How many ways can a company shoot itself in the foot? How many ways can fate turn against a company or executive, trashing reputations and fortunes along the way? There are seemingly endless possibilities, as BusinessWeek.com's annual review of the worst PR moves of 2006 makes clear.
Among the foot-shooters, there was Hewlett-Packard's (HPQ) in-house investigation into leaks of board information to reporters covering the company. The scandal stemmed from the use of private investigators who "pretexted"—or impersonated others—to obtain personal phone records and other information about board members and reporters who covered the company, including three BusinessWeek reporters. Ultimately, Patricia Dunn, the board's chairman, stepped down and criminal charges were filed against five HP officials and private investigators. The company also paid a $14.5 million fine to settle civil claims brought by the California Attorney General.
The year also gave us the O.J. book affair—that misbegotten attempt to peddle a book by O.J. Simpson, titled If I Did It, about the hypothetical murder of his ex-wife. In a marketers' fantasy world, the book, published by a News Corp. (NWS) subsidiary, HarperCollins, was to be promoted with a TV special on News Corp.'s Fox network. The uproar over the book and the refusal of some Fox affiliates to run the show led News Corp. Chairman Rupert Murdoch to step in. On Nov. 20, he canceled the book and the television show. Then, on Dec. 15, Judith Regan, the high-profile editor who spearheaded the O.J. project, was fired.
Fast Track to an Apology
Health scares posed some unique PR challenges. The source of the E. coli outbreak that sickened dozens of people who had eaten at several of Yum Brands' (YUM) Taco Bell restaurants in late November and early December hasn't yet been identified. But after customers began falling sick, Taco Bell quickly closed the affected restaurants for cleaning and is now advertising that its restaurants and food are safe. It also changed suppliers for some of its ingredients. Whether or not Taco Bell is to blame for the outbreak, its next job is to make sure customers don't shy away.
Similarly, Bausch & Lomb (BOL) quickly pulled numerous bottles of Renu with MoistureLoc contact lens solution from store shelves, after the Centers for Disease Control & Prevention reported that the solution was the probable cause of a spate of serious eye infections. Even though the exact cause of the problem again wasn't known, the company sought to protect its brand by acting fast. As Paul Argenti of Dartmouth College's Tuck School of Business told BusinessWeek at the time, companies don't have the luxury of waiting. "In the first days of a crisis, you should be managing communication. Figure out the problem, explain it, and apologize to customers," Argenti said.
Apologizing for mistakes is one thing, though, and paying for them is another. Sony (SNE) and about a half-dozen laptop computer makers had to recall more than 7 million lithium-ion batteries after reports of batteries catching fire surfaced on the Web. As of mid-September, the estimated cost to Sony of the battery recall ran as high as $300 million. It's an expensive way to say, "We're sorry."
For every company that ran into a PR trauma in 2006, there were others that got a lift, either intentionally or through luck and good timing.
In the case of Wal-Mart (WMT), the world's largest retailer, there was a bit of both. On the down side, the retailer took heat after the disclosure that a folksy blog written by "Jim and Laura" during a cross-country tour was actually being financed by Wal-Mart and its PR firm (see BusinessWeek.com, 10/8/06, "Wal-Mart's Jim and Laura: The Real Story"). But Wal-Mart also gained stature by introducing a plan to offer low-cost generic drug prescriptions, rolling out the plan to a few states at a time to gain maximum publicity for the program.
Many publicity campaigns relied on the latest technological wizardry, on MySpace, YouTube, or elsewhere. But others used good, old-fashioned gimmickry. Take Procter & Gamble's (PG) pop-up public toilet facility in New York's Times Square to promote its Charmin toilet paper. There were Charmin cheerleaders and, on a recent morning, a young woman decked out as a dancing toilet. It may not be art, but it sure beats explaining all those backdated stock options.
Click here for a look at more of the worst and best PR plays of the year.