Interview Segments on Topic: Trust/Credibility
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: 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: Well, one of the issues clearly is that government hasn’t really earned the trust either and so all institutions seem to be suffering from a lack of trust. Is that accurate?
EDELMAN: Yes, I think you see a general malaise about trust, that’s correct. Interesting dichotomy between the rising markets of China, India, where everything is great. We love government, we love business, we love CEOs. Whereas in the West, it’s not the case. It’s the opposite. We don’t like government, Mr. Sarkozy‘s 25% popular, Obama’s now at 40%, and we don’t like CEOs; we only trust 25% of them. That’s pretty bad. So that’s a long, slow climb back out of the abyss. 2008, September was a big moment and it wasn’t just the demise of Lehman Brothers, it was the demise of centerpiece companies in the world economy and destruction of pension funds and you know, decline of sovereign nations and Greece needing a bailout. All these are just almost unthinkable. But it happened. So then the people have to say, what are my basic assumptions? Who do I trust? Well, I trust experts, I trust employees within the company, I don’t trust the CEO. I have to hear things five times before I get to believe, not once. It’s not the age of Uncle Walter Cronkite, that’s over. I get news from eight sources a day, not two. And so we’re going to have to do surround sound and agility and speed but basic reordering of priorities I think for business.
BOLTON: Represents opportunity though, does it not? In the sense that there is a long way to go upwards—but there is an opportunity to go there.
EDELMAN: I think companies that recognize that opportunity and are not afraid of letting go a little. So I see this dichotomy between control and credibility and, the more you control the less you’re believed. But it’s scary. I’m sure the first time you skied really fast down a hill - you said I’m out of control. And your ski instructor said, come on Roger keep doing that cause you’re actually more safe than if you try to lean back into the hill. That’s about the best analogy I can make and having fallen many times cause I was nervous. You can’t be nervous. And even if you make a mistake you just have to get up and say, I’ve got to ski to the bottom of the hill or else I’m going to walk. So, you don’t have that option really, unless you want to be laughed at.
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.
BOLTON: You mentioned the Edelman Trust Barometer earlier. Certainly you’ve been a leader in studying this phenomenon of trust in global institutions -- businesses, and other institutions as well. And I believe that you began this work roughly around the time of Enron/Worldcom.
BOLTON: Can you describe what’s happened in the intervening 8 or so years and what the trends have been since then, and what you see happening in terms of the public’s view of business? And I understand that it varies by location around the world as well.
EDELMAN: Well, just to sort of make a general observation, trust in business was affected by Enron, WorldCom, Global Crossing; but it wasn’t fundamentally altered. What’s happened in the last couple of years is a reevaluation of the relationship that I, as stakeholder, have with you, business. Because again, it was centerpiece companies and also the need for massive bailout. So the whole theory is kind of Anglo-Saxon deregulation, business will take care of us—whoa, wait a minute, it didn’t quite work. But I can’t count on government because government’s proved to be awkward and inept at job creation; we don’t believe in that either. So, I think people are wary, they’re multi-sourcing, they’re more self-reliant, but they are really looking for people with specific credentials. Whether it’s as a friend because you know Shakespeare, or even more profoundly, [it could be that] I trust a professor from Oxford or something. Or even a financial analyst and this is remarkable. Financial analysts, which you may remember in 2002 were blamed for the demise of the market’s overhyping, are now the second-most trusted source of information, because Sarbanes-Oxley created that sort of separation between church and state, between I-Banking [investment banking] and analysts. And now they’re seen as really credible sources. So you can build back technology, which was not so high in 2002; has moved to be the #1 trusted industry. Banking which was the #3 industry only 2 years ago is now #9. It’s just falling off the cliff. So there is real volatility based on current events, I think banks can re-earn trust but it’s going to be a long, painful process. And it’s going to require explanation of how we do what we do. I even think that sort of phrase, proprietary trading, is difficult. Proprietary means something unto myself, I’m not sure that that’s okay. I have to understand why we’re able to be backing up financial institutions as citizens. Why is that good for us? What do we get in return?
BOLTON: That’s the mutuality concept, how can I trust you if my interests and yours are misaligned.
EDELMAN: Well our friend from University of Maryland certainly understood that, our professor friend. Mutuality, right?
BOLTON: Yeah. And the business model does matter. The public perception of how an industry makes its money and whether it’s heads win, tails you lose.
EDELMAN: Right. Which I’m afraid is the sort of cynical, populist approach. But I don’t think that there’s been a complete flop over to pitch forks and death to business, and we want a lot of government because basically, you see sort of underlying aspects of trust in business. 80+% trust in technology. That’s indicative, so what is it that the tech industry does that is so magical? Well, they constantly create new products where the price points over time decline. They make my life better; they’re an employer of diverse populations. They are wealth creators, meaning the stock prices go up. They have some characters, Jobs or Gates. Gates has given something back to society—that’s very important for Microsoft. Gates Foundation. So, they’re making the world better, is sort of the sense.