Aarti Shah 22 Apr 2020 // 6:02PM GMT
The ultimate fallout from Covid-19 remains unclear, but we can expect certain issues the industry grappled with before the crisis to persist: measurement, com-tech investments; and the changing role of agencies. And while each of these areas presents new threats and challenges, they will also continue to open new opportunities and pathways for revenue.
These were among the topics we discussed during a closed-door conversation that took place at PayPal’s offices in New York. This feature, taken from that conversation, explores how CEOs evaluate their communications functions, how technology will continue to transform the industry and how agencies and clients can become more aligned around expectations and deliverables.
This is the second in two-part series. Part one — which covers purpose, employee activism and integration — can be found here. (The full photo gallery from the event can be found here.)
Participants in this discussion:
Brian Besanceney; Walmart CCO
Catherine Hernandez-Blades; Aflac, SVP/Chief ESG & Communications Officer
Franz Paasche; PayPal, SVP Corporate Affairs & Communications
Paul Dyer; Lippe Taylor, CEO/President
Torod Neptune; Lenovo, Worldwide Group Vice President & Chief Communications Officer
Sarah Meron; Gap, VP Corporate Communications
Trish Wexler; JPMorgan Chase, Chief Communications Officer, Chase Consumer & Community Banking
Moderator: Aarti Shah; PRovoke Media, Executive Editor
‘When the reputation score is up — everything is up’
Last year Paul Holmes explored the PR industry's FOFO problem: "Fear Of Finding Out". The question being, are marketing and PR professionals resistant to hard metrics because they're afraid of finding out whether they really make a difference? Participants in this discussion say no because they are already measured against their organization's business objectives.
“I get the CEO’s business objectives and then I have to turn around and tell him how my function is going to impact those,” says Aflac’s Catherine Hernandez-Blades. “And it’s not about activities, it is literally about getting results: year-over-year percentages increasing X, this is how we will contribute to that.”
Every month, the metrics are reviewed, and quarterly, Blades receives a score from the Reputation Institute. “I overlay our editorial media sentiment, our social media sentiment, our employee engagement scores, our stock price and our sales figures,” she says. “And while it’s not multivariate regression analysis so I can’t isolate the metric enough to prove causation — but you definitely see correlation. When the reputation score is up — everything is up.”
Lenovo’s Torod Neptune takes a similar approach with a global reputation scorecard that looks at 12 to 14 internal and external stakeholder groups and 20 issues. “We track this in terms of progress: positive, negative, neutral — around those issues,” Neptune says. In addition, his function analyzes the impact of its global media coverage. “We’re beginning to look at sales influencing mechanisms as well, so very outcomes focused.”
‘It’s aspirational on our part’
The industry, of course, has graduated far beyond the days when its impact was measured by “the thud factor” — or the impact the clip book made when it landed on the client’s desk. But some iteration of the thud factor — like impressions, awareness and clip counts — has stubbornly endured over the years. But those metrics shortchange the industry's impact on revenue generation.
“The desire is to point as close as possible [to sales], even though we’re never going to get to a direct line of sight,” Neptune says. “Or maybe we will — but I think the aspiration that I have for the division is we’ve got to lean as close as we can in that direction.”
“What it really comes down to is: are we building out the company’s license to operate and the company’s license to grow?” PayPal’s Paasche says. “We have four or five critical stakeholder groups — they are everything to us. So, we have a good understanding of how customers, regulators, policymakers, investors and employees view us and we can measure within those groups.”
“I get a daily reputation track number with almost presidential-level, campaign-level polling and I can get some insight into what’s going on,” says Walmart’s Brian Bescanceney. “But it’s also like the temperature gauge on your car. It usually hangs out here and you don’t pay a lot of attention to it. When it starts going over here, you better figure out what’s going on.”
There's also the intangible work that communicators do — ensuring stories are accurate and even stopping stories from ever being published.
JPMorgan Chase's Wexler says, “Our executives really don’t care how many clips we get. It’s aspirational on our part that we want that, but they care how relevant is the coverage that we’re getting and that immeasurable ‘what wasn’t printed?’ How do you quantify that? I don’t mean hiding things, I mean correcting and making sure that things are accurate out there.”
Communications leaders are also building their own technology stacks, independent from marketing. The technology can be used for optimizing content marketing, automating campaigns, audience targeting — and also for employee communication and collaboration. For instance, Wexler was tasked with reducing the number of emails sent internally by 10% and Walmart has adopted Facebook's Workplace for its associates.
“That’s giving us a two-way, digital dialogue with our associates as opposed to the traditional cascade down, grassroots-up type of approach,” says Besanceney says. “We have more data than we’ve had before. I would love to see the day when clip and story count are relegated to the ash heap of history, but we haven’t quite weaned ourselves off that particular one yet.”
He adds, “We probably have more data and we have more analytic sensors out there but the processing and activating against it is probably a click or two behind where the marketplace will take us over the next couple of years.”
"It’s so helpful when an agency can see the rest of the game’
The industry has, and continues to, defy those who insist public relations is interchangeable with press relations. For more than a decade now, the PR industry has evolved towards integration — a natural direction for a discipline that isn’t rooted in a channel or vehicle. Agencies have adapted to this agnostic mindset and we’ve seen an explosion of new capabilities and services. And more than ever, their in-house counterparts have become equally channel-neutral.
“We have rebuilt our team up around a 360 comms model,” Besanceney says. “When I got to Walmart we had media relations sitting under one leader, we had internal comms sitting under another leader — we have moved very aggressively to a much more blended model that’s very much inclusive of the digital capabilities.”
The idea that agencies should act like extensions of the in-house team isn’t new, but integration has made this more complicated. As in-house teams communicate and collaborate with more frequency and speed cross-functionally, agency partners risk being left behind simply because they often don’t have the same access to organizational functions beyond communications or marketing.
“Our team is built in such a way that we probably in-source a lot of capabilities that others might go out for the agency world for. But we use agencies to fill in gaps in our capabilities,” Besanceney says. “It’s so helpful when an agency can see the rest of the game. If you only see the world through the lens of earned media and national media, you’re missing an entire constituency that’s really, really important to us.”
“We have an outstanding internal team and they have a really high standard of how they work and what they expect,” PayPal’s Paasche adds. “You need an agency that can provide you with that extension of yourself.”
Neptune adds, “For our global agencies, the integrated piece is mandatory. We need the people in the room to have the ability to pull from what traditionally might have been six or seven agencies. We’re in 180 countries and so the expectation is that they will have a global mindset.”
“They have to understand the business and the culture because great ideas can come in all day long but if it’s not a fit for the business model and the culture, there’s no value,” Blades says.
Gap’s Sarah Meron says, “It’s important to hire agencies who find the work and your business interesting. I know that sounds like table stakes but there’s so many, especially with the big shops, that act like they’ve seen it all before. I want to come to the table with somebody who’s curious and who wants to know more and who actually wants to be figuring out the hard problems together.”
'The procurement thing is real’
The question, of course, becomes how much of a premium are communications leaders willing to pay for agencies that are able to see around corners, enable the in-house team to truly scale themselves, and have inventive solutions to well-worn problems. Is there a misalignment between the value that agencies are bringing and how much they are charging?
“If our attempt is to get something launched or an event or something that we have some concrete deliverables around — I think it would be too dramatic of a shift to say ‘OK we’re only going to pay you on outcomes.’ But perhaps there’s a bonus structure for outcomes where your time is still paid for, but if you excel and exceed, it’s more than just getting the contract renewed? There’s actually more skin in the game. Because we all get a bonus on our performance – or not,” Blades says.
Lippe Taylor’s Paul Dyer, however, says often clients don’t understand the impact procurement has on the business reality for the agency. “And the business impact for the agency is in many cases extraordinary because agencies all operate by the same numbers,” Dyer says. “And there’s a breaking point where you are either making money or losing money on an account.” Asked whether moving away from hourly billing might be a way forward, Dyer pointed again to procurement as the barrier. “We’ve been pitching that for years. But when you get into procurement they break it back down into time.”
Neptune adds, procurement should only be an issue at the start of an agency relationship. “Getting into the door, I know the procurement thing is real. Even internally, there’s some tension between our teams and procurement to try and shake loose their rigid view of how to recruit agencies. That’s not easy. But I definitely see that as an entry point issue. Once they’re in, if it’s a great idea, I’ll pay you what needs to be paid for.”
“I came into Gap Inc as a retainer hater,” Meron says. “As a portfolio company, we don't have years and years of AOR. We’ll do a six month deal. That gives us flexibility, at the corporate level, of where do we need to flex within our portfolio? Who has the news?”
‘Bots didn’t cause the crisis but they certainly amplified it’
A discussion about the next 20 years, of course, would be incomplete without touching on the way technology will continue to transform our world, consumer expectations and how brands communicate and engage.
“5G is going to be a game changer,” Blades says. “I don’t know enough about it to say any more than — I’ve seen demonstrations and it’s going to turn customer expectations in a totally different direction. For me to have a smart refrigerator, be able to walk up to it on a Sunday night and pick out my recipes. Then, show up Monday and not only is the food for all the recipes sitting on my doorstep but I’ve got the chef on the screen talking me through the demonstration as I’m cooking. Imagine the possibilities in terms of customer experience and engagement and creating an environment that can really lead to exchange.”
“In the midterm, AI will perhaps solve some of these clips’ coverage, volume issues for us,” Neptune says. “I think the risk for us more broadly, is that you’ll see our discipline become relegated to either bot-ised or non-existent if we can’t own a very weighty portion of advising our CEOs and our C-suites on how to move the business forward and manage risk and drive sales and impact.”
“We’ve already identified a risk in the form of all of these aggregators that pull from so much information that may not be accurate,” Blades says. “If you think about it from an old school perspective — it’s all about controlling your narrative. But you have aggregators out there and all it takes is one bad piece of information and your stock goes down ten points. Because I don’t have a person, a belly button that I can pick up the phone and call and say this is wrong. I’ve got to figure out how to check on an algorithm.”
Wexler adds “But right now, if you look at some of the biggest crises that big brands have faced and the role that bots played in that — it didn’t necessarily cause the crisis but it certainly amplified it. And it escalated so quickly. That makes the role of the communicator so much different than it was even a year ago.”
“I would like an AI to write board announcements,” Meron says. “Most of our earnings coverage at this point are by is written by AI. Why can’t someone do that for board announcements?”
‘Who we are versus who we aspire to be’
“I think the more that we can get the next generation of business leaders to understand the criticality of reputation and the correlation between brand and reputation as a business lever, I think that this industry has a lot of runway left but it’s going to look and feel different,” Besanceney adds.
“The C-Suite is focused on how to serve a whole range of stakeholders in a very different way than I think it was a decade ago and even five years ago. It’s about stakeholder engagement,” Paasche adds.
“When you talk about ethics, that’s going to evolve because the law has not caught up with the technology and nor has it caught up with what the market is asking us to do,” Blades says.
“It’s managing that continuum I was talking about: who we are versus who we aspire to be,” Neptune says. “That’s the tension that we’re seeing now – are we an ethical company, as opposed to knowing how to do the things in ethics that the compliance office is accountable for. That increasingly is becoming an inflection point that big business is struggling with.”
Part 1 of this series — which covers purpose, employee activism and integration — can be found here. (The full photo gallery from the event can be found here.)