PRovoke Media 17 Jan 2022 // 7:52AM GMT
1. AstraZeneca struggles to build vaccine trust
It was a big year for big pharma, as the industry moved incredibly quickly to develop a range of effective Covid-19 vaccines and start their roll-out across the world. Pharmaceutical firms, operating in a highly regulated, critical sector while also making pots of cash, are used to being scrutinised, but perhaps never before to such a degree – or as collectively – as they have been with the vaccines, with the additional comms complication of a vigorous and vocal anti-vax movement.
As Kate Hartley, co-founder of crisis simulation firm Polpeo and author of ‘Communicate in a Crisis’ says, “there’s a long-held belief in our industry that communications, while important, isn’t life or death. In the case of vaccine trust, that’s not true.”
AstraZeneca was arguably the vaccine manufacturer that struggled most with perception, reputation and communications during 2021. Hartley says she actually felt sorry for the firm: “Pharmaceutical companies are not known for their altruism, but AZ teamed up with academic researchers to create a life-saving vaccine, at speed, for no profit. (Its revenues from the vaccine were reportedly around $1 billion in Q3 2021, compared to Pfizer’s $13 billion.) And yet, all it got was flack.”
Trust in the vaccine plummeted as leaders across Europe and the US halted its roll-out, raising concerns about how AZ had reported data, and the potential side effects of the vaccine. Some of that may have been politically motivated; being dubbed the ‘British vaccine’ didn’t help its popularity in a post-Brexit Europe. Efficacy figures were confusing as data was reported separately for different population groups, leading to uncertainty about whether the vaccine was suitable for younger people or those over 55. One problem led to another – a crisis always brings greater scrutiny – as distribution problems led to legal action by the European Commission against the company.
As Hartley says, a lack of clarity and preparedness from AZ made it worse: “Clear, transparent communications is always important in a crisis, but particularly when it relates to public health data. Comms is always a minefield in a heavily regulated industry, and I wonder if AZ simply wasn’t prepared for the level of public scrutiny it faced. Public awareness of pharma companies (outside of the healthcare industry) has traditionally been low - how many of us knew who made our vaccines before Covid? – but suddenly they were trending on social media.”
Hartley’s view is that, with this backdrop, however AZ responded, it was unable to rebuild trust – the damage was done. “Uncertainty leads to anxiety, which leads to vaccine hesitancy; conspiracy theories flourish in an uncertain environment. Good communications, here, really is life or death,” she says. — MPS
2. Facebook's whistleblower crisis
How is it that a social media site, one most of us joined to keep in touch with friends and relatives, to update them in real-time on the events of our lives, transformed itself into such a destructive force in American life, the major source of disinformation in the world and a contributor to the erosion of democracy itself?
Facebook’s previous crises were featured in our 2018 and 2019 reviews, while the company only avoided specific mention on last year’s list because it was only one of several players in the biggest crisis of 2020—the avalanche of disinformation that followed from the presidential elections.
The company is back this year, however, having earned another round of justified criticism for its handling of a former employee’s explosive testimony before a Senate Commerce subcommittee. Frances Haugen, who until May had worked for the company’s civic integrity division—surely the most oxymoronic operation in all of corporate America—had already revealed herself as the source of thousands of documents provided to the Securities & Exchange Commission and the Wall Street Journal and appeared on 60 Minutes to discuss her time at the company.
“I’m here today because I believe Facebook’s products harm children, stoke division and weaken our democracy” she told the hearings, accusing Facebook of putting its “astronomical profits before people.”
Her revelations alone would have constituted a crisis, but as usual the company’s belligerent response, questioning her credibility while expecting that a few enlightened initiatives will counterbalance all the harm the company does, made the situation worse. “It's strategy is born of arrogance and panic,” crisis expert Richard Levick told us at the time. “The number one rule of crisis communications is to fix the problem and communicate it. They are not doing that. They just keep kicking the can down the road, saying critics are either ignorant or critics are wrong.”
These crises have continued through changes of leadership in the communications function, including the 2018 addition of former UK deputy prime minister Nick Clegg, and will almost certainly continue through the company’s latest cosmetic change, its rebranding as Meta. The reason is clear: the rot at Facebook starts at the top, with Mark Zuckerberg and the culture of contempt he has created. The crises won’t end until the company’s leadership and culture are torn out root and branch. — PH
3. Evergrande's debt woes
Chinese property giant Evergrande accumulated liabilities of more than $300bn, after riding a 30-year China property boom fuelled by cheap credit and apparently insatiable demand. However, new debt limits from Beijing put an end to that era of expansion, leaving Evergrande reliant on a massive state-led restructuring operation that has failed to quell investor and consumer concerns.
Unable to meet interest payments on debts, the Evergrande crisis presents major systemic risks for China's property sector and financial system, with many wondering if the world's most indebted company is too big to fail. Already, China's slowing economic growth has been partly attributed to the property market crisis that counts Evergrande as the dominant actor.
After two years of selling of assets, Evergrande also faces dozens of lawsuits for unfulfilled property sales, while the exact details of the restructuring remain unclear. Engulfed by bad news at every turn, Evergrande's communications approach has struggled to calm nerves. After initially admitting that things could get worse, the company has now shifted towards a strategy that appears to suggest an imminent turnaround.
One week after defaulting on debt payments to foreign investors, for example, Evergrande was touting the completion of a residential complex.
“The Evergrande situation is technically not a crisis by the classic definition, but rather an ongoing monumental issue which rolls along and is yet to be resolved by the company and the Chinese government," says John Russell, China MD at Sandpiper North Head.
"Despite its highly overleveraged debt position being well-known, many analysts assumed Evergrande would be 'too big to fail' as a Lehman-style collapse would have systemic consequences on the Chinese economy and the global financial system," he adds.
"As the situation continues to evolve, ongoing cooperation with the Chinese government, coupled with the activism of the chairman and leadership remain essential for successful management of this 'debt crisis' in addressing the expectations of investors and the public." — AS
4. Robinhood's GameStop frenzy
Robinhood carried a heavy load of baggage into 2021, having the previous year already racked up some serious problems — the threat of being banned in Massachusetts; a $70 million fine from US regulators for misleading customers; and a wrongful death lawsuit filed by the parents of a 20-year-old Robinhood user who believed he lost $730,000.
None of which, though, blew up into a high-profile PR crisis like the investment platform’s response to the GameStop buying frenzy, when it restricted users’ ability to buy GameStop stock — the price of which they drove up at the expense of short sellers on Wall Street.
The move infuriated users, saying they were unfairly cut off from making purchases while hedge fund managers were allowed to continue, and came under fire from lawmakers and regulators. The move also prompted roughly 50 lawsuits, largely tied to users’ claims that Robinhood’s actions cost them money and opportunity.
Industry watchers say that kind of response shows the enormity of Robinhood’s blunders, including the failure to deliver on its promise.
“Robinhood faced such vitriolic criticism from its users because its decision contradicted its core brand identity: an everyman’s trading platform democratizing finance,” said Group Gordon chief strategy officer Andrew Jarrell. “When users took Robinhood up on that value proposition and leveraged the platform to create real chaos in the markets, in the eyes of its users, the platform sided with the evil, institutional financial elites.”
Another factor at play: Robinhood’s positioning as a disrupter in a field with very little, if any, room for freewheeling.
“Robinhood is a high-regulated financial services company trying to play by the move-fast-and-break-things rules of Silicon Valley,” said Eric Hazard, managing director of financial PR firm Vested. “This creates communications challenges when Robinhood's financial due diligence missteps create experience headaches for their customers, exacerbated by a CEO with a poor understanding of the requirements to run a financial company.”
“If Robinhood wants to affect real change in financial services, the leadership would do well to study the rules by which their company is governed and build a customer experience which begins with trust and open communication. From this foundation, Robinhood can build the trust the company needs to create a more open, participatory market for everyone,” he said.
Robinhood’s reputation tanking also points to failures in leadership, which include having a “revolving door” of communications heads and, in Vladimir Tenev, a CEO whose “manner of communication suggests an undisciplined loose cannon or perhaps a tone deafness when it comes to reading the room,” said Signal Leadership Communication principal Bob Pickard.
“The only way for Robinhood — not one way or a way but the only way — to try and turn things around would be for them to simply establish some continuity in the leadership of their communications team so that this company has a stable foundation on which to build a proper professional public relations function longer-term,” Pickard said.
“During a social media era when doing and saying the right thing at the right time through the right channels in the right sequence striking the right chord in the ‘now’ of sentiment is both more important and more difficult than ever, they have done just about everything wrong,” he said. “The good news is that they should be able to exceed expectations because there are none left.” — DM
5. Opioid crisis expands to include CVS, Walgreens and Walmart
The opioid crisis is the gift that keeps on giving: in our 2019 crisis review we focused on the role that Purdue Pharma had played in promoting its drug OxyContin despite overwhelming evidence of the misery it was inflicting on communities across America. Purdue and the Sackler family members who owned it still deserve the lion’s share of the blame for the crisis, and are still suffering aftershocks—in December a judge rejected a settlement agreement that protected the Sacklers from further lawsuits.
In 2020, our review focused on the role of management consulting giant McKinsey, which had given Purdue advice on how to “turbocharge” sales of its opioids, undermine efforts by drug enforcement agents, and “counter the emotional messages from mothers with teenagers that overdosed” on the drug.
This year, attention turned to the nation’s largest pharmacies, as CVS, Walgreens and Walmart were found by a federal jury to have contributed to the opioid epidemic in Ohio. “For decades, pharmacy chains have watched as the pills flowing out of their doors cause harm and failed to take action as required by law,” said lawyers for the two counties involved in the case.
The pharmacies deny the charges and are appealing the verdict, but the public relations damage is ongoing and unlikely to be mitigated if the verdict changes. A CVS statement indicates the PR problem the companies will face. “Pharmacists fill legal prescriptions written by DEA-licensed doctors who prescribe legal, FDA-approved substances to treat actual patients in need,” the company said.
This flies in the face of the industry’s efforts to portray itself as a “gatekeeper” that contributes to community health, as underscored by the “Pharmacists for Healthier Lives” initiative, among others. Pharmacists either play an “important role in helping people live their healthiest lives” or they are mere order-takers, fulfilling the prescriptions written by doctors regardless of the consequences.
CVS, Walgreens and Walmart will have to decide how they want the American people to see them.
6. The European Super League's aborted launch
The breathtakingly misguided attempt to launch a European Super League of the region’s 12 biggest football clubs in April last year is already a legendary own goal in the PR crisis game.
After ignoring all the basic tenets of effective communications and stakeholder engagement, the plan – blatantly motivated by greed rather than being for the good of the sport – collapsed under the weight of impassioned opposition from fans, pundits, club managers, players, governing bodies, broadcasters and even governments within 48 hours of the surprise announcement. Manchester City was the first to pull out, followed by the five other English clubs who were meant to be in the league, but not before their reputations had been tarnished by association. The European Super League, with its mystifyingly absent spokespeople, was handed a red card before the starting whistle was even blown.
Engine MHP deputy CEO Nick Barron – a Spurs fan who spent five years in marketing communications at the Football Association and was head of communications at Wembley Stadium— wrote a piece for PRovoke Media at the time and has this incredulous take on the fiasco: “Imagine you had to launch a revolutionary new product. How might you do it? Hopefully, you’d start by articulating the problem you’re trying to solve and the benefits your innovation will bring. Then you’d do some audience research. Do people want your product? And if you’re trying to disrupt the category, you’d model how competitors, stakeholders and loyal customers of rival brands might react – to anticipate and mitigate these challenges.
“Next you might plant some seeds with your audiences, so that when your game-changer hits the market, people are ready for it. Finally, you’d meticulously plan your launch – honing the brand proposition to perfection, developing an irresistible pitch, carefully selecting your spokespeople, and building influential advocates.
“This is not what the European Super League did. Instead they unleashed an ill-disciplined coalition of rich people to announce that, in order to further enrich themselves, they were going to up-end the world’s best loved sport and turn a game famous for giant-killing upsets into a closed shop for the most powerful. No brand, no plan – and no thought for the rest of the football world, on which their success ultimately relies. And when the rest of the world reacted with horror, the vitriol caught the league off-guard.”
Barron says he has since spoken to some of those involved in the inglorious scheme, who – astonishingly – remain convinced that this was the right plan, derailed by a lack of co-ordination. He says: “Certainly, once a few clubs took fright and peeled away, the backlash was irresistible. But it’s myopic to blame the choreography. The real problem was that, while re-designing the people’s game, they forgot to ask the people what they wanted. This wasn’t a crisis, it was a dud." — MPS