A recent episode of the top rated weekly
CBS news program 60 Minutes featured a story
about Howard Schultz, CEO of Starbucks.
The ten-minute news piece traced Shultz
from his humble beginnings as a kid growing
up in a Brooklyn housing project to the
head of a 29 billion dollar coffee empire.
The piece was interesting, entertaining
and it really looked like “news”.
In actuality the 60 minutes piece entitled
“The Star of Starbucks” was
a triumph of public relations. A carefully
disguised, well placed, 10-minute publicity
spot for the worlds fastest growing café
Every year companies are dedicating a larger
portion of their marketing budget toward
public relations. A study by Veronis Suhler
Stevenson Investments estimates the PR spending
in North America to be over four billion
dollars annually. With the industry growing
at an average 9% a year since 1990 this
is expected to go above five billion by
It is not just
big corporations who are getting into PR in a big
way. Charities, universities and government agencies
are actually the biggest users of public relations
services in the country. From raising funds, to
raising awareness, PR plays a huge part in the success
of Canada’s non-profit sector.
The strong growth
of the public relations industry compared to the
relative stagnation of traditional advertising can
be attested to one thing: PR simply works better!
A recent study by Procter & Gamble, world leader
in innovative marketing techniques, showed that
public relations provided a consistently higher
return on investment than advertising
One reason for
this is that running a PR campaign is much less
expensive than running an ad campaign. Even with
a price tag of $500+ an hour charged by the big
firms, PR clients bills are still much lower than
those who decide to opt for 30-second TV commercials
and full-page magazine Ads. With public relations
campaigns, clients are appearing in the same medias,
but they pay nothing to be featured in a news story.
The most important
success factor is trustworthiness, according to
marketing consultant and author Al Ries. In his
book The Fall of Advertising & the Rise of PR
he makes the following comparison: “PR has
credibility – advertising does not”.
The book argues that when a client is featured in
the paper or on the six o’ clock news, not
only is the audience more likely to listen to the
message, they are also more likely to trust it -
Twelve times more likely according to a study by
the Harvard School of Business.
This is great
for Howard Schultz and Starbucks, who have struggled
with the negative image of being labeled an “evil
corporation” paying minimum wage and charging
high prices. Now, thanks to the spot on 60 minutes,
their customers think differently. Everyone who
orders a double tall, one pump, vanilla skim, caramel
latte knows, and more importantly believes, that
the five dollars they are paying for a 20 cent cup
of coffee is subsidizing the company’s unparalleled
health plan for employees.
This priceless 10-minute “image makeover”
broadcast on primetime, network television and presented
to the public by a trusted news reporter cost Starbucks
a total of 0 dollars. Their profits however, will
be brewing for years to come.