Traditional media continued to shrink in 2013, putting pressure on PR practitioners to reach audiences via social media, PR wire services, e-mail networks and their own websites.
The Boston Globe and Washington Post were sold for fractions of their former values and Forbes was on the market for reported $400 million. Newspaper ad revenues dipped to $23B from double that in 2006. Online revenues are only $3B, a small fraction of the loss.
Corporate/institutional PR staffs, under pressure from legal, financial and marketing, continued to shrink. The Centre for Corporate PA, Melbourne, said “PR is dead as a strategic management function in large organizations and corporations.” CCPA, with dues of $3,500 and similar to the Arthur W. Page Society in the U.S., said “socio-political outcomes” (i.e., desired legislation) can be obtained other ways.
Fraser Seitel published the 12th edition of The Practice of Public Relations in which he said “arguably the two most important cases in the history of the practice of PR” were Johnson & Johnson’s handling of the 1982 Tylenol murders and the 1986 murder of Diane Elsroth via similar poisoned capsules.
He’s right. J&J’s massive PR effort, which snowed the press, police, FBI and courts, established that a company could escape a press conference no matter how big the news story was. Since then, press conferences, once the hallmark of PR, have about disappeared. PR lost the ability to produce its employers for public grillings.
Two new voices arrived on the PR scene. The Oct. 14 New York Observer had a front pager and four full pages inside written by Michael Kaminer, PR careerist turned journalist. It was almost completely about agency PR, naming 50 to a “power list.” The O’Dwyer Co. had a prominent mention since 17 on the list were from the O’Dwyer rankings. U.K. PR person Alex Singleton also jumped to journalism, starting a blog and publishing The PR Masterclass which stressed the quest of clients and employers for “third-party endorsement.”
The O’Dwyer Co. documented growth in the agency side of the business. Double-digit gains were posted by 15 of the 25 largest PR firms for 2012. Indications are this growth continued in 2013. Almost all press contact has moved to the agency side. Coping with social media has added to the services of PR firms.
Income disparity (top 10% of U.S. earners took home 50% of income in 2012) was a major news topic. It afflicts the ad/PR world as evidenced by the $53.3 million that Omnicom CEO John Wren took home in 2012. Not far behind was COO Randy Weisenburger who pocketed $31.5M (salary, bonuses, stock sales, etc.). Both started out as accountants. Ex-BBDO and Y&R PR practitioner Philippe Krakowski became one of Interpublic’s top five-paid execs at $3,290,492 in 2012. Interpublic’s CEO Michael Roth reported total pay of $9,663,294 in 2012.
High pay or not, ad/PR conglomerate stocks were flying high along with the rest of the market. OMC, after ten years in the doldrums at under $50, soared to $70+; WPP, as low as $25.86 in February 2009, was $110. IPG, as high as $57 in 1999 and as low as $3.96 in 2008, climbed to $17.
Wren’s 851,962 shares rose $17 million in value from the January price of $51.63. Weisenburger’s 687,703 shares rose $13.75M. Many of the shares were obtained via options, restricted stock, bonuses, etc.
Borrowed money helped the conglomerates to acquire companies. WPP’s debt was $6.6B; OMC, $4.65; IPG, $1.67B, and Publicis, $1.39B. The planned merger of OMC and Publicis, creating a firm with $23B in revenues, is on hold until Q2 of 2014. Approvals of European Union and Russia are needed. U.S. has no objections.
Income disparity earned the attention of Pope Francis (Time’s Person of the Year”) who decried the “idolatry of money.” He criticized the size of the church’s own hierarchy, saying power should be more dispersed and that women should have a greater role in church affairs.
Swiss voters, irked about high CEO pay including the $78 million severance package for Daniel Vasella of Novartis, voted in March to ban bonuses and force companies to seek stockholder approval of pay packages. However, a proposal to cap exec pay at 12X that of the lowest-paid worker of a firm garnered only 35% of the vote on Nov. 24. Pay of top 200 CEOs in the U.S. averages $15 million and is sometimes 500X lowest-paid employees.
WPP stockholders, angered at CEO Martin Sorrell’s take, forced a 20% cut in his 2012 pay of $28.2M. Sorrell in some years is the U.K.’s highest executive.
IABC, which canned 16 of 32 staffers at the end of 2012 and likened reporters who criticized this to dogs “humping in the park,” switched its print publication to online and suspended its accreditation program. COO Christopher Sorek, whose pay package was close to $200K, left after less than a year. IABC released its 990 tax return in late November, missing the legal deadline of Nov. 15. Next year’s report will probably be as late. IABCers get one financial report a year.
IRS Form 990 was withheld from the PRSA Assembly for the third year in a row, concealing a $61,000 bonus to COO Bill Murray that boosted his pay package to $423,647. Murray got the bonus (and a promotion to CEO) even though 2012 revenues of $11,083,420 were $343,367 less than they were in 2006, the year before he arrived. A $30 dues hike in 2012 helped boost revenues. Membership, which was 20,266 in 2000, is currently “21,000,” according to the Society website.
A PRSA “Holiday” gift package worth $1,625 is being offered to new recruits. This includes five webinars worth $250 each plus waived initiation fee of $65 and free membership in a section. An added inducement was free access to the Society’s Strategist magazine. The Society’s many price-off deals made it sound like a department store. The 2014 annual conference in D.C. is a record high $1,495 for members but only $1,095 “if you sign up before March 1, 2014.” The ABA, AMA, AICPA, etc., do not promote memberships with price breaks.
Society Recruits are not warned that, unless they pay $285 and become accredited, they are ineligible for national office or serving on the Ethics Board, making them “second class citizens.”
The Society’s devotion to APR continues although consultant Laura Freebairn-Smith, who was paid $50K+, concluded it was a bogus designation because the APR-granting body, the Universal Accreditation Board, is not independent (its board is dominated by Society members). Her firm interviewed 750 but was not allowed to ask if APR should be abandoned.
Numerous others, including the O’Dwyer Co., have moved into the PR ethics enforcement space after the Society pulled enforcement from its Code in 1999.
A total of $484,401 had been spent on “Code Enforcement” and “Ethics Code Revision” from 1988-2001. Ethics spending was $5,290 in 2012; $1,406 in 2011, and $2,649 in 2010. Staff has just about zero interest in ethics although it’s the theme of many a leader speech including chair Mickey Nall’s talk to the student career forum Feb. 22 in Atlanta. The Society’s staff is comfortable with lawyers, who have been paid $582,608 in the past nine years.
There were few public cases. One was the “hanging” of Summer Harrison in 1988 after she said four Society leaders had no business huddling with CIA chief Bill Casey on how to raise money for the Contras. Others were 1986 president Tony Franco who was caught in an insider trading scheme and Ted Pincus, whose PR firm allegedly distributed false financial information for a client.
But members found a lot to complain about as evidenced by ethics spending of $49,680 in 1988, $53,462 in 1991 and $40,618 in 1990. Legal bills on ethics matters were $29,613 in 1989 and $32,968 in 1990. Most cases were kept quiet and abuses halted after legal slaps on the wrist. Although a bear on following the exact letter of the law when it suits its purposes ($582K was spent on lawyers in the past nine years), the Society was in violation of the law for decades at a time. Its Code had two illegal competition-blocking articles from 1953-1977 when the FTC forced a change. It illegally sold hundreds of thousands of copies of authors’ articles without their permission from 1978-94.
One reason the Society cannot have ethics enforcement is that the board itself would be in the dock because of its press-boycotting ways; its failure to warn member prospects about the APR rule; its late and misleading financial reporting including withholding COO Bill Murray’s $61,000 bonus from the Assembly, etc. The old “judicial panels” would have to process charges by a member that the board is violating it own Code.
The PR ethics slack has been taken up by the National Press Club and New York State Senator Liz Krueger who urged the Society to abandon its press-boycotting ways; PR Watch, which condemned the Society’s interference with press freedoms and which is exposing similar press-interference policies and other abuses by the American Legislative Exchange Council, a group of mostly GOP state legislators and corporate executives; full-length books like The Tylenol Mafia by Scott Bartz and Deadly Spin by Wendell Potter, and a half dozen PR blogs including newsroomink.com, which said the press boycott has cost the Society “its credibility as an organization that can speak for its members.”
Shocker: FedEx drivers, decked out in uniforms, are not employees but independent contractors. FedEx, dodging a bill that would force it to hire the drivers, sold its routes and let the subcontractors hire the drivers.
Journalism students covered four PR career forums for the O’Dwyer Co., providing a glimpse of what working PR people are saying about the industry. Don’t expect to make a lot of money initially, is one thing they were told. “Love it,” was a remark by one PR executive to the PRSA/Georgia forum in Atlanta Feb. 22.
The Atlanta forum, hosted by the Society’s richest chapter ($317,000 in savings), was an all-day affair that included lunch and cost students $80 each. Journalism students who covered for O’Dwyer’s noted that Society chair Mickey Nall and other speakers stressed the importance of ethics in PR. Non-student reporters were banned from all sessions except the luncheon address by Nall.
Reporters were banned altogether from an all-day career forum at New York University April 2 sponsored by the Society’s New York chapter. VP-PR Arthur Yann of the national Society was present to make sure no reporters gained entrance.
The Council of PR Firms hosted evening career forums at Boston University Oct. 3 and San Jose Nov. 5, both events drawing more than 200 students. There were no charges for either event. Both were open to press coverage.
The four sessions were praised by the students and there will be another one in early 2014 in Atlanta hosted by CPRF. J majors who covered for us said there should be shorter speeches and more time for questions. There should be a “literature table” with PR trade publications and directories and books on PR (besides textbooks). A discussion of the pressures on PR people is needed.
Students at the Council of PR Firms event at Boston University in October.
PR is the fifth most stressful job, according to the 2013 ratings of careercast.com. It gave PR a No. 2 rating in 2011. PR people are beset by bosses and clients on the one side and reporters on the other. “They live in the public eye” and “have think and act quickly.” College students are attracted to PR “making keeping a good job that much more difficult,” Comcast adds.
How PR can work with legal was considered by two panels at the 2013 PRSA conference in Philadelphia Oct. 28 (although O’Dwyer reporters were barred from covering them). The Society itself is a good example of legalities trumping PR. For the third year in a row it withheld its 990 income tax return from the Assembly, saying it is not “legally” required to publish it until Nov. 15.
PR grads will not only have to contend with lawyers but with marketing and financial, both of which have a lot to say about what is communicated or not. Future Society panels should tell PR people how to work with those power centers. Marketing, which is mostly an information-gathering rather than an information providing function, keeps a close watch on anything said. Financial has an even tighter grip because anything “material” has to be immediately told to “disclosure media” (via PR Newswire, Businesswire, Dow-Jones, etc.).
Stress most probably played a role in the sudden death on June 13 of Arthur Yann, 48, VP-PR of the Society. Yann reported to COO Bill Murray and not to the board, as indicated by the specs for Yann’s replacement. For most of his five years at the Society, Yann had conducted a campaign to discredit O’Dwyer media and interfere with its coverage of Society events whenever possible. His policies are being continued by Stephanie Cegielski, 2006 University of Denver law school grad who was promoted to VP-PR.
Nearly 50 stories on Yann’s activities are available in this website’s archives and are a case history of what goes on in some PR circles. They include details of Yann’s death, which was withheld for four days from the membership; details of his career (his 17 years with Nichol & Co. were unmentioned by the Society), and statements Yann made about Jack O’Dwyer and the O’Dwyer Co. on the Society’s own website and a half dozen others. Yann’s eulogy by a fraternity brother is also covered.
Yann had a meteoric career at the Society, joining in 2008 and rising to the fourth highest paid on a staff of about 55 in one year. His pay of $137K in 2009 was more than the $135K paid to VP-special events Karla Voth, a staff member since 1990, and more than professional development head Judy Voss, a staffer since 2000, who was paid $115K. Jennifer Ian, VP-membership who was paid $121K, left the staff the next year. Yann was no doubt the “apple” of Murray’s eye. His five-year remuneration, including his 2012 package of $191K, totaled about $900K. Murray said he had “one of the toughest jobs in PR.”
“Wells Gets Drilled” said headline in the Oct. 3 New York Post. New York sued the nation’s biggest mortgage lender for allegedly not complying with a 2012 mortgage-servicing settlement. “Their communication with customers is terrible,” said Atty. Gen. Eric Schneiderman. Wells Fargo PR head Oscar Suris was co-chair of the 2013 PRSA national conference. Rosanna Fiske, 2011 Society chair, joined Wells as VP-Florida.
Two new award programs were added by PR’s tireless puff industry—the international COMM-PRIX awards of the Global Alliance for PR and Communications Management, whose founding committee was headed by Bill Murray, and a “Hall of Fame” for PR figures by PR Week/U.S. The initial banquet, held at the W Hotel, inducted Harold Burson, Al Golin, Jon Iwata, Charlotte Otto and Marcia Silverman. A posthumous award went to Marilyn Laurie, former EVP of AT&T. Three new honorees will be picked each year.
Awards are fine, especially for the individuals and companies honored, but do they change the public’s view of any of these companies or industries? Phoenix Marketing Int’l this year surveyed 800+ consumers in the U.S., U.K., Canada and France and found that less than one in eight associate “respect” and “trustworthy” with pharmaceutical companies. The landmark study on PR’s public image was published in 1999 by PRSA. The five-year study found “PR specialist” to rank 43 on a list of 45 believable sources of information. We don’t think it has changed. At least ten books on PR have the word “spin” in the title.
Journalism’s main job is exposing abuses of one sort or another and not being the “puff press.” Erin Arvedlund of Barron’s, for instance, exposed the Bernie Madoff scam in 2001 by interviewing more than 100 Wall St. experts. Almost no one, including the SEC would listen to her. Investors lost $65 billion. Abuses in banking (almost anyone with a pulse got a mortgage which was then dumped on Freddie Mac and Fannie Mae) brought the U.S. to its knees in 2007-08.
The feeding frenzy in PR for awards, prizes and honors of one type or another has gone too far. Those with $$ are throwing too much of it at media that stroke them. PR firms owned by Omnicom, WPP, Interpublic and some independents started putting millions into PR Week/U.S. in 1998 to the exclusion of other PR media.
The glossy monthly Reputation Management of Paul Holmes perished almost immediately. PR Quarterly and PR Reporter, which did not give awards, both died in their 50th years in 2008. PRQ, which carried articles by PR professors as well as working PR people, had one advertiser—NAPS. Its salesperson said doors closed in his face when he went to the big companies and agencies. PR Reporter covered news and carried papers by PR professors and grad students. It was sold to Ragan, publisher of the weekly Ragan Report, in 2006 but did not last long.
Ragan also stopped publishing its weekly NL, its monthly PR Intelligence Report and the quarterly PR Journal. The Council of PR Firms, founded not coincidentally in 1998, favored PRW. It placed $150,000 in ads in PRW in one five-year period (monthly one-third page ads) and gave the O’Dwyer magazine one $650 ad. Conglomerate-owned PR firms during a ten-month period put $307,000 in ads in PRW and gave the O’Dwyer mag one $1,400 ad.