Wednesday, February 23, 2011

Interview with Paul Holmes on PR versus Marketing

RIA Novosti interview with Paul Holmes, Founder and CEO at The Holmes Report and the SABRE awards. The original English version was taken just before the plenary debate on 17 February at the Communication on Top Forum in Davos. Russian version can be seen here.

Q: So Paul, since you’ve been invited here to attend the plenary debate, the subject of which is basically PR versus marketing, what is the essence of the competition between PR and marketing as you see it?

Paul: It’s an interesting question. It probably helps to start with definitions, and one of the problems you run into right away is that there are almost as many definitions for public relations as there are public relations people. My definition of public relations is fairly simple, and it derives from the meaning of the words public and relations. So I believe public relations is the discipline of managing the relationship between an organization and all of the publics: so employees, share holders, consumers, government, media.

Marketing, it seems to me, is the management of the relationship between an organization and its consumers. Therefore, in a logical world, if public relations is doing its job properly and marketing is doing its job properly, marketing would be a part of public relations. There are two obvious reasons why that doesn’t happen. The reason is that in most major corporations, particularly Western multinationals, marketing has become the focus of all communication. So companies will spend… if companies have a budget of $100 million for all communications, they will spend $95 million of that on consumers, on marketing to consumers. That’s because the way you reach most consumers is the most expensive thing, advertising, but it’s also a reflection of the fact that most Western multinationals in particular, have made customer focus a central part of their business.

At the same time the public relations function rarely operates in the way that I just described. That’s a little unfair, but far too many public relations people have allowed themselves to be defined not as the person who manages all of those relationships but as the person who deals with the media. I would say that to a certain extent, media relations, which is how many people define public relations, is a part of marketing. So what we’ve allowed ourselves as an industry to do is go from being up here at the sort of seed level of the organization, managing all communications, to down here under marketing, managing one aspect of marketing.

So that’s my answer to that question.

What I think is happening right now is that organizations are coming to realize that marketing, as an isolated discipline with about 100% focus on consumers, is much more difficult in a social media environment, because there are an awful lot of people who can have a tremendous impact on the decision of consumers.

There are a couple of things going on. There is much more information on organizations out there, and there are people who have access to large audiences who can disseminate that information and in some cases can disseminate misinformation. And so there are activists, there are NGOs, there are ordinary consumers, all of whom have a point of view about the company not necessarily about its products or services but about the way it does business, how it exploits people in developing countries or whatever, who are having a huge influence on consumers. That sort of environment of influences is where public relations is traditionally strong. And so public relations people are being brought into a slightly different role as a result of social media.

Q: That was actually my next question about the expansion of the social media and how it changes the rules of the competition between PR and marketing. But you’ve answered this.

Paul: Let me give you another quick thought. I think that the big change is that five years ago it was probably possible for marketers to believe that the brand was all the things they told people. So the brand was the advertising and the logo and the sponsorship and the press release; the brand was everything they told people. Today, I think marketers have to recognize that the brand is all the things that people are saying about it. Suddenly you don’t own the brand anymore. The public owns the brand, and that creates a very different dynamic. Communication is not about sending out controlled messages. It’s about influencing a much broader environment and again, that’s where public relations comes in.

Q: Do you think this competition between PR and marketing, is it going on still with the advent of social media? Is it really a win-win situation for the company, for the consumer, for society?

Paul: I’m not sure that I necessarily think that in every company there’s marketing guy and a PR guy and they’re battling for control. It’s not quite that black and white. What I actually think is happening is that in smart companies and the leaders in this are probably consumer products companies, because that’s where the marketing department has always been the strongest. Smart companies are beginning to realize that it really doesn’t make sense to have one department over here that is responsible for corporate reputation and another department over there that is responsible for products. Because the two are interconnected in a way they never have been in the past. Your corporate reputation has a huge impact on brand decisions. Take an area such as corporate social responsibility. Obviously that’s about the reputation of the company, but one of the reasons you want a reputation for being responsible is so that people buy more of your product. Is that a marketing discipline or is that corporate reputation discipline? I would say it is both.

I actually think that the dividing lines between marketing and communications are becoming blurred. I think it’s much more a case of the two disciplines being pulled into the same place by what the company needs them to do, than that they’re fighting for supremacy. So they are both being pulled towards the same place in the organization. Now my suspicion is that over the next couple of years, and to a certain extent you’ve seen this already in certain large American corporations, IBM, American Airlines, Cisco, there are a few, I believe Xerox is another, companies where there is now a chief marketing and communications officer who is responsible for both disciplines. So, where I think there is really a battle is for whether the person who will head that combined department is a marketing person or a PR person. I worry a little bit that the combined function will end up being what I would call public relations, as I described earlier. So it will be a public relations function.

Q: So you see it as kind of a more strategic function?

Paul: Yes. I think when you add up marketing and public relations, what you get is public relations. So I think in that sense, public relations will win. However, I would guess that in at least half of the companies that do this, the senior person will be the marketing person.

Q: The senior person responsible for PR and marketing?

Paul: Yes… will be a marketing person, not a public relations person.

Q: But he’ll be more involved in PR rather than in marketing.

Paul: Yes, but he’ll have to learn PR skills. But I think that in a lot of companies the senior marketing person is taken more seriously than the senior public relations person.

Q: Is it a matter of budget?

Paul: Partly. I think it is a question of…

Q: Is it a matter of sales?

Paul: I think that there are two things, three things. Budget, what I’ve been calling the second thing, balls; you might want to find a different way of expressing it for your readers… but courage. And the third thing is accountability. Marketing has a stronger metrics, CEOs like metrics. CEOs like things you can measure in dollar or rouble terms. So marketing, if you’re doing marketing well, you know because you’re selling more stuff, if you’re doing marketing badly you know because you’re selling less stuff. Corporate reputation, where public reputation people spend most of their time, is not like that. Corporate reputation is a more nebulous, amorphous kind of concept. Even if you feel like your reputation got better, how? Which you’d measure by asking people: Do you know our company? Do you know what it stands for? Do you like our company? Would you recommend our company to somebody else? Even if you see those things going up, you see that more people like the company, you don’t necessarily see how that impacts the bottom line. So measurement and accountability is a big part of this. And the courage part of it, I just like budget and balls because of the alliteration, but the courage part of it is that for a long time public relations people have added most value when they are defending the company. So public relations has tended to be a defensive, reactive, responsive discipline whereas marketing is proactive. So what you’ve seen, as social media has become more and more vital, is that marketers, this is an overly simple view of the world, so I’m generalizing; in general, marketers look at social media, they see opportunity and they’re first reaction is to do what they’ve always done, which is shout. So they go out into social media and they set up viral videos or they…

Q: Act nasty…

Paul: …not even nasty, but if you think of social media as a conversation, its sort like walking into a cocktail party where everybody is having a conversation and jumping up on the table and saying, “I’m the greatest, and here’s why.” And that’s what marketing people do. That has been the essence of marketing for a hundred years.

Public relations people look at social media; they see risk, potential damage to the company’s reputation, and so what they do is they walk into the cocktail party and they go around to every little conversation and they listen, but they don’t necessarily engage.

I, not surprisingly, think that the right response to the social media environment is somewhere in the middle of those two things.

Q: It’s to basically mix in with the crowd.

Paul: It’s to join the conversation, to participate in the conversation, but not to try to dominate the conversation. I think there are a lot of skills that public relations people have. I do think public relations people are better listeners, I think, because they’re always having a conversation. Public relations people are used to dialog. Public relations people acknowledge the need to be authentic, to have their conversation grounded in some sort of truth. Sometimes they try to create that truth, which I would say is a mistake, but at least they’re not about fantasy in a way marketing people are.

Q: Well they’re not acting on their own. Sometimes they try to make the best out of the worst situation.

Paul: Right. So I think actually the right response to social media is more engagement, more dialog, more conversation, a more respectful attitude, towards the audience whether its consumers or activists or media. I think there are a lot of skills public relations people bring to the table. I think that in a lot cases, CEOs are faced with a choice between do I want this job to go to my PR guy who has never really had a budget bigger than a couple of million dollars, who’s mostly there to answer questions, who isn’t particularly proactive - I think a lot of social media involves story telling - who doesn’t necessarily create stories - whereas advertising people have a lot of history creating stories - who isn’t used to developing content to put into social media, but who understands the broader environment. Or do I give it to my marketing guy and say learn all of this other stuff and become a much more well-rounded communicator. I think most CEOs will make the decision based not on the background of the person but on the current role of the person in the organization. In most organizations, the marketing guy is more senior than the PR guy. The marketing department, which is huge, is not necessarily going to be very comfortable with being told, hey you’ve always thought of public relations as something that you use when you couldn’t afford advertising; now it’s in charge of you. I think a lot of those people are going to be marketing people. And I think, by the way, smart marketing people can learn public relations. I don’t think public relations is deeply… it’s not rocket science, its not brain surgery, it’s not deeply mysterious.

Q: But as you said, it’s an attitude. It’s a special kind of attitude.

Paul: Right. And I do think that attitude is more difficult to learn than people think it is. So I think you’ll see a lot of marketers do public relations quite badly. I worry that our industry… I worry that we have to think quite differently as an industry, if we’re going to win. Again, I don’t really like thinking about this as a battle. It’s fun in a debate to approach it that way. But I think it’s more about earning the trust of the CEO. I’m not sure most PR people are ready to have that level of trust.

Q: Okay, thank you Paul. Can I ask you a kind of personal question, just for a change?

Paul: Of course, I think.

Q: Being such a PR profession with such a vast background of experience, how often do you use your techniques in your personal life with your family, friends, and does it work?

Paul: Well, if you ask my wife, she’ll tell you that I’m the worst public relations person that you’ve ever met. I actually think that a lot of public relations is what I’d call applied common sense. If you think about how companies get into trouble in the public relations realm, it’s by doing something profoundly stupid. After the fact, you can look at it and go, what were they thinking? I actually think that a lot of public relations is just giving very simple common sense advice. I think you can solve a lot of PR problems by saying to the CEO, what would your mother think if she read this on the front page of Pravda, that you did this? That’s a very simple idea, but I think we all know that common sense is not quite as common as the name implies, that actually everybody does stupid things occasionally. 

The truth is I do just as many stupid things. The big one for me, as I said earlier, one of the things we forget about communication generally, is that communication is not talking. Talking is half of it, listening is the other half.

Q: And maybe thinking?

Paul: Yes, okay, yes of course. So it’s a blend of those three things. I’m great at talking. I love talking. I do it all the time. My wife will tell you I’m a terrible listener. I only hear what I want to hear and even then I don’t always interpret it the right way. So I think the short answer to your question is that I’m much better at telling other people how to use this than I am at putting it into action in my own life.

Having said that, I’d like to think that in terms of the way I run my business I have always tried to apply the sound principles of public relations. I have a very relationship driven approach to running my business. My business is actually… my business exits only because I have a reputation of a certain kind. If I had a reputation for being self-serving or for writing things only about people who advertised or rewarding people because they spent a lot of money with my company, then my business would disappear because it’s all built on trust and credibility and personal reputation. So in my business I think I’m quite good at it, but in my personal life… shi..

Q: A question about the forum we are attending right now. It’s an international forum, Communication on Top. You’ve mention some US based examples of how PR and marketing work there. What other major country-specific or region-specific trends or issues do you see in PR and marketing?

Paul: Let me start by saying that one of things that I think is great about this conference is that it brings together people from more developed public relations markets with people from public relations markets where we’re still growing the business, it’s still maturing, and it’s developing. The great thing about that from my perspective is that I think there is an opportunity for people in developing markets to learn from the mistakes that developed markets have made. So I talked earlier about the relative position of public relations and marketing in big Western multinationals. I think that’s happened over a period of 50 years because public relations has allow itself to be diminished. I think that in countries like Russia, for example, there isn’t a 50-year tradition of marketing and public relations. So I think that in a lot of ways the PR industry in Russia has a lot of ways to define itself, almost from the beginning, as being something different. Events like this help a great deal.
I’m not entirely sure where we’re going with the question.

I think there are different communication styles and emphases in different markets. I spent 20 years in the States focusing exclusively on the North American market. When I said I was going to Europe to do what I do in the United States in Europe, the first reaction of Americans was, great, you can teach Europeans how to do PR the right way. The reality is that public relations in Europe is different. One of the ways its different is, I mentioned corporate responsibility. The attitudes towards corporate responsibility in Europe are very different than the attitudes in America. In America there are a lot of people who believe that the only responsibility of business is to make money and create jobs. In Europe, I think people look beyond that to environmental impact, to social impact. They focus much more broadly on the way in which that money is made.

Q What do think is behind this different way of thinking?

Paul: That’s a very interesting question. I think to a large extent it’s a question of culture. I think that in Europe, Western Europe in particular, I’m not an expert on Eastern Europe. I actually think Easter Europe in some respects is closer to America than it is to Western Europe. But in America there is a focus on individualism. So people are expected to be selfish. Selfish is a very harsh term, but people, there’s this feeling that…

Q: …self motivating.

Paul: Yeah. Whereas in Europe there is much more of a community emphasis, so there is more focus on whether something is good for the community then whether it’s good for an individual businessman. I’m not sure how you explain that other than culture and history and heritage. But it means that social responsibility is very different. I think if you look at the developing markets in Eastern Europe, I think they sort of looked at the American system of capitalism and looked at the European system of capitalism and said to themselves, okay the Americans are richer, so that obviously works. So they are a little closer…

Q: So you see predominance in the American approach to running…

Paul: I think there is more of an emphasis on free market and a fairly harsh model of capitalism. Again, I think that over time all of those markets will evolve into something that is appropriate to that location. The other element of this, obviously, is that public relations works best in an environment of maximum freedom. …public relations is about giving people the information they need to make choices and persuading them rather than forcing them to make the choice that you want them to make. Obviously that works better in a system where people have more choices. There’s no point in doing public relations if you can’t choose where you work, or who you buy from, or who you vote for. Public relations really only matters when there are choices.

Also, public relations can only really work well in an environment in which information is trusted. So if the media is viewed as credible and impartial and not corrupt, public relations is more successful. If the media is viewed as being biased and corrupt then actually any message that you put into the media will be suspect. There are obviously markets where there are higher and lower degrees of trust in media. And public relations works best, and is most powerful in markets where there’s a high degree of trust. That obviously means that there are national differences as well.

Q: The conference is running for the second year now, and this year there seems to be a large delegation of Russian speaking participants. How do you see Russia from the point of view of marketing and PR? Has, in your opinion, Russia achieved a certain level of widely accepted approaches and practices to PR and marketing from what you’ve seen?

Paul: I have spoken three or four times at the Baltic PR conference in St Petersburg. The first time was probably seven years ago. The last time was in September or October of last year. Over that relatively short period of time, I have certainly seen the industry in Russia grow and mature and become more sophisticated, more strategic. So if you sit down with a PR practitioner in Russia, you probably end up talking about the same things you’d talk about with a PR practitioner in the States. The rise of social media is a big issue in Russia today just as it is in the US. PR people are trying to figure out how to deal with that.

Q: Not only PR, media as well.

Paul: Right. So in that respect it has, quite quickly, and probably more quickly than most of us imagined 20 years ago, has become a mainstream public relations industry. At the same time, I think, from a Western perspective, the Russian PR industry and the Russian business landscape in general remains quite opaque to Western eyes. Whether that’s a question of not understanding or whether it’s a question of the fact that Russian business is not yet as transparent and well regulated in the broad sense as American or British business, I don’t know. There is a feeling that you can still, with certain media in Russia, get quite a long way with, not necessarily suitcases of cash, but subtle ways of saying, if I buy an ad, you’ll run a story. If I pay a certain amount of money for you to come to my press conference, I’ll get good coverage. So I think that there are still elements of… I think that there is still a feeling that “black PR” can be quite effective in Russia. By the way, I think Americans are fooling themselves if they think there is no “black PR” in America. That we’re all practicing this noble truth telling craft. We tend to assume that we are better than we are and that Russia is worse than it is.

Q: What Russians call “white and fluffy.”

Paul: Yeah. But generally I think you’re seeing a move toward the same kind of standards in every market.

Q: Okay, thanks very much Paul. I think it was a very interesting conversation.

Paul: Thank you. I think journalists are going to have to, to a certain extent, think more like PR people, journalism is becoming much more about individual brands, again I talked about, you know, the need for there to be trust in media. Now in some cases that may be the trust that you get because of the title of the publication so people may trust you because you’re from the New York Times or they may trust you because you’re from Fox News, or they may, depending on what their belief is. Or they may trust you because you’re an individual whose work they’ve read um who has been accurate, who sounds like they know what they’re talking about. If you look at bloggers, they get their reputation because of individual trust and I think journalists are going to have to start thinking that way: “How much am I trusted as a journalist?” not “how much is my publication trusted?” So I think all journalists are going to have to be, to a certain extent, their own public relations people, their own brand managers.