Easy Rider
Posted: 4/21/2008

Council of Public Relations Firms
The Firm Voice
© 2008 Douglas K. Spong
April 16, 2008

By Doug Spong, president, Carmichael Lynch Spong

While the big-name and highly pedigreed economists debate whether we are experiencing a “true recession” – defined as two consecutive quarters of economic decline – you don’t need an advanced degree in economics to find the “R” word stitched like a scarlet letter all over the blouses and shirts of American consumers.

After 20 years of consecutive earnings growth, I never thought I’d live to see the day that my client Harley-Davidson would report a decline in sales and earnings. After all, a true Harley enthusiast will go without three steady meals a day and a reliable roof over his head before giving up the lifestyle represented by the eagle and shield tattooed on his arm. I guess when gas averages $3.50 a gallon, milk costs even more and that roof over his head is in foreclosure, maybe the tattoo wasn’t such a good idea after all.

Despite the recession-that’s-unofficially-a-recession and revised earnings forecast, Harley-Davidson has kept its head and remained true to its heritage as one of the world’s most-envied brands. Harley’s attitude is this: We recognize there’s a recession, but we’ve chosen not to participate.

You can only coast going downhill.

Instead of throttling back on public relations and marketing spending as many of its competitors have, Harley understands the law of physics that says you can only coast going downhill. Being a public company and bowing to the demands of living quarter to quarter, Harley-Davidson, like other successful centurions, takes a long-term view of its performance and the relevance of the brand to its core enthusiasts.

Faced with a decline in sales and earnings, lesser companies often choose to pull over and park some of their PR programs for the sake of cutting costs. This may help skinny down the quarter and make it look good to the Street like a runway model at Fashion Week. However, any CFO worth their weight in carbs knows you can’t cut your way to prosperity.

The world’s best companies like Harley-Davidson recognize the opportunities during a recession: Hold tight on the throttle, steal market share from others, be the first to outrun the foul economy, and gain momentum for a sales spike when the clouds part and the sun shines on consumers again.

More miles per gallon.

Anyway you look at it, public relations is THE most efficient return on investment that a company can make. Harley-Davidson gets more mileage -- dollar for dollar -- from public relations than all other communications, marketing and creative disciplines. First of all, public relations typically costs a fraction of a leading brand’s spend in advertising. I see companies invest $30 million, $100 million or even $750 million in traditional advertising. However, look closely at their public relations budgets and you’d be hard pressed to find any of them spending more than 10 percent of their advertising budgets in public relations and corporate reputation.

Despite this disparity in spend, public relations, when done right, over-achieves by a country mile in such metrics as audience reach, message recall, increased brand awareness, preference, recommendation, trial and loyalty. Long before online social networking sites, public relations was the original, authentic form of two-way conversation and old-school social networking – face-to-face, in-person relationship-building between an organization and its various stakeholders. Try joining the HOG (Harley Owners Group) Club or riding to Sturgis, South Dakota in August and you’ll experience “social networking among a fraternity of strangers” at its purest form.

Lease versus own.

Want to experience the twisties along California’s Highway 1 without having to ride the 1,500 miles to get there? Check out the robust H-D Rental program. You can experience the unabashed lifestyle and benefits of Harley ownership anywhere in the world without having to tap your home equity line-of-credit and tell the boss man where to stick it.

While the corporate cost-cutters keep the pressure on companies to keep payroll in line with revenue and reduce “head count” to achieve profit margins, smart companies figured out long ago that it’s often better to lease versus own. After all, why tie up valuable cash in the expense of owning when companies can put that cash to better use by leasing. No one buys Xerox copiers anymore.

Corporate aircraft are leased either fractionally or in whole. The same can be said for public relations services from Council-member firms.

Companies own their in-house public relations or corporate communications departments. This includes the good, the bad and the ugly that goes with staffing and employment costs.
On the other hand, firms lease out their talent to clients in units of time. Rare expertise and highly specialized services are a conference call away. Scores of well-trained, passionate practitioners can be quickly inserted to achieve a big hairy goal or resolve a seemingly overwhelming problem.
At the end of the trip, clients can either extend their lease if the ride has been worth it or turn back in the rental if the experience failed to live up to the promise without much penalty.

Ride defensively.

A sour economy presents many hazards for member firms. Although none of us can see too far down the road, take heart in the fact that Council member firms enjoyed double-digit growth in 2007 while our kissin’ cousins in advertising, direct response and other related disciplines endured a rather bumpy ride. Remember to ride defensively.