Marketing in the Next Millennium: A Public Relations Perspective

It is a momentous time in history – just 330 days, 7944 hours and 476,640 minutes from the year 2000 – so it’s an appropriate time to address the role of public relations in the new millennium and the trends in the U.S. that may influence that role. There are several reasons, in fact, why this is such a critical point in history.

First and foremost, a communications revolution, enabled by the Internet, is sweeping the world. That revolution is being led by and has its roots in the United States, and one of its impacts is individual empowerment. Never before in history have single individuals had greater power to affect large institutions.

Simultaneous with this communications revolution, there is an economic revolution, resulting in an avalanche of megamergers. It may be led by U.S. companies, but it’s a worldwide phenomenon, one that gives greater power to the corporate entity than at any other time in recent history. Corporations have become so huge that their assets rival the economies of nations. Along with growing individual power and corporate power, the third trend, shaped by many of the same forces as the other two, is the increasing need to distinguish a corporation by giving it an individual, distinctive, human face; a human icon, if you will. It’s the dawn of the age of the CEO branded corporation.

I predict all three trends will be as important to the practice of public relations in Europe as they are in the U.S. today.

“... I WILL SHARE MY OBSERVATIONS ABOUT THREE TRENDS, WHICH I BELIEVE WILL CHANGE THE FACE OF OUR BUSINESS WORLDWIDE.”

Now I am going to address the implications of these three trends. I’ve attached labels to these trends to help you remember them:

• Avalanching: the tidal wave of megamergers
• Atomizing: the increasing fractionation of the media, the public and the investment community
• Iconizing: the drive to create a human corporate icon, or the CEO-branded company

So, what are my predictions regarding the impact these trends will have on public relations? Of course, I hope you recognize that it is hard to predict the future. And that I’m in the rather distinguished company of famous people who have failed in this area who should have known better.

How about…“Democracy will never survive another world war.” – David Lloyd George,
former prime minister of the U.K.

“I think there is a world market for about five computers.”– Tom Watson, founder of IBM

So I ask your indulgence as I share my observations about these trends, which I believe will change the face of our business worldwide.

First, let’s look at avalanching.

Yes, literally there has been a merger avalanche –nine of the ten largest mergers of all time took place in 1998, the biggest deal year in history. $1.7 trillion changed hands as Chrysler and Daimler, British Petroleum and Amoco, Bell Atlantic and GTE and more than 25,000 other major companies consolidated. Worldwide there were over 200 mergers a week. But the trend has been up for years since the 80s.

U.S. deals account for the large majority of this avalanche. But cross-border deals have
risen in the 90s. And both the Euro and privatization should further stimulate such mergers. Deal volume is rising sharply in Europe as companies consolidate to increase their competitiveness with U.S. and Asian giants.

As I see it, this bodes well for the public relations business because our business thrives on change. Typically, it’s when things are in a state of flux that we are called in — to help bring about a smooth transition, build identity and help persuade target audiences to embrace changing value systems and the new products and services that result from such changes.

So, one immediate result of all these mergers in the U.S. is that the need for corporate branding is on the rise. First, it is on the rise among companies that feel the pressure to merge for competitive reasons — but have yet to do so. They need to attract attention to distinguish themselves as potential merger candidates. Second, the merged companies need to define, simplify and promote their new identities — personified with a new name, a new logo, a new buying experience, a new image or unique magazine articles about their new blend, corporate culture, personalities, products and growth. For example, Citicorp and Travelers Group has become Citigroup. But what is Citigroup? What are the economies of scale? How does the consumer benefit from this new combination? How should the merged company be perceived? What are the products and services I can get now that I could not get before? Public relations will be called upon more frequently to build the corporate brand and tell the story that needs telling with credibility and clarity.

More community relations needs should also result from these megamergers. Will Citigroup, for example, be as sensitive to the local community as the two independent companies were before or will problems at the top overtake management’s attention, making them forget about support for the local neighborhoods: the schools, the arts, the development of research activities and the training of potential workers?

Thus, counter to conventional wisdom, it is not only the global public relations entities that will benefit, I predict that the megamerger trend will bode well for the local independent public relations firm, as long as they have international alliances. Those PR firms that have strong roots in the communities and are sensitive to nuances of local culture will be better able than any of the global PR goliaths to create a powerful local presence for the megacorporations whose global reputations are based on local success.

Megamergers are also creating opportunities for internal communications needs. Overlapping departments; expanding products and services; job downsizing; internal culture clashes; new employee policies and organizational structures, and new leadership are among the many factors that will create unprecedented communications challenges.

Thus, I predict that lucrative practices in internal communications, change management and organizational development will become as commonplace in public relations firms in the future as external communications is today. Human resources people, psychologists, and organizational development professionals will need to join the PR team.

Here, unfortunately, the public relations industry is lagging behind the Big 5 accounting and management consulting firms. Do management consultants and accountants know more than we do about internal communications? No. But they have definitely been more aggressive than we have in acquiring and merchandising this valuable expertise.

I believe the mergers will also create a growing role for investor relations. A professor at New York University’s Graduate School of Business tracked the stocks of 100 big companies that made major acquisitions between 1994 and 1997. On average, a year after the deal the acquirer’s stock fell below the Standard & Poor’s 500 by nearly 10%. Shareholders are obviously skeptical about these newly-merged companies and the value they will produce. The shareholders need to be persuaded. That is where investor relations comes in.

In summary, both the external and internal reputation of the newly-merged global and/or domestic company is a management issue of enormous proportions. Many relevant communications functions will be called into play to get the job done. The public relations organization of the future must either offer all the services required by these large convenience minded companies, or create alliances to provide them. If successful, I predict that public relations will evolve to become the central reputation management discipline responsible for integrating all such communications with its publics. With all that said, remember that mergers have a poor record of success. Like marriages in the U.S., about 50% do not succeed. And there is plenty of work for public relations firms in the breakup as well!

While the corporate world is consolidating, other parts of the world are splintering apart. Thus, the atomizing of the media, the public and the investment community is the second trend that is changing the way we are doing business. Atomizing is the process of breaking things up into small particles. The irony in the real world is that some of these small particles can be as powerful as large ones. Said another way, in this new environment, one individual can be as powerful as a corporation.

Years ago, President Richard Nixon met with the then Prime Minister of Israel, Golda Meir. She told Nixon, “You think your job is difficult, well mine is more difficult.” Nixon said, “I preside over 200 million people.” Golda Meir said, “Well, I preside over two million Prime Ministers!”

And to a large extent this is the challenge we are facing. Everyone is a power. This is a time when one individual in a remote location via the Internet can bring a company such as Nike to its knees. Last year, with next to no money, one young man rallied thousands of people over the Internet and brought some of them together at Nike’s New York City store to protest the company’s price gauging of the public. Nike was producing shoes in Indonesia for wages of $1.84 per day and selling them in the U.S. for $150-200 a pair. Nike had a borderless crisis on its hands.

According to a recent crisis preparedness survey undertaken by my firm, 70 percent of U.S. CEOs rated their knowledge about what is being said about their companies on the Internet “very poor” to “just adequate.” Only a third actively monitored the Internet. And 20 percent said they hadn’t even thought of doing it.

I predict that a wave of Internet-based corporate crises will force major corporations to increase Internet monitoring as a critical part of their reputation management activities.

Today, with the advent of the Internet, we all live in glass houses.

Thus, I predict that “the glass house audit” will become standard start-up work for nearly all our PR clients. We must determine where the client is vulnerable on and off the Net. Because, if it’s off the Net, it will get on the Net. We must identify the cancer and treat it before it grows. We must be more sensitive than ever before because any individual with an anti-corporate agenda can create chaos, not just locally but internationally. Another extension of individual power is that news today is becoming a “self-service” phenomenon. You actively acquire news by seeking out the sources — the channels of distribution — that are most interesting and convenient for you. It may be over the Internet, a CD-ROM, a highly-specialized magazine, e-mail or another source.

In contrast, there is the “shared” media: The New York Times, The Wall Street Journal, Time and Newsweek, to name just a few. While they still capture the largest audience, it is smaller than it used to be. For example, in 1997, for the first time ever, ABC, NBC and CBS — America’s pioneer broadcast networks — commanded less than half of the entire U.S. viewing market.

So, the balance of power has shifted from top-tier “shared” media to “special interest” media that appeal to smaller slices of the population. With the new Direct TV, there has been a channel explosion — 500 channels to choose from, channels of every persuasion for every interest, from history to golf to cooking. Some are genderor age- or even color specific. A sports channel that is dominated by a male audience over 40. A music channel that is dominated by the 18 to 30 set. And even a black network for black people, and so on. Magazines are equally as segment focused. Consumers can choose from among more
than 18,000 magazines in the U.S. today, including Cigars, Sci-Fi Encounter, Home Business, Hogs Today, Casino Player and Wired.

So, how is a public relations professional to reach an atomized audience of individuals out there — each with their own preferred media? I predict that public relations organizations will develop media departments much like ad agencies have
because the complex and intricate science of reaching target audiences demands it. Designing media targets for the modern client is a science, and a media scientist must be at the helm. Otherwise the media reach and pitch will fall short.

I also predict that “pinpoint” relationship marketing and market research will become a key weapon in the PR professional’s arsenal.

What does “pinpoint” imply? The level of detail about the target will need to be so specific that each detail could fit on the head of a pin. Knowing the target’s wide range of interests including books they read, clubs they belong to, religion, marital and employment status could help improve the reach and the relationship. This is personified in the e-commerce consumer who is posing a great challenge. This consumer, working alone, has more freedom and control than any other consumer in history. They can change a set price market to one based on bids. They can cut through hype in no time.

Seventeen million Americans bought products and services over the Net in 1998, up from zero a few years ago. We need to know how to capture that individual’s attention. For example, one new Internet service is paying consumers 50 cents for every ad they read, and the advertiser foots the bill.

Today, Americans are among the most enthusiastic users of the Web. More than 72 million U.S. adults have access to the Internet, but the cyberexplosion is going global. By the year 2000, 327 million people around the world will have Internet access. Already, 15.9 percent of Belgians are on line … and those numbers are expected to continue to grow!

The irony in all this is that if you master pinpoint research, your worldwide reach will be greater through the Internet than any medium known to man. And it will not matter whether the architect of your campaign is a single individual, a regional firm or a global communications goliath. What will matter is how effectively you pinpoint the target to be reached.

Another prediction: I predict that investor relations will experience its greatest growth spurt in its history. And this is why.

Investing has truly become an individual sport. The number of individual investors has risen 19% over the past three years to 51 million in the U.S. alone. Online trading lets individual investors get in and out of stocks faster than they ever could before. And they have access to extraordinary information online and all at a very low price. There is a big audience for investor relations professionals to reach today. Their effectiveness can bring enormous value to their clients.

I predict that the rise in the number of individual investors will force investor relations professionals to become consumer marketing experts.

Iconization, a word I have coined, is the third and final trend I’d like to discuss with you
today. Now, the corporation wants an icon because the public is demanding it, but the icon is human. Last year, Time magazine concluded that only president Bill Clinton was more powerful than Microsoft CEO Bill Gates and that seven of the ten most powerful Americans were CEOs.

One key reason for the rise of the high-profile CEO is the growing complexity of life at the turn of the century. Psychologists tell us that people make sense of the world by attaching names and faces to impersonal forces. And as corporations get bigger, we try to turn these tremendous institutions into personalities that we can relate to.

One public relations firm recently did a study which showed that 40% of a company’s reputation is based on the perception of the CEO, and 86% of security analysts say they would buy stock based on the CEO’s reputation.

Furthermore, a study of 336 major companies clearly shows that the most effective communications programs, those that have the greatest actual return on investment, are those where the CEO is central to the plan and plays a leadership role in representing the company.

Bill Gates, for example, is said to spend between 10 and 15 percent of his time on media relations. By relying on their company’s public relations professionals, more ordinary CEOs can give themselves the patina of celebrity.

The next step is to apply that celebrity to the corporation, creating the living symbol or icon through which the public recognizes the company, giving birth to the CEO-branded company. So, Bill Gates is Microsoft. Jack Welch is General Electric. Andy Grove is Intel. And so forth.

CEOs know that a strong reputation is critical to success. So, what is the impact for public relations and the top communicator? First, 4 out of 5 CEOs selected public relations over advertising as the critical technique for reputation building. So, CEOs today believe public relations is very important.

Thus, if the CEO is to rely on the top PR executive, that person must understand the language of business first, so he or she can speak the language of the CEO. The top communicator must also achieve an understanding of the company’s constituencies better than anyone else on the team so communications proposals hold weight. That will enable PR to influence corporate policy.

I predict that qualified PR practitioners at the most senior levels will be a scarce commodity in the next millennium.

According to a leading recruiter for the public relations industry in the United States, one out of every three clients engaged in a search for a senior PR manager is requesting an MBA or other advanced degrees in business. There are few such today. Monsanto, a multi-billion dollar company, is a good example. The CEO is transitioning his company from commodity chemicals to biotechnology and has specified a PR person who not only knows the new business, but who’s also been through a similar transition and has the expertise to handle every aspect of the massive cultural changes that accompany it.

The new millennium will be complex and often contradictory. There will be more consolidation on the corporate side and more fragmentation among the media and in society. The CEO will increasingly represent the souls of their corporations. We will be challenged to reach audiences that act not as a group but as individuals via the Internet. We will have to demonstrate depth of business expertise and breadth of vision. It will be a world both challenging and exciting, and I predict it will represent a period of enormous growth for our industry.

I am reminded of a story about one of the greatest hockey players in history — a man named Wayne Gretzky. Year after year, he led the national hockey league in goals scored. A reporter once asked him, “What’s your secret, Wayne?” His answer? “I skate to where the puck is going to be … not where it has been.”

That’s our challenge in the 21st century. We’ve got to skate to where the puck is going to be. If so, we can be masters of our destiny and the future of public relations.