Category: In the News

Starbucks Agrees to Pay Restitution

Starbucks has an up and down relationship with the media and consumers on social media. From positive interactions to overstepping baristas to Christmas cups, the brand seems to find a way into the headlines, good or bad, with some frequency. Occasionally, though, the news is more serious than a red cup or a hapless employee. This is one of those crisis cases.

Various media reports announced recently that Starbucks Corp has agreed to “pay restitution and accept greater oversight” as part of a settlement in response to allegations that the company “illegally required New York City employees to find substitutes when they needed to use sick leave.”

Starbucks has since changed its sick leave policy, but that doesn’t mean the positioning messages have stopped or that the company should just ignore what’s being published or broadcast subsequent to the settlement. A sampling of media reporting on this topic reveals that the company had to pay at least $176,000 in restitution to employees and to post “educational posters” about the new policy in all NYC stores. The company has six months to prove to regulators that it is in compliance in all 8,000 NYC locations.

As of December 2019, Starbucks is not talking to the media about this issue, other than to say they will comply with the terms of the settlement, so there’s very little messaging coming from their side. There’s merit to that position. The company gains nothing by extending this story into another news cycle. They had a policy. It’s been changed. The end. From their perspective, what else needs to be said? Anything more, and you simply risk drawing more attention to an issue most consumers aren’t paying any attention to. No up-side there, so terse acknowledgement with a forward focus is the right move.

That could change, though. In the event that an advocacy group or an influencer grabs hold of this issue and pushes a negative narrative of Starbucks as “unfair” or “insensitive” to employees, the company may need to shift its stance in response. That calls for proactive consumer PR.

Starbucks should not assume this issue will just fade away, though it does seem likely. The brand needs to be prepared for the issue to resurface, and to be ready for a position where they’re not in control of the narrative being pushed. The goal, then, is two-fold. First, to offer a counter-narrative, and second, to try to gain some control of the prevailing message in the marketplace. The purpose of this planning is not to go on the offensive, but to be immediately prepared to respond, so precious time isn’t lost figuring out how to answer a negative message in real time.

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NFL Taking Hits Over Officiating

Since the disastrous Saints-Rams NFC Championship no-call last year, NFL officiating has been under intense scrutiny. With new technology allowing fans at home and in the stands to clearly and easily see where refs make mistakes, the pressure was on. And the officials are not making it any better on themselves with more than a few high-profile blown calls throughout this season. Some legitimately could be said to have changed the outcomes of games.

The league says it may look into a “rules adjustment,” but they already did that. After the NFC Championship debacle, the league gave coaches the chance to challenge pass interference calls, or the lack thereof. This change hasn’t had much effect on the perceived issues that both commentators and fans are griping about.

The issues, according to both fans and critics, have more to do with the inconsistencies in how plays are called, rather than misses in big moments. Sure, one egregious call might get oversized airtime, but pundits are discussing officiating nearly every day. As are fans, and the conversation has done well beyond the standard griping about the refs.

Speaking to the media, Atlanta Falcons president Rich McKay said, “There’s no question there’s been angst… I’ve felt (it). With our team, I’ve felt the angst of others… But it’s a new rule, a big change… something we haven’t done before. I don’t want to prejudge the outcome.”

That, unfortunately, is what many critics are saying is the issue. Speaking candidly on ESPN’s Get Up program, analyst Dan Orlovsky said the league definitely does not want the controversy over the officiating to follow play into the postseason. He said fans are fed up, and even pundits are tired of talking about it week in and week out.

He’s not alone in this estimation. Twitter feeds are full of complaints about officiating, specifically the inconsistency in applying the rules related to pass interference, use of helmets, and coaches’ challenges.

McKay and others say they are “gathering information” and “looking into” the issue, but those words are not assuaging the frustration among fans, players, and coaches. Some don’t understand what’s being called and why, others are frustrated at what’s not being called… and everyone seems to be frustrated at how many calls are creating scenarios that impact games, week after week.

If this continues, the league could face losing some of the fan goodwill it’s enjoying thanks to lights out play from marquee players and role players alike, as well as unexpected performances by players no one had heard of before they stepped on the field. This could be the league’s year to surge after a few years embroiled in controversy, but, at least at this point, that isn’t happening.

Ronn Torossian is the CEO and Founder of 5W Public Relations. 5W PR is a leading digital pr and influencer marketing agency.

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Can GameStop Survive a Shifting Market?

Streaming media has slowly transformed multiple different industries. It began with music. As the iPod sliced away at market share, retailers and production companies tried to ignore the interloper. Apple didn’t stop, and, in the space of a decade, the entire industry was transformed.

The example was plain to see, as were the trends, but many booksellers did not pay much attention. When the Kindle came out, they scoffed. Then, stores started closing, as Amazon book sales and digital book sales exploded. People still buy and love “real” books, there are still big box booksellers and independent bookshops, but the market potential shrank considerably.

It was only a matter of time before the video game market followed suit. Like movies, video games followed a pretty basic consumer distribution model: you could buy games or rent games, buy consoles or rent them. Because of that, game resale stores became big business. Now, though, one of the biggest video game resellers, GameStop, is asking some of the same questions music stores were asking a decade ago. When not enough people are coming in, what do we do next?

GameStop is telling investors to expect the company to continue its current sales decline, and the company is projecting a loss of $83 million in the third quarter alone. CEO George Sherman is reportedly blaming weak sales on people waiting for the holiday releases of new game consoles, such as the PlayStation and Xbox. Others are saying that’s only part of the problem; that the real issue goes much deeper. They are likely correct.

The simple fact is that consumer habits are shifting. More people are playing online, more people are streaming games, and fewer people are buying games outright. With fewer people buying games, there are fewer resale games available. And, when consoles are not upgrading every year or two, there’s much less reason for even the most dedicated gamers to go shopping for something new.

This isn’t speculation. GameStop stock is down about 60 percent this year, and executives don’t expect a rebound any time soon. If they’re waiting for the release of what GameStop leadership called “new and innovative” consoles late next year, they could be playing a very dangerous waiting game. Who knows what the next year will offer in the way of streaming content.

Will GameStop even be relevant this time next year, or will the company have waited too long to reinvent the brand for the current market realities? Time will tell, but the smart money says the company can’t wait that long. They need a new, connective, and relevant message. And they need it now.

Ronn Torossian is the CEO and Founder of 5W Public Relations. 5W PR is a leading digital pr and influencer marketing agency.

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GM Hoping to Make a Big Splash with First Electric Pickup

When Tesla announced it was working on a fully-electric pickup, many people laughed. Too soon, they said. Unfeasible, others agreed. Tesla, of course, soldiered on in their efforts, which do not have a scheduled release date. One company, though, has jumped ahead of the competition, announcing plans to release the first American fully electric truck by the fall of 2021. That company is General Motors.

The announcement was met with some skepticism among the auto crowd. Could a fully electric pickup really meet the demands of the tough truck market? GM’s CEO Mary Barra tried to quell fears and misgivings by banking on GM’s reputation for making strong, capable pickups:

“General Motors understands truck buyers and … people who are new coming into the truck market…” several media outlets reported Barra saying, “It will be a very capable truck, I’m pretty excited about it.”

This statement comes on the heels of a report, last month, by Reuters, that GM has an entire line of pickups, light duty trucks, and SUVs in the works. The new lineup is expected to be manufactured at GM’s Detroit-Hamtramck plant in 2021, according to reports.

Pickups are one of the most profitable segments for all automakers in the world, so the first company to come out with capable, reliable fully-electric truck is expected to have a corner on a very lucrative market. GM hopes to get out ahead of the competition and carve out a strong market share.

But they are not alone. Ford is in the race as well, promising an all-electric F-series truck sometime in 2021 as well. As GM’s chief rival in the American market, especially for pickups, Ford would love to be able to step in and steal some of GM’s thunder in this race to see who can get a fully-electric truck to the American market fastest.

And, with two big names dropping dates and deadlines, does Tesla have anything new to add? Not in the way of a timeline, no. Elon Musk said his company’s truck would be more like a futuristic “armored personnel carrier” than a traditional pickup truck. And, while that promise definitely earned headlines, that message didn’t resonate as much as the promise of an industry-flipping product with a strong deadline. Now, the onus is on both GM and Ford to hit their deadline… or risk their headline grabbing messages getting lost in a sea of questions and doubts.

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Elon Musk in Court Over ‘Pedo Guy’ Tweets

In July of 2018, British diver Vernon Unsworth took part in a daring, life-threatening rescue of 12 boys and their soccer coach, all of whom had been trapped inside a quickly flooding cave system. It could have been one of the purest and best “good news” stories of 2018; for most people, it certainly was.

But there was one aspect of the round-the-clock news about the story that went off the rails, thanks to comments made by Unsworth, and the response from billionaire Elon Musk, who famously offered to assist with rescue efforts. That offer of assistance included the use of a mini-submersible.

While some involved in the rescue expressed appreciation and politely said “no, that won’t work for this situation,” Unsworth went on CNN and called Musk’s offer a “publicity stunt” rather than a genuine offer of assistance, adding that Musk could “stick his submarine where it hurts…”

Those comments did not sit well with Musk, who took to Twitter to both defend himself and to castigate Unsworth. During one part of his rant, Musk referred to Unsworth as ‘pedo guy’… and that brings us up to the present, when Musk appeared in court to testify in a defamation hearing in which he has been accused of harming Unsworth’s public reputation.

Headed into court, Musk had nothing to say to the swarm of reporters waiting for a soundbite. Instead, he let his testimony do the talking. Musk opened by apologizing for the comment, adding that he reacted to an “unprovoked” insult from Unsworth. Musk said he did not believe Unsworth was speaking literally when he suggested what Musk could do with his sub, just as he was not speaking literally when he reacted by insulting Unsworth.

If you’re a member of the general public sitting back watching two high-profile guys have a go at each other on Twitter, all of this seems a bit silly. However, from both a PR and a legal standpoint, this issue has some teeth.

First, the legal: Unsworth is seeking compensatory and punitive damages from Musk. This case would have been news just because it’s Musk. Which is one of the key points in Unsworth’s argument, that Musk’s profile has the real potential to do real harm to a person’s reputation.  Is there a “second” point?

From a PR perspective, this case is guaranteed to get press, again, because it’s Musk. However, it also includes a person most of the world considers a hero. And now that “hero” tag may have been tainted. Unsworth may or may not have needed to respond the way he did in order to protect his reputation, but he’s chosen to be proactive on the issue, attempting to take some control of a message that’s guaranteed to be told, with or without his input. Whether or not the case goes his way, at least now, he’s had a say in the conversation.

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Uber CEO Responds to Criticism … Again

Most of the world believes Saudi journalist Jamal Khashoggi was murdered, though how, why, and by whom remains an open question and occasion for strident debate in some circles. The controversy alone should warn people off, especially if they’re not ready to face a firehose of very public rage. The fact that there’s an official version of events that most people tend to take at face value, should give people yet another reason to double-down on caution related to this issue. Especially, once again, if your brand has nothing to do with the tragedy or the controversy related to a murdered journalist. Enter Uber CEO Dara Khosrowshahi…

During an interview with Axios media, the Uber CEO appeared to defend the Saudi government, whose officials are blamed for Khashoggi’s murder. During the interview, Khosrowshahi said, “I think that (the government) said they made a mistake…” The Uber CEO then tried to clarify by adding, “It’s a serious mistake. We’ve made mistakes too, with self-driving, and we stopped driving and we’re recovering from that mistake… So, I think that people make mistakes, it doesn’t mean that they can never be forgiven.”

From a PR perspective, this statement is a mess wrapped in a disaster.

  1. First, offering an opinion on the issue at all in a press interview has no up-side. It doesn’t help Uber, and it can only cause controversy for the brand, at the very least.
  2. Second, Khosrowshahi’s statements were viewed by many as downplaying the nature of Khashoggi’s murder, comparing it to a traffic accident.
  3. And, third, in an effort to somehow offer empathy, the Uber CEO chose to directly compare the murder of a journalist with the worst moment in his company’s history, when a malfunctioning autonomous vehicle hit and killed a pedestrian.

At what point does reminding a live media audience of the worst moment in your company’s history equal positive PR? And, at what point does comparing that unfortunate accident with the intentional murder of a journalist make any sense whatsoever?

Those are among the many questions Uber and its CEO are currently being asked by both consumer media and countless market analysts who can’t fathom why Uber’s leadership continues to create unnecessary PR firestorms.

Critics have said the comments were made as an intentional financial move, because the Saudi sovereign wealth fund remains a major Uber stakeholder, and its managing director has a seat on Uber’s board of directors. But those theories were put to rest last week when Khosrowshahi went on Twitter to apologize for the comments: “I said something in the moment I don’t believe… Our investors have long known my views and I’m sorry I wasn’t clear…”

And, while that apology might have stifled one conspiracy theory, it didn’t stop the blowback. Many consumers felt the apology was simply not good enough. Both “boycottuber” and “deleteuber” hashtags started trending on social media, while, yet again, Uber’s chief rival, Lyft, sat back and collected new customers thanks to errant comments from another Uber Chief Executive.

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Brands are Using Loyalty to Cut Acquisition Costs

The ongoing battle among brands today is the one raging over customer loyalty. The environment of digital marketing is shifting, and this causes competition in various forms. As more brands become aware of the importance of building a loyal customer base — while also keeping their new customer acquisition costs low — some creativity is needed to entice those customers not only to stay loyal, but to bring more people into the fold via referrals.

This challenge has led to an increase in loyalty and rewards programs. For example, the recently announced Target Circle is one of the latest iterations of loyalty programs promising perks and benefits for those who choose to spend their money in Target stores. Another way brands are trying to find a permanent home in a customer’s rotation of needs is to offer increasingly more convenient options such as low-cost or free home delivery of groceries.

And other brands have built loyalty on a referral model, understanding that the CPA goes down exponentially when customers are referring in new business on their own. By incentivizing the referral process — offering exclusive discount codes, free gifts for a certain number of referrals,  etc. — brands can essentially recruit existing customers as salespeople eager to share the value of the product. This reduces the CPA to virtually zero and allows for current customers to act somewhat as influencers. This creates a reliable system for referrals, as customers are more likely to convert their friends than a standard ad might.

Building out a strong loyalty and referral program can accomplish many goals on a marketer’s list. Loyalty is a strong currency in today’s marketing environment, but the program must be strong with robust perks and incentives for staying in. A strong loyalty program will also encourage organic referrals from happy customers who feel strongly enough about something that they’ll promote it on their own.

A referral program can also bolster the sense of community associated with a brand. This is another up and coming metric that is beginning to hold more value for businesses. Community is something that consumers actively seek out. Whether it’s the dedicated Facebook page for the New York Times Cooking section or a group of exclusive club members for the Morning Brew who have referred in the most new subscribers, consumers love to gather in places where like-minded individuals exist.

This sort of environment creates a more organic feel of promoting products and services that accomplishes more than a paid search ad or a television ad. It is good to remember that consumers are more trusting of the opinions of people they know. Not even a customized ad can have as much converting power as the endorsement of a trusted friend or acquaintance.

Businesses looking to reduce their acquisition costs while also bolstering consumer loyalty would do well to take a page out of the playbook of companies such as Target, The Skimm, or Morning Brew. Brands such as these that have capitalized on the fierce brand loyalty of their customers will find new avenues opening up that lead to increased conversions and happy, satisfied customers.

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New Research on the Buying Habits of Gen Z

Gen Z has become a focal point for many marketers seeking to connect with this up and coming generation with hefty buying power. In the most recent edition of the Piper Jaffray 38th Semi-Annual Taking Stock With Teens® Survey, released this month, new information has become available on the shopping and retail habits of Gen Z. This information is instrumental in forming a marketing strategy designed to tap into the estimated $830 billion contributions to U.S. retail sales made by this young generation.

Gen Z is growing up quickly. These individuals, born between the mid-90s and the mid-2000s, are becoming more independent and are beginning to register their preference when it comes to everyday retail decisions.

How can marketers harness the power of data collected in this survey to make knowledgeable and actionable decisions regarding marketing?

By taking an objective look at the existing habits of this generation, trends can be identified. For example, in glancing through this report it’s clear to see that many recognizable brands are still performing well for this younger generation. Prominent brands such as Chick-fil-a and Starbucks still reign at the top of the list for restaurants. Brands such as Nike and American Eagle still dominate the shopping corner of this market.

What does this tell us? These brands have hit on the proverbial fountain of youth and found a way to continue to market relevant material to ever-younger generations. The staying power of these brands is admirable, as they likely would rank high on the list of popular choices among even older generations.

Staying relevant is an ongoing challenge for brands, so there are some important takeaways here. Emulating the models of these brands that have demonstrated cross-generational staying power can be helpful for brands looking to achieve something similar.

Studying these survey results can also help point to areas that a different brand may be able to break down its own barriers to entry into this younger market. By taking the example of the brands that have ranked as important choices for Gen Z, and by studying the behaviors of these consumers when they’re making purchases, an opportunity may be more easily identified.

Another important takeaway here is the platforms these younger users are spending the most time on. YouTube, Instagram, and Snapchat all rank high for social media and video consumption purposes. What does this mean? Advertisers should be looking for programmatic ad opportunities on these platforms when looking to reach these younger users.

Data such as this report can help brands navigate the world of media buying for younger demographics. By also looking at these buying habits, a marketing campaign’s messaging can begin to take shape as well. Remember: messaging matters just as much as platform and delivery. The wrong message that fails to resonate or connect with users will end up being a waste of marketing dollars.

Marketing to Gen Z presents a challenge, as does every young generation. With information such as is found in this report available, the obstacles to success a successful marketing campaign seem less insurmountable. Finding opportunities to reach younger consumers in an authentic way is important, and turning to data is often a key to success when it comes to marketing.

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Cathay Pacific Reverses Position on Hong Kong Protests

One of the hottest and most divisive news stories coming out of the far east this past week was the ongoing “pro-democracy demonstrations” in Hong Kong. Waves and waves of people, mostly students, are out in the streets letting the Chinese government know what they think of the current state of things. 

Initially, renowned airline, Cathay Pacific, put out an internal message that the company would not stop its employees from taking part in the demonstration. That has changed, and the company was quick to let the world know it. Employees were told that, if they participated in the protests, their employment would be terminated.

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The Politics of Preseason Communication

The NFL preseason is one of the most grueling stretches in all of athletics. Teams bring nearly twice as many players to camp as they will keep on the active roster, so competition is fierce and emotions are high. That means there are also a ton of compelling stories, so reporters and broadcasters are on high alert for any nugget of breaking news.

Combine that intensity with a bunch of keyed-up players and coaches, many of whom have limited experience with the press, and you have a recipe for communication chaos. To avoid this, teams need to have clearly articulated plans about who talks to the press (and when), as well as what is or is not said to the press or on social media.

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