Interview Segments on Topic: PR and Technology/Change
Richard Edelman is the president and CEO of the world's largest independent public relations firm with wholly-owned offices in 53 cities and more than 3,600 employees worldwide. He was named president and CEO in September 1996. Prior to that, he served as president of Edelman's U.S. operations, regional manager of Europe and manager of the firm's New York office.
Richard has extensive experience in marketing and reputation management, with current assignments for the National Dairy Council, Hewlett-Packard, McGraw-Hill and Scotts Miracle Gro. He has counseled several countries on economic development programs, including Egypt, Israel and Mexico.
Richard won the Silver Anvil, the highest award in the public relations industry, in 1981. He was named "Best Manager of the Year" by Inside PR magazine in 1995. In 2006, he was awarded "Entrepreneur of the Year 2006 - NY Metropolitan Area" by Ernst & Young. Richard was named the "Most Powerful PR Executive" by PR Week in October 2008, for the second year in a row, and "Agency Executive of the Year" by AdAge in January 2008. In 2010, he was named one of "America's Favorite Bosses" (#8) by Forbes.
He serves on the Board of Directors of the Ad Council, the Atlantic Council, the Children's Aid Society and the National Committee on U.S.-China Relations. He is also a member of the World Economic Forum, the Arthur Page Society and PR Seminar.
BOLTON: This is Roger Bolton and I’m here to interview Richard Edelman for the oral history series at the Page Center at Penn State University. Richard, you’re the CEO of Edelman Public Relations, a firm founded by your father when?
BOLTON: And what was the world like when he founded this firm and what was he thinking when it began?
EDELMAN: He had the idea that marketing public relations was really the potential larger force, even in corporate or public affairs, and he felt that the so called independent validation by credible third parties would be very important in the marketing process and ultimately he’s been proven very right. His really big idea was the media tour and he did it for the Toni Company in “Which Twin Has the Toni?” And he toured the Twins and then he did it for Sara Lee and ReaLemon and Kentucky Fried Chicken and California Wines and he was off to the races. But it was an incredibly different time Roger, because you know, relatively few media, national media in particular, a lot of local media. And, it was a time of very high trust in institutions; it was President Eisenhower, after all. Everything was good and normal. And also PR people were called publicists so it wasn’t exactly the way in which we’re regarded now. My dad used to have parties with 300 journalists from the Chicago media core at our home and growing up we would crawl between the legs of the celebrating, tipsy reporters. Such different times.
BOLTON: And how has the firm evolved under your leadership in the last, over a dozen years?
EDELMAN: Well, I think first we’ve really had quite significant growth. We’ve gone from about a $100 million firm when I took over to just about, we finished this last year Roger, at $487 million at Edelman. And if you add in Zeno, our second firm, it’s a $500 million business. Second, I think we’ve been very early in digital and that’s really been a boom for the firm. In fact, somewhere between 10-15% of our fees are directly related to money that we would never otherwise have had that would have gone to advertising or other firms. And then third, we’ve really built out our global network. We are seriously in 52 cities now and we’re in every one of the BRICs, we are substantial in the Middle East and Indonesia and so we’ve stretched ourselves substantially.
BOLTON: The firm has changed, the world has changed. Think about the world in 1952, when your dad founded the firm and the world today; how would you characterize the difference in the environment in which Edelman operates?
EDELMAN: Well I think, first point is, advertising was by far the dominant force in communications, and I don’t think that’s true anymore. I think that we’re absolutely at the table and arguably have a more substantial relationship with senior management than advertising. Advertising is a functional, tactical skill and public relations is a strategic and counseling [skill], as well as execution. And so, the way I describe it is moving from the sort of tail of the dog to the brain of the dog. Also, you know you’ve had the evolution of media in such a substantial way with the dispersion of authority into social media, into companies’ so-called owned media with their own channel on YouTube or whatever. You clearly also have very important blogs like Politico or TechCrunch or Techmeme, that are setting the agenda and that’s a big change. And then last is sort of this emergence of civil society, the rise of NGOs really in the last decade and when you see this from the Edelman Trust Barometer where NGOs are now much more trusted than other business or government, they’ve sort of sponged up the loss of trust in those two mainstream institutions. And they’re really the fifth estate in global governments. So it’s business with civil society now and it’s not just in opposition to.
BOLTON: So, your dad founded the firm with a focus on marketing PR as you came into the business in New York, there was this kind of move into crisis PR and more corporate kinds of issues. You’ve just described an environment in which the agenda’s being set by new kinds of media, new kinds of institutions, the emergence of civil society and NGOs. What does Edelman today look like in terms of its business mix and where’s the growth and where’s the focus?
EDELMAN: So we’re still probably 60% marketing and 40% corporate and public affairs. But the way we look at marketing is really much different than the sort of small box that we used to occupy which was, you take the advertising creative and make something of it so, you know when Morris the cat ran for president, and that was the basis of the ads for the Heinz brand, we took Morris on tour and had street rallies and all kinds of things but we basically took the creative. Now, let’s compare that to what we’re doing for eBay at the moment, we said we want to be the authority on fashion because eBay is ultimately the destination for properly priced fashion products. Well, we’ve created a whole concept called The Inside Source. We hired a woman who had been at Lucky magazine, she’s a genius on fashion trends. She looks through the eBay site every day and she basically posts her views on the five or ten best deals of the day, and then from that, we are able to multiuse that. Cross cellphone, almost RSS kind of feed. We also put that up into people’s PCs because we have this on the eBay site, and if people are trolling, they can go right to Inside Source and get the advice of the day. So in a sense, we’ve created our own media for eBay. It’s a completely different approach. Also, the pop-up store we’ve done for the period between Thanksgiving and Christmas, to literally manifest what is available digitally at the EBay store, but to also understand that consumers need to see this and that media, mainstream media needs to see it. So the sort of pinging back and forth between what is mainstream and what is social media is a very interesting further approach. But also even more so in the marketing of a healthcare product such as Alli for GlaskoSmithKline, which helps you reduce weight. The marketing challenge for that is as much dealing with medical opinion leaders, establishing appropriate use guidelines for consumers—what to and what not to eat, as it is doing classic you know, get on the Today show. You must do both. You must establish a foundation of scientific strength, if I can put it that way, that allows you the license to operate into the mainstream media. So, I actually look at PR now, on the marketing side as in a sense, creating a runway that allows the advertising plane to take off. Because without the base of support with opinion formers, and even actually the new influencers—could be diabetic moms or any other activist types—you’re going to lose.
BOLTON: Advertising is clearly a tact that you described earlier, and one that is less effective without the PR planning strip that you just described. Marketing, arguably, is a strategic discipline and function within corporations. Do you see a trend to convergence of marketing and corporate communications or corporate public relations, and if so, driven at least in part by the digital realities?
EDELMAN: But it’s also driven by a change in expectation of business, Roger. I think you see that it’s now business in society. The whole theory of Milton Friedman, which is that the sole responsibility of business is to make profit, is now being eclipsed by Indra Nooyi for instance of PepsiCo, taking about Performance with Purpose. It’s both. So business thinks of itself in a stakeholder mentality instead of just a shareholder. So the reaction by companies is very interesting where you see a chief communications officer, a Jon Iwata, moving also now to take on marketing. So he comes not out of, in a sense of brand management, as much as he does with reputation management. So he’s put the two together and I think the program IBM does on Smarter Planet is brilliant. Because it puts IBM at tables where they are convener they are intellectual capital creator and they are not just selling boxes and software. It’s a whole other way of selling. And then you have a person like Leslie Dach to Wal-Mart who’s in the top 7 of people in the firm who is pushing Wal-Mart to be the change agent in environment through supply chain leverage and I think that’s again, indicative of this merging of brand and corporate reputation.
BOLTON: What do you see as kind of current trends in public relations agencies and relationships with corporate entities? Are your clients more the marketing people or the corporate communications people or both, and how is that relationship evolving and working?
EDELMAN: Edelman’s always had strong relationships with the marketing side of the house. So, that we are tied to the CMO and it is nothing new for us. What is new is that the PR executive, the Roger Bolton of Aetna days, wants a firm to be involved as counseling on global issues, on NGOs, on areas employee engagement, on things that may be outside of core strength of classic PR director. And wants particularly the global aspect to be on call so when CEO visits China, what’s going to be expected; how to do, what to do. And what bases to have made sure that you’ve covered which think tanks to have seen, what intellectual capital should we have developed, which speeches, a lot of that used to be solely internal and I see more of that now being, in a sense, a shared responsibility between the PR firm and the corporate center.
BOLTON: Strategic partnership?
EDELMAN: It’s much more a strategic partnership, that’s right. I use the agency only for arms and legs. Give me your thinking, give me your connections, give me your wisdom, what do you see out there and, that’s really rewarding. It’s much better than when I started in the biz. Absolutely.
BOLTON: 1952. 1997 I think. We’re now in 2010. Imagine we’re in 2025. Can you take a stab at what the world might look like as it continues to evolve? What do you see?
EDELMAN: I think some of this is straightforward which is that the power of India, China, Brazil, maybe Russia, will be enhanced. You’ll see a continued shift. I think the FT (Financial Times) 500 ten years ago, had only 25 companies from developing nations; as of this year it’s 125 of the 500, maybe it’s half by then or maybe it’s close to half. So we have to move our mentality to be able to hub business from Sao Paulo or Beijing, not just service business, it’s a big change. Second, we are absolutely going to have to make digital core to how people practice our business. It can’t be called on Edelman Digital, you know. That’s nice but everyone has to appreciate the impact of having a Twitter embassy or other techniques that are necessary for connecting corporations in digital world. Third, I think the battle is still being decided about whether it’s business in society or whether it’s just business for shareholders, and the extent of relationship between business and government and how this is going to play out. Whether this is shortwave amplitude, where there’s heavy government or whether it’s long wave, as in the 1930s. I can’t tell you that…it seems that the populace doesn’t like it, to have so much government. They see business as a wealth creator. But if that’s the case, business is going to have to re-earn their trust and they’re going to have to behave differently. And whether it’s issues of compensation or giving back to community, how they feel philanthropically or products that are better for…I think that’s probably the way it will go. Business having the leeway but you know, higher expectation context.
BOLTON: Many business leaders aren’t prepared to cede control in that way, or don’t have the understanding of the trends or the background to be able to trust the letting go as a way of building trust.
EDELMAN: I think that they’re starting to see object lessons in the success of that letting go. And letting the middle part of the company speak up. And you know, a company that historically would have thought of this highway control, Microsoft. They have, I think 20,000 people blogging one way or another. It’s a huge change maker for them and allows a discussion as opposed to a “talk at.” I think there’s genius in that. And similarly you see a change in mentality at a GE or a Wal-Mart. As icons do it, people at others say, well maybe we should be doing the same. And then also certain brands, Ben & Jerry’s Ice Cream, for which we do work, they’ve really led in social media. They had a couple hundred thousand friends on Facebook. They did a contest where they said please tell us which flavors—here are ingredients you can play with, make it on your home stove, come back to us, we’ll commercialize it if it works. They jumped into a million friends on Facebook within 6 weeks and, they commercialized one of the products and you know, it’s become a big seller. And the point is, involve people with your brand and they have an advantage, right? Because they had a history of eco and sourcing appropriately but they’ve changed their mentality completely.
BOLTON: This is the “people like me” phenomenon?
BOLTON: Do you want to explain that?
EDELMAN: Sure. We found, starting 4 or 5 years ago, that a person like yourself is a very important source of credible information so…you and I both like theater, if I were thinking about whether to go to a Shakespeare festival, I’d definitely send you an email, much more than rely upon local media or other because, I know you know because, you’ve lived your life in it. So that’s what has evidenced itself in a sense in Facebook. Where a sort of peer recommendation leads to a six times more likely to buy than other—than if it was just an ad on Facebook.
BOLTON: With major impact obviously on the established media, how do you see the media environment changing? You mentioned a few minutes ago the surround sound or the need to hear it from multiple sources. People don’t just rely on Walter Cronkite as the one trusted source, so there’s a proliferation of media outlets and yet at the same time perhaps, still a need for media to establish credibility and trust as well…yes?
EDELMAN: I think they’re going to establish credibility and trust differently. Which is to say, they’re going to be much more immediate. On a continuum you have; reporters blogging, they’ll write short form copy that might go up on a wire service. And then they’ll have the long form piece that will show up the next morning. But again, it’s the continuum but interestingly, it’s as much about the blog post and the subsequent conversation, as it is the long form piece that then yields letters to the editor. So, actually, I think the reaction by mainstream media has also been to open up their walled gardens. So, if you think about the WashingtonPost.com, they have decided that they’re no longer going to have a front page mentality which is to say, Roger’s going to read a little bit of foreign news, and a little bit of local news and a little bit of domestic tax legislation. Maybe Roger’s just interested in domestic politics and so we’re going to have WashingtonPostDomesticPolitics.com. And then we’re also going to aggregate best of—even from Politico or from AP because narrow and deep is what we have to offer. So, I think that’s a profound change for media. I think the unresolved question is whether they’re going to be able to have an advertising-support-only model, or if they’re going to have a model that charges for content, and if so how? Do I charge as the Wall Street Journal does, an annual fee of $100 for access? Do I have a tiered play where I could write to Bob Woodward at the Washington Post if I had a real question about Iran if I paid $500 a year, and that’s possible. But what’s the impact on the PR firm is the real issue. And I think we’ve got to become much more quick. We’ve got to have much more visual content, not just written. We’ve got to go where the conversations are, meaning we’ve got to put up an embassy for our clients on Facebook if in fact that’s where the locus of conversation is. We can’t just rely on people to go to New York Times.com because that’s where the article is, no way. And I also think we’ve got to do a better job of identifying who the true influencers are, as opposed to just the amplifiers. A person, Ashton Kutcher, has a million followers on Twitter, does not make him an influencer, because he’s probably not a thought starter. He might be on certain subjects; he might be on eco for example but on use of a tech product, not so sure. Maybe a gear head in Silicon Valley who’s got a very interesting view but we’ve got to identify them, work to reach them and then turn them on to the latest BlackBerry or whatever else we’re promoting.