NEWSLETTER VOLUME 001   l   JUNE 14, 2006

Double Tall Non-Fat PR

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 chain.

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 2010.

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.

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