Wednesday, July 02, 2014

Rebooting PR - part one

The value of public relations mediated by the capabilities of the internet is huge. But to access this value, the industry has to change.

The extent to which we are beginning to understand the contribution intangible capabilities make in the creation of wealth is growing every day.

The Intellectual Property Office (IPO)  put it this way
"Whereas, in the not too distant past, the majority of business investment was in people or physical things like premises and machinery, today the majority of business investment is in intangible goods, in ideas and creativity. Making sure that our entrepreneurs, innovators and creators can translate their investment in the creation of intellectual property assets into value is key to the UK’s long term growth prospects. In the last 12 months, the Intellectual Property Office has done much to increase the likelihood that British businesses understand the importance of managing their IP effectively."
The IPO showed that it needed  strong PR to allow the UK to get at the real value of IP.

Inngot and Valuation Consulting Limited reported that:

The role of intellectual property and intangible assets in facilitating business finance” found that knowledge assets were not appreciated in mainstream UK lending and that IP was therefore a missed opportunity with millions of pounds worth of business assets whose value was not being leveraged at all, or only being leveraged inadvertently
It seems that a very large part of the worth of the nation is in dire need of some good PR.

We can begin to see why such strong PR is needed so that, for example we so can use our currency. The Bank of England put it this way:

The words "I promise to pay the bearer on demand the sum of five [ten/twenty/fifty] pounds" date from long ago when our notes represented deposits of gold. At that time, a member of the public could exchange one of our banknotes for gold to the same value. For example, a £5 note could be exchanged for five gold coins, called sovereigns. But the value of the pound has not been linked to gold for many years, so the meaning of the promise to pay has changed. Exchange into gold is no longer possible and Bank of England notes can only be exchanged for other Bank of England notes of the same face value. Public trust in the pound is now maintained by the operation of monetary policy, the objective of which is price stability.

The value of your pay packet comes down to 'trust'.

It also comes down to reputation:

The Governor of the Bank of England Mark Carney has said he doesn't see any reason why the Government should inject more cash into the economy, in comments which have given a big boost to the value of the pound.
Is that all? Is the intangible value of what we earn down to the comments of the Governor of the Bank of England?

What about advertising and marketing... they much have a role in this debate.

In advertising Nigel Hollis of Millward Brown struggles but begins to show what is at stake. He writes:

My attempt to explain that advertising could add intangible value to a product experience was met (by friends at a dinner party)  with blank incomprehension at best. Creating intangible value seemed to be equated with duplicity. Advertisers cheated people by creating erroneous beliefs about the quality, efficacy or value of a product. It was unethical. So maybe you can help me come up with a better and more compelling argument?

First, let me state that I am all in favor of developing products that deliver a tangible and positive experience for their users. This is the first step of creating a strong brand. Advertising can serve a useful role simply by informing people of the existence of a product that might serve their needs better. But that does not preclude creating an even better experience through the creation of intangible benefits. Just as placebos can produce a positive response in patients, so too brands can create a more positive experience for their consumers.
What he was saying is that adverting can add value but after the event and is limited in what it can deliver.

But something does add value and a lot of it.

The added value of a brand to an engineered product like a motor car is an example. But there is a lot more going on.

If we go beyond advertising to 'brand' values we see big numbers emerging.

In 2012 Brand Finance published a study on the Monarchy as a ‘brand’ to coincide with the 

Queen’s Diamond Jubilee. They valued the Monarchy from an economic perspective and as a brand with an impact of £44 billion on the UK Economy as well as assessing the emotional, political and constitutional arguments for The Royal Family. 
The Monarchy’s contribution to the UK economy is considerable and  Brand Finance estimated the revenue uplift to the UK economy was £2.4 billion offset by costs of £1.4 billion giving a net uplift of £1 billion to GDP. 

UK businesses also benefit from Royal Warrants and Brand Finance valued the scheme at £4 billion and there is also a significant reputational benefit to individual UK businesses from the Monarchy once they have been granted a Coat of Arms which Brand Finance valued at £400 million. 

The question one may ask is, which management discipline is charged with defending and exploiting and developing the tangible benefits from intangible (reputation, trust, employment, social development, profit, etc) an idea which in itself is as intangible as the Monarchy?  This goes beyond brand management because it needs the ethical and social engagement of a broad constituency.

Investing in this asset has such a high return that we need to know who can deliver the required servicing.

 Perhaps we can see how the intangible converts to money to gain a view of the new intangible economy according to an recent article in the Economist:

FACEBOOK, Amazon, Twitter and a host of other big companies in today’s “data-driven economy” share one thing in common: they make a living from harvesting personal data. Some of this data is freely given, perhaps too freely. More than 1.3 billion people have donated some of their most valuable personal information to Facebook in return for the ability to “like” and “share” cat photos. Amazon knows almost as much about its customers as they do. Twitter knows what you think and when you think it.

The article follows the adventures of Jennifer Lyn Morone  (JLM), who is collecting the growing amount of online data JLM is amassing and which will be visible on her website—although as Ms Morone gains more control over her data she aims to transform this transparency into opacity; only she will collect the data, and only JLM will decide how and where it can be viewed, used, sold, bartered or donated. This may be challenging: some of JLM’s most valuable data, such as financial transactions and health records, are by definition controlled by other organisations (such as banks), although Ms Morone will be able to re-package and resell them (data can be sold many times without losing their value). 

Turning something as intangible as a Facebook 'Like' into money is an interesting idea. Turning the data aura surrounding and individual or a group of individuals into assets seems like alchemy.

The significance of transparency is now coming home to roost. There is a big economy out there where intangibles visible from transparency are becoming very valuable in many directions.

It extends beyond the individual.

I looked at the big data that is LinkedIn. Here I saw how porous organisations have become. This porosity also has value and is also a resource for many disciplines.

It is possible to view about 60% of the UK banking industry employees in LinkedIn. This means we can see how long they have been employed in the industry and how long with a specific bank. We know the skills that they bring to banking and the skills the banking industry needs to run its businesses. In addition we can view if there are more of fewer people being employees and what is the employment employment churn rate between competitors, what are the skill (service) differences as between banking competitors over time. We can plot this over time and much more. This is an organic map of an industry with data not provided by the organisation or the traditional media but by its employees using social media. This is, as the CIPR Internet Commission put it 15 years ago, internet porosity.

This is a picture I created of the skills, and especially, the intangible human resource of 14% of Nationwide Building Society employees:

From this you can see how much of the bank is driven by intangibles and, indeed, the word map is, itself is an intangible asset.

From this one data set, it is possible to monitor and view whole industries and LinkedIn ".... will eventually become an "economic graph" that "maps the global underpinnings of the global economy." Says its CEO Jeff Weiner

We are seeing elements in this mix that include trust, reputation, assets of functions, assets encapsulated in features and assets available through the activities people and every time we look at intangible assets, they are bigger than anticipated and depend more on public relations than any other management discipline.

My thesis is that the PR industry now needs to play to its strength.

It has the capability to lever value and to enhance the value of that part of the economy which is bigger than any other - intangibles.

It is mandated to be ethical and to be open about how the client can develop trust and a reputation for trust worthy dealings and it has the power to and place to say to the Marketing Director and the CEO what has to be done to access value.

It is by no means a low cost activity and it has issues and crisis management to add to its activities online.

We even have a map to take us from here.

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