BOfA and Bono Team Up for Charity

 BOfA and Bono Team Up for Charity

THE PR VERDICT: “A” (PR Perfect) for BofA’s brand-building philanthropy.

When was the last time an activist rock star gave a standing ovation to a “too-big-to-fail” bank? That’s just what happened last week when U2 front man Bono extolled the generosity of Bank of America and joined CEO Brian Moynihan at the World Economic Forum in Davos.

Moynihan and U2 frontman Bono announced a $10 million BofA commitment to RED, the AIDS charity co-founded by Bono. In a clever promotional twist, the bank will tie its donation to U2’s newest album release during the upcoming Superbowl. BofA agreed to pay for every download of the album’s song “Invisible” for 24 hours, an investment they will back with expensive Superbowl advertising.

Rarely have Moynihan and his bank basked in such a warm reception. Under the bright Davos sunshine, CNBC and The Financial Times (among other news media) took turns interviewing the Boston-based banker and his rock activist partner. The visual contrast was nearly as noteworthy as Bono complimenting the bank for its “game-changing influence.”

THE PR VERDICT: “A” (PR Perfect) for BofA’s brand-building philanthropy.

THE PR TAKEAWAY: Regain trust by carefully picking your allies. Despite continuing efforts to engage in a public dialogue and foster good will, progress has been incremental over the past five years. In Davos last week, BofA wisely avoided interviews about its business. Instead, it joined a unique global health initiative and happily played back up to a true superstar. Well done, BoFA.

AIG CEO’s Comment Goes (Deep) South

 AIG CEOs Comment Goes (Deep) South

THE PR VERDICT: “F” (Full Fiasco) for AIG’s Robert Benmosche.

Five years ago, when AIG was rescued by the US government, the insurer became the poster child for everything that had gone wrong in the financial services industry – inflated balance sheets, insufficient controls, and corruptive bonuses. The company then embarked on the steep path to restore its financial health and reputation. Led by Robert Benmosche, appointed CEO in 2009, AIG underwent a drastic turnaround, with uncompromising cuts to its balance sheet and work force. As a result, the US government was able to exit its investment with a profit of $22.7 billion and, in August this year, the company announced higher profits as well as its first dividend payment and share buy-back since 2008.

All’s well that ends well? Not quite. Benmosche managed to turn his interview with The Wall Street Journal from a PR opportunity to a disaster by comparing the 2009 outrage over AIG bonuses to racism in the Deep South. The uproar, he said, “was intended to stir public anger, to get everybody out there with the pitchforks and their hangman nooses, and all that – sort of like what we did in the Deep South…and I think it was just as bad and just as wrong.”

AIG’s staff undoubtedly worked hard; without them, the government bailout would have ended in tears for shareholders and tax payers alike. Nevertheless, the public cannot be expected to offer sympathy or gratitude. If Benmosche wanted to make employees feel better, he achieved the opposite. After a long crisis, all they wanted was to get on with their jobs, without battling constant controversy around their employer. Hard luck.

THE PR VERDICT: “F” (Full Fiasco) for AIG’s Robert Benmosche.

THE PR TAKEAWAY: Some fights can never be won. Executive interviews have some absolute “don’ts.” The most important is to never – ever! – compare anything that happened in an industry or in a company to a historic event rife with human suffering. The comparison will always sound deluded and bring out debate that widens the issue not narrows it. Compensation is also better left untouched, especially if it has already been under fire in the past. Executive pay was a PR battle AIG lost years ago. When coming back from a crisis, remember no headline is always preferable over a bad one.

For New Fed Chairman, the Message is the Medium

 For New Fed Chairman, the Message is the Medium

THE PR VERDICT: “B” (Good Show) to Janet Yellen (right; with Larry Summers) for her methodical approach and realistic expectations.

As President Obama prepares to name a new Fed Chairman, he may be well advised to look closely at the communications skills of the candidates. Ben Bernanke dragged the Fed into the modern age of communications and institutionalized commonplace PR strategies to the Fed’s tool kit.

A comparison of the two leading candidates, Larry Summers and Janet Yellen, suggests that both have communications know-how. No doubt Summers is a more practiced communicator, but Yellen has fully embraced today’s communications/transparency paradigm. Under Bernanke, she led a subcommittee on communications and presumably developed the playbook for publicly releasing FOMC minutes, issuing monetary policy “guidance,” as well as establishing a schedule of post-FOMC-meeting press conferences.

But despite Yellen’s studious approach to communications, Bernanke has had trouble staying on message. Bernanke suggested accelerating QE “tapering.” Markets reacted badly, and at his next press conference, Bernanke pushed back. The Fed would “continue to support the recovery,”  but his message was lost in the media glare. One live blogger wrote: “Bernanke seems frustrated that markets and pundits don’t understand the point of policy guidance.”

THE PR VERDICT: “B” (Good Show) to Janet Yellen’s methodical approach and realistic expectations.

THE PR TAKEAWAY: The best communicators focus on long-term objectives. While she has had some bad breaks managing her Chairman’s PR with the financial markets, Yellen believes good communications can support monetary policy and reinforce the Fed’s leadership. As she told journalists in April, “I believe further improvements in the FOMC’s communication are possible, and I expect they will continue.” No PR plan can work flawlessly. The institution you speak for is the message, not how aggressively you handle the media or how articulately a spokesperson expresses a viewpoint.

Facebook Finally Saves Face

 Facebook Finally Saves Face

The PR Verdict: “B” (Good Show) for Facebook and their stock.

Facebook’s return to its IPO price is gratifying to investors, as well as to the firms on Wall Street that  set a price of $38 per share. But the comeback was more than just a successful resolution of a key business problem (mobile revenues). It was a case study in PR perseverance.

On May 18, 2012, after a 30-minute delay, the stock opened on NASDAQ and reached a high of 48. That’s where it stalled, and by the close of the first day of trading, finished flat. One month later, FB had fallen to $28, and reached an all time low of $18 at the end of August.

The level of criticism directed at all parties – underwriters, NASDAQ, and the company management – was overwhelming. The Wall Street Journal labeled the deal “a fiasco,” while others invariably referred to the deal as “botched.” Even the New York Stock Exchange publicly called out its rival, suggesting that NASDAQ may have set a “harmful precedent.” Facebook CFO David Ebersman and Morgan Stanley’s tech bankers took the most heat. Assessing the underwriters’ brand reputation, one Wall Street expert wrote: “…Morgan Stanley will take a hit for it, deserved or not. That’s a big break for Goldman Sachs and JPMorgan Chase.”

And yet, months later, all that has changed. Media criticism eventually lost steam, and the serious investors who held on to the company’s stock were vindicated over time. (Moreover, the JPM and Goldman reputations did not enjoy a “big break.”)

THE PR VERDICT: “B” (Good Show) for Facebook and Morgan Stanley.

THE PR TAKEAWAY: Don’t react; just act. Sure, Facebook management might have made more of an effort to embrace Wall Street. Mark Zuckerberg didn’t need to wear a suit and tie during the roadshow, but the hoodie and declarations that the company was “in no rush” to go public may not have sent the right message. But this was all on brand and contributed to Facebook’s business-as-usual unflappability. Given disclosure restrictions, defending Facebook’s pricing and underwriting process after the fact required consistency and patience. Over time, that strategy – which may have been no strategy – paid off.

Royal Baby Gives Royal Boost to UK

royal baby 150x150 Royal Baby Gives Royal Boost to UK

The PR Verdict: “A” (PR Perfect) for the new prince’s effect on UK economy.

Economy ailing? Country need a financial boost? Just get your beloved monarchs to give birth to a future king. That’s exactly what Prince William and the Duchess of Cambridge did for the United Kingdom when a new prince was born.

Though at press time the baby was still unnamed, the financial figures from the birth of His Royal Highness were already in. The Center for Retail Research estimated that Royal Baby Watchers would spend upward of $420 million in celebration over the birth of the third in line for the throne. There was a boost in visitors to London, not least of which from the media, camped out for weeks to get shots of the royal trip to the hospital and the first photos of the future queen or, as it turned out, king. Commemorative merchandise was for sale, along with donuts iced with baby footprints, and, of course, a lot of alcohol for toasting.

This boost in economy is yet another part of the re-branding, if you will, of the monarchy. In the past, Britain’s royals have struggled with scandal, but recently that has changed. William bucked Buckingham to marry his choice and when Kate was caught topless by paparazzi, the verdict was shame on the magazines that ran the snaps. Now, a baby brings glad tidings during an ongoing worldwide recession. The royals are on a roll.

THE PR VERDICT: “A” (PR Perfect) for William, Kate, and the UK’s warm, PR-savvy welcome to the royal baby.

THE PR TAKEAWAY: Accentuate the positive. In a time of a struggling economy, good news – from any source – is always welcome. The British Royals have always grabbed the headlines, occasionally like some sort of reality show meets romance novel. William and Kate are playing their PR cards well. It’s called making hay while the son – sorry! – shines.

Royal Bank of Scotland’s Hester No Fool

 Royal Bank of Scotlands Hester No Fool

THE PR VERDICT: “D” (PR Problematic) for the UK government. (Pictured: Royal Bank of Scotland’s Stephen Hester)

Government, it seems, is no match for bankers and executives who run the world’s most powerful financial institutions. The world got another reminder of this on Wednesday when Stephen Hester, Chief Executive of Royal Bank of Scotland, abruptly tendered his resignation. The news might have slammed Hester as another wealthy banker too arrogant to work under government supervision. Instead, Hester left his post like a hero, with lavish praise from the folks who fired him and the admiration of shareholders.

News of his departure sent the stock down, triggered headlines about bereft employee morale, and prompted a Treasury minister to address the UK’s House of Commons with a statement full of hyperbole about Hester’s success at getting the job done.

The reason for the departure? Apparently the government wants to “turn the page” on RBS and divest itself of the business it bailed out. Investors in a privatization deal will not view Hester’s leadership favorably, reckoned the bureaucrats. Instead, so their thinking goes, the market wants to see a leader who represents the future, not the past. Fair enough but for the unanswered questions: Who is Hester’s replacement? And if he’s as good as you say, why show your most capable leader the door? Why not let him help you through the “transition?”

THE PR VERDICT: “D” (PR Problematic) for the UK government for badly mishandling an announcement with a communications strategy that begs many questions.

THE PR TAKEAWAY: Before firing, have a replacement lined up, or suffer the consequences. The RBS privatization has a chance to succeed, but the government just raised its cost of capital unnecessarily by showing the current CEO the door, with no apparent plan for replacement. Once the press statements were finalized and the polite, politic resignation letter released, Hester told the truth that he’d wanted to stay after all. While he got to appear as though he’d orchestrated an effective career transition, Chancellor of the Exchequer George Osborne et al were left holding a bag of empty words. Next time, think before you pink slip.

 Royal Bank of Scotlands Hester No FoolPRV Contributor Pen Pendleton is a communications professional with 20 years experience in business and financial public relations. He began his career as a newspaper reporter and now works as a consultant in New York. 

Austere Today, Gone Tomorrow?

 Austere Today, Gone Tomorrow?

THE PR VERDICT: “F” (Full Fiasco) for the proponents of austerity, who continue to lose a losing battle.

What now for the proponents of austerity? Up until last month it seemed they had won the policy and PR debate. With disciples across Europe and the US, and with Angela Merkel as its high priestess, fiscal restraint was positioned as a dose of much needed tough medicine. The mantra was clear; no pain, no gain. Politically unassailable, this was one helluva PR launch with some influential backers. Over the last month, however, things have become a little more complicated: austerity may have lost its PR claim as a cure all.

Last week, economists at the University of Massachusetts reviewed calculations cited in Growth In a Time of Austerity, the bible for those justifying tightened fiscal policy, as flawed. The claim? The research published in January 2010 by Harvard University included “selective exclusion of available data and unconventional weighting of summary statistics.” The case for austerity is now not so clear.

Since then, austerity seems to be losing more and more PR steam. EU nations are sliding deeper into recession, with unemployment in Spain and Greece topping 30 percent. In Britain, austerity is responsible for a limp 0.3 percent growth, while Germany, the champion of austerity, is teetering on the edge of recession. Has austerity fallen out of fashion? The headlines would seem to suggest that less has not added up to more.

THE PR VERDICT: “F” (Full Fiasco) for the proponents of austerity, who continue to lose  a losing battle.

THE PR TAKEAWAY: Product launches can teach us something about ideological launches. If austerity was a consumer product, it would now be sitting on the supermarket shelves unloved and unwanted. Why? Because not one of its proponents have been able to demonstrate tangible benefits. Despite a big and loud launch, its advocates seem to be retreating into the shadows. Where are the business leaders confirming they are hiring in the face of cutbacks? Without some simple proof points and enthusiastic advocates, this is one launch that might have seen its brief vogue run right out of steam and into the dustbins of economic history.

 

JP Morgan: It May Take Two

 JP Morgan: It May Take Two

THE PR VERDICT: “D” (PR Problematic) for JP Morgan. (Pictured: JP Morgan CEO Jamie Dimon.)

Megabank JP Morgan hit the headlines over the weekend with news that it was mobilizing its senior management to defeat a shareholder vote on corporate governance. In advance of a vote at next month’s annual meeting, board members are planning to sit down with some of the bank’s biggest shareholders, encouraging them to block a motion to separate the role of CEO and Chairman.

Momentum for the proposal has gathered steam following the losses from the London Whale trading episode and JPM’s nearly $6 billion in losses. Fairly or unfairly, questions about the CEO have been raised, and whether or not it is possible to manage a firm of JP Morgan’s size. Following some recent ugly congressional hearings, the new catch cry is not only too big to fail abut also too big to manage. This recent suggestion, to split the current Chairman/CEO role into two is an attempt, so say its proponents, to get another set of eyes overseeing day-to-day management.

The Board of JP Morgan isn’t in favor of the change, while press reports have CEO Jamie Dimon being alternatively sanguine about the proposal or threatening to leave, if the motion is approved. To avoid ongoing external scrutiny and to appease fierce critics in Washington and elsewhere, this may be one battle not worth fighting.

THE PR VERDICT: “D” (PR Problematic) for JP Morgan and its decision to oppose suggested governance reforms.

THE PR TAKEAWAY: Give an inch to keep a mile. It’s not really clear what JP Morgan’s objections are to splitting the role of CEO and Chairman. It is, after all, a structure that is already in place in many companies around the world, and splitting the roles is generally perceived as a desirable safeguard. For a firm that has been dragged through acres of tough media coverage about its internal management controls, this might have been one relatively painless and not unreasonable concession to make. Another financial loss or management failure around the corner, and JP Morgan may rue the day it so vociferously opposed such a modest reform.

The PRV Report Card: This Week’s Winners and Losers

 The PRV Report Card: This Weeks Winners and Losers

PR WINNER OF THE WEEK: “A” (PR PERFECT) to the latest online petition. We love the latest petition circulating on the White House’s own website, “We the People” which calls on Congressional lawmakers to prominently display their financial backers and monetary support from various lobbies. Yes, it will make Congressional members look like Nascar participants, but it just might focus their minds when it comes to voting on financial or healthcare reform. Members of Congress would be required to wear the names of their “sponsors” during all official duties, including voting. The size of a logo or name would vary with the amount of a donation. A brilliant idea, giving vested interests no place to hide.

 The PRV Report Card: This Weeks Winners and LosersPR LOSER OF THE WEEK: “F” (FULL FIASCO) to the European Central Bank (ECB) and its ham-fisted attempt to impose an unprecedented tax on the deposits of ordinary Cypriots without vetting the levy with lawmakers first. The tax, part of a proposal to bail out the small Mediterranean country of Cyprus, sparked demonstrations and forced the Cypriot Parliament to reject the bailout’s terms, causing angst in European, and ultimately world, financial markets. Nobody likes a tax, but the terms may have been easier to accept had the ECB secured the backing of key leaders first. Instead, Cyprus now teeters on the brink of economic collapse. The world watches – and waits to be affected by the consequences.

 The PRV Report Card: This Weeks Winners and LosersTHE PRV “THERE’S NO ‘THERE’ THERE” AWARD to Michele Bachmann. The Republican Representative for Minnesota is back, and she’s making less sense than ever. In this video, she says Obamacare will “literally kill” women and children. We understand what she meant, but a bill cannot literally kill anyone, unless it is used to inflict a fatal paper cut. Still, it would not be the health care bill itself, but the paper the bill was printed on. That’s more detail on that than Rep. Bachmann gave in her charge against Obamacare. And in her address at the Conservative Political Action Conference, she stated that the First Family lives ” a lifestyle that is one of excess.” Bill O’Reilly pointed out that President George W. Bush had a bigger White House budget. Let no mere fact stop the poor man’s Sarah Palin from making her point – whatever that might be.

JP Morgan’s Whale of a Hangover

 JP Morgans Whale of a Hangover

THE PR VERDICT: “C” (Distinctly OK) for JP Morgan. (Pictured: JPM chief Jamie Dimon.)

Stiff drinks for the staff at JP Morgan? A martini or two might have helped ease the pain from Friday’s Congressional hearing in Washington, which examined the firm’s now infamous $6 billion loss known as the “London Whale.” The trade generated not only steep losses but a level of scrutiny from regulators and the media that has had JP Morgan’s management on the hoof for months.

Friday’s hearing was brutal for JPM’s top brass. The list of accusations by the Senate’s Permanent Sub Committee on Investigations was simple enough: a risky proprietary trading strategy, concealing losses, manipulating pricing models, and lying to investors and regulators. Anything else? Actually, yes; the fallout continues as Senate aides are now pondering referrals to regulators and the Justice Department. This was a bad day for JP Morgan, and a very good day for the Senate’s PR machine.

Despite a parade of embarrassing and contradictory testimony, the thrust of JP Morgan’s response remains unchanged: “Management always said what they believed to be true at the time, period. In hindsight we discovered some of the information they had was wrong.” Fair enough, but unlikely to break the momentum on a train wreck of an issue that continues to gain momentum.

THE PR VERDICT: “C” (Distinctly OK) for JP Morgan. A straightforward and expected defense, though it’s unlikely to make much of a difference.

THE PR TAKEAWAY: Life is not always fair. Despite its clout, JP Morgan was always going to be outgunned in a public hearing concerning its embarrassing  losses. The bad news for the firm is that there is little that can be said to disrupt the forward movement on this issue, apart from what they’ve already said. Admitting you got it wrong may not be enough in an environment that continues to be out of love with banks. It will take more critical and remedial changes in management and strategy before the heat is turned down. Until then, another round, please…