Good PR Can Guarantee High Job Approval Ratings and High Stock Prices What government and the private sector can learn from one another
The Bush Administration is being terribly hurt by the media.
The Government Accountability Office issued a report in January 2006 stating that the current administration in Washington spent $1.6 billion on public relations over 2-1/2 years. Of that, $1.1 billion was for military recruitment.
That leaves $500 million for image building. Yet the president’s job approval rating is in the mid- to low 30s.
What’s gone wrong?
Dwight Eisenhower, Master of PR
If you saw George C. Scott in “Patton,” you will recall the slapping scene. Patton, visiting grievously wounded and dying soldiers in a field hospital in Sicily, came upon Pvt. Charles H. Kuhl of the 26th Infantry Regiment sitting on the end of a cot weeping. “It’s my nerves, I guess,” Kuhl told the general. “I can’t stand the shelling.” In his biography of Eisenhower, “General Ike,” Alden Hatch recounted what happened next:
Patton’s fetish was personal courage and this reply seemed to snap his own overwrought nerves. He roared a corrosive stream of abuse and profanity in which such printable epithets as “coward” and “yellowbelly” were the moderate exception. Finally he struck the boy with the back of his hand, sending his helmet liner rolling under the beds.
The Allies were suddenly faced with a public relations disaster. In those innocent times, it had potential consequences akin to Abu Ghraib.
Eisenhower moved quickly, ordering Patton to apologize in person not only to the soldier and all the personnel in the field hospital, but to the entire Seventh Army.
But how to deal with the press? The slapping incidents (there were more than one) occurred in the early summer of 1944. Hatch’s “General Ike” describes how Eisenhower dealt with the press:
According to Quentin Reynolds, in his book, “The Curtain Rises,” he said to Eisenhower at the press conference, “This would be a nasty story to get out. [Nazi propaganda minister, Joseph] Goebbels could do a lot with it. Every mother in America would think that her son was being subjected to this sort of treatment.”
Eisenhower replied wearily, “I know, I know. But I will not impose any censorship on the story. No security is involved.”
The correspondents assured Eisenhower that they believed it was up to the Army to handle the story as it saw fit.
“I appreciate that, boys,” Eisenhower said, “but I still won’t order any censorship ban.”
According to Reynolds, the sixty-odd correspondents then agreed among themselves that they were satisfied with Eisenhower’s decision, and that it would be playing into Goebbels’s hands to publish the story. They imposed a censorship on themselves for what they believed to be the good of their country, and loyally observed their own ban until Drew Pearson broke the story [three months later].
Media Relations and Job Approval Ratings
Eisenhower came into the White House with a reputation of being absolutely straight with the media, and the press treated him well. His job approval rating never fell below 50 percent.
The press also loved Eisenhower’s successor, John F. Kennedy, the first president to hold televised press conferences. Kennedy was young, good looking, fast on his feet and often very funny. In the past 50 years, Eisenhower and Kennedy were the only presidents whose job approval rating never fell below 50 percent.
Following Kennedy, presidents started miscuing and began to play fast and loose with the media, whereupon the short swords came out and have been out ever since.
Lyndon Johnson’s handling of the Vietnam War generated a great deal of mistrust. By the time Bob Woodward and Carl Bernstein drove Nixon from office, the media’s distrust of government had grown exponentially, and every subsequent administration has discovered that contentious relations with the press have resulted in low job approval ratings.
With low job approval ratings, it is difficult—if not impossible—to govern effectively, especially when Congress distances itself from an unpopular president during election season.
Media Relations and the Price of Stock
In 2004 I self-published “Priceline.com: A Layman’s Guide to Manipulating the Media.”
One of the poster boys of the dot-com revolution was Jay Walker, who came up with the idea of bidding for airline tickets and founded the multibillion-dollar priceline.com.
Like Eisenhower, Walker and his CEO, Richard Braddock, were masters of PR, making themselves always available to the media. Each time Walker announced that a new airline joined the program, a press release went out. In a blizzard of activity, he signed up an array of nationally known companies that agreed to use the priceline.com system so that consumers could bid on not only airline seats but also hotel rooms, rental cars, telephone services, mortgages, credit cards, automobile and truck purchases, and even groceries. In all, Walker made 47 such alliances.
In the course of 1999, priceline.com issued 111 press releases and generated 5,851 news stories—virtually all of them highly complimentary. The reporters for Forbes, Fortune, Business Week, The Wall Street Journal, The New York Times and business sections around the country were like giddy old men at a Britney Spears concert. The media could not get enough of priceline.com and its brilliant, articulate, wildly enthusiastic founder who could sell Viagra to a eunuch.
Running concurrently with the massive PR effort was a series of recklessly upbeat reports issued by financial analysts from major Wall Street investment firms and a $252 million TV and radio campaign starring William (Captain Kirk of “Star Trek”) Shatner that captivated the country.
And the stock!
The issue price of the IPO on March 31, 1999 was $16. One month later it hit a high of $165. “A 10-Bagger!” crowed lead underwriter Morgan Stanley, using Wall Street’s term for a stock that goes to 10 times the issue price.
The investment community was persuaded that Jay Walker’s 35,000 square feet of sublet office space in Stamford, Conn., with his little assemblage of computers, exotic software and 177 employees, were worth (on paper) $23.1 billion—more than United, Norwest and Continental airlines combined.
Jay Walker was ranked by Forbes as the 25th richest person in the world with personal wealth (on paper) of $10.6 billion.
Alas, it turned out priceline.com’s business model was deeply flawed, with 67 out of every 100 bidders being turned away empty-handed. At the end of 1999, the stock was down to $47.38 and the accrued net loss applicable to common shareholders since 1998 was $1.17 billion.
It was downhill from there. At the end of 2000, media relations had soured, staff was laid off and the stock price on the last day of the year had plunged to $1.31—making it a “Minus 100-Bagger.”
During its brief heady heyday, the officers, directors, warrant holders and other insiders sold their priceline.com stock for riches beyond the dreams of avarice.
Priceline.com could never have happened without one of the most magnificent PR campaigns in the history of business. It was truly a creature of the media.
In short, for success in business and government, it is imperative to have a good, open and friendly working relationship with the media.