and what will make them yawn - trust their instincts. However, no media is going to write how you would like them to. The best you can hope for is to present your side of the story.

Take the 2001 visit to New Zealand by Madam Deng Rong, daughter of the late Chinese leader Deng Xiaoping. Tower Corporation paid for her tour of its New Zealand and Australian operations after using her political influence to try to secure a licence to sell insurance in China. Tower invited several Wellington journalists to a private lunch to meet Madam Deng but former chief executive James Boonzaier was unhappy the resulting media coverage included criticism of Deng's past behaviour rather than patsy comments on the visit. In particular he was surprised The Evening Post quoted the Green Party questioning whether Tower should be using the Deng family to cosy up to China's rulers when it was Deng who had mandated the 1989 Tiananmen Square crackdown. Surely even a junior PR person would have warned Boonzaier to see all that coming? Or was he not listening?

PR practitioners say only 15-25% of their work now involves handling the media, but it is crucial. "The growth in PR is attributable to the unreliable conduct of some news media where they can't be relied on to publish all the facts and get it right," claims Jock O'Connor, sole PR practitioner and one-time journo. Most PR consultants advise against making no comment, although some tell clients not to talk to journalists they perceive to be biased and therefore won't give the company a fair hearing.

Threatening legal action is no guarantee the story will be dropped, either. The Independent Business Weekly recently ran a story on Vending Technologies, despite believing the company's PR spokesman, Allan Botica, had warned lawyers could become involved if the story was published. Botica denies threatening the journalist concerned (but confesses making threats of that nature when his call was answered by the newspaper's receptionist on deadline).

Handle the media wrong and you could suffer.

Look at last year's claims payment crisis at health insurer Southern Cross. Now retired chairman Hylton le Grice immediately got offside with the media and members by dismissing lengthy payment delays caused by a new computer system as "just a small hiccup" and nothing more than a nuisance.

"For various reasons [the problem] wasn't handled as well as it could have been. People were caught on the hop and a lot of the damage was done when [the story] first broke," new chairman Bryan Kensington says.

And the long-term impact? You could blame the handling of the claims debacle for a huge drop in customer numbers, with around 30,000 of Southern Cross's 800,000 members leaving the insurer from June to October last year. Kensington's spin is premium increases are largely the cause of the defections but agrees the company's image suffered.

8. Watching the bills

You pay when an external PR person comes to your place and when you go to theirs. One PR consultant recalls a colleague some years ago wanting to charge for the time taken receiving a Christmas present personally delivered by a client.

It is best to have an agreed budget up front to avoid nasty surprises. You can opt for an hourly rate if your needs are minimal. A retainer is better if you're using the agency a lot. Remember the retainer is based on the estimated time to administer your PR strategy - you'll pay more for any bells and whistles. You can negotiate a set price for a special project but you will pay more if you go outside the specified brief.

Fees range widely, with the average charge at around $200 an hour. One-man bands charge less because of their lower overheads but don't have the range of skills available in bigger agencies. You can pay as little as $30 an hour for someone to write a press release or as much as $450 an hour for strategic advice from a top agency director. An account executive is charged out at around $70 an hour and an account manager at around $160 an hour for doing the grunt work. An account director is charged out at between $200 and $250 an hour for strategy work and agency directors charge between $300 and $450 an hour for their input. During a crisis your PR person will be available around the clock, but be aware they charge emergency rates of an extra $100 or so an hour.

Client cost savings aren't usually top of mind in agencies so there are some things to watch out for:

Get a breakdown to see how many account managers and account directors are working on your campaign. Are two or three of each really necessary?

Brainstorms are a popular way for agencies to create good ideas but clients get charged for each person sitting in the room.

Don't let your PR practitioner pick up the lunch tab. You will be charged an extra 10-40% for the bill going through the agency accounts. In fact, any expenses, including outsourced work such as producing annual reports, attract the same mark-up.

Consider what you use your PR firm for. One local software firm asked its agency to book plane journeys and hotels for its staff and was then amazed at its whopping PR bill. It saved around a third of the cost by simply hiring a secretary.

9. Bang for your bucks

It is not so much what you pay for PR as whether you get value for money. The industry's big challenge remains measuring what value they give clients. The internationally affiliated agencies have formal measurements but many Kiwi PR practitioners don't bother, saying clients see little point spending $10,000 on a PR campaign and then $5000 assessing how it went. Counting how many column inches about the company appeared in the newspaper is a crude measure, ignoring the impact of what was written. Contrary to popular belief, not all publicity is good publicity.

Clients usually rely on gut feel and informal feedback. Reduced staff turnover and lower absenteeism are useful measures of internal communication.

Don't expect instant results. You're not going to change the world or customers' views with one big-bang marquee on the tennis court. As Baldwin & Boyle's Louise Nicholson says "PR is about consistency, discipline and repeating the message until people believe."

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