Under the Influence with Terry O'Reilly - S1E10 - Marketing In A Crisis

Episode Date: March 11, 2012

When companies are hit with a crisis, it can be a defining moment. In the world of marketing, it's an all-hands-on-deck situation - because communication is one of the most important keys to handling a disaster. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan. You just have to love storytelling. Subscribe now and don't miss a single beat. In case nobody's told you, weight loss goes beyond the old just eat less and move more narrative. And that's where Felix comes in. Felix is redefining weight loss for Canadians with a smarter, more personalized approach to help you crush your health goals this year.

Losing weight is about more than diet and exercise. It can also be about our genetics, hormones, metabolism. Felix connects you with online licensed healthcare practitioners who understand that everybody is different and can pair your healthy lifestyle with the right support to reach your goals. Start your visit today at Felix.ca. That's F-E-L-I-X dot C-A. From the Under the Influence digital box set,

this episode is from Season 1, 2012. I'm going to love it in an instant. Your teeth look whiter than noon, noon, noon. You're not you when you're hungry. You're in good hands with us. You're under the influence with Terry O'Reilly. One day, on November 30th, 1954, near the town of Sylacauga, Alabama, Anne Elizabeth Hodges turned on her radio and decided to take a nap on her couch.

It was going to be a short nap because she was going to be woken up precisely at 2.46 p.m. by a falling meteorite that crashed through her roof, bounced off her radio, then bounced off her. The Sylacauga meteorite, as it was later called,

was the first documented extraterrestrial object to have injured a human being. Objects slamming into Earth from outer space is an interesting subject. As writer Tad Friend noted in The New Yorker recently, they are called Near-Earth Objects, or NEOs. In 2002, an asteroid exploded over the Mediterranean. Later that same year, a fiery NEO crashed into a Siberian mountain. In 2008, SUV-sized asteroids plunged into the Sudanese desert

and streaked over Saskatchewan. In 2009, one blew up high over Indonesia with three times the power of the atom bomb that destroyed Hiroshima. In late 2011, a several-ton rock blazed across the noonday sky above the Atlantic Ocean so brightly that it was visible from Massachusetts to Maryland. It's not a recent phenomenon either.

NEOs have been implicated in three mass extinctions, most famously when a seven-mile-wide asteroid slammed into the sea off the Yucatan Peninsula. That one killed off the dinosaurs. All of which is to say, we have a history of bumping into NEOs. And about a hundred tons of sand-sized space rock bombards our atmosphere daily.

Scientists have isolated one NEO in particular that is 300 meters wide. Initially, they believed it would slam into Earth on Friday, April 13, 2029 with the force of 8,000 Hiroshimas. Then, after more observations, they concluded it will miss us by a mere 18,000 miles, putting it inside the orbits of our communication satellites.

But that NEO could slide through a keyhole, a region near Earth where our gravitational field would deflect the asteroid just enough so that it will slam into us in a subsequent pass in 2036. Here's the interesting part. If an asteroid does come our way, we have no plan. And even if we did have one, it's a complicated issue. Who oversees intergalactic defense?

NASA or the military? Who calls the shots? The United States or Russia? Or China? Who pays for it? So, we continue to float in outer space with no crisis plan. A crisis can bring out the best and worst in a person, a country, or an organization. When companies are hit with a crisis, it can be a defining moment, and their ability to weather

the storm can dictate, to a large degree, what their future holds. In the world of marketing, it's an all-hands-on-deck situation because communication is one of the most important keys to handling a disaster. And how you market in a crisis reveals everything about a company. You're under the influence. On Tuesday, December 6, 2011, a jet scheduled to fly from Los Angeles to New York was delayed at its gate.

It was awaiting permission to push back and taxi to the runway for takeoff. The doors were closed, the seatbelt sign was on, and the passengers had been reminded that all cell phones and electronic devices had to be turned off. And all but one passenger complied. He was playing a game called Words with Friends on his cell phone, and when the flight attendant asked him to please turn it off, he refused. According to American Airlines, when she insisted, he refused again and called the flight crew inappropriate names using offensive language. Then, he undid his seatbelt, stood up, stormed into the washroom with his phone,

and slammed the door so loud, it alarmed the pilots. That was when actor Alec Baldwin was finally removed from the plane. Alec Baldwin, headlines all last week after getting kicked off that American Airlines fight. Baldwin is no stranger to negative press. Five years ago, the world got to hear a cell phone conversation between Baldwin and his 11-year-old daughter, where he unleashed a tirade of threats and insults. He later apologized

and wrote a book about his struggles with divorce and parental custody. But he would handle the American Airlines incident very differently. Instead of being contrite, Baldwin took to the airwaves

and made a surprise appearance on Saturday Night Live's Weekend Update. He appeared dressed as an American Airlines pilot. When Weekend Update anchor Seth Meyers asked him why he was there, Baldwin's pilot character replied, And on behalf of everyone at American Airlines, issue an apology to Mr. Alec Baldwin. It was an open mocking of American Airlines and FAA regulations, and Baldwin scoffed at the fact that his tirade had delayed the plane. It did. And it was the first time in the history of American Airlines that one of our flights was delayed. Come on, Sam!

But his handling of the incident had a curious effect. It swung popular sentiment around in his favor. People enjoyed the SNL skit. It got tweeted around the world, and even the press laughed. I was watching, I was just following along. It was pretty funny. It was. I love it. It's like, keep going, keep going, keep going with it.

It seemed Baldwin was off the hook. Minor PR disaster averted. But when most big companies go into damage control, they don't have the luxury of laughing it off on Saturday Night Live. Marketing in a crisis is a very difficult process. There is usually a lot at stake. It often involves people's lives, the very reputation of the company. It requires timely decisions, the assumption of responsibility,

and, above all, a little big thing called an apology. Inside your stateroom, you will find safety signs that will familiarize you with the ship's layout, the emergency procedures, and the available exits from your cabin leading to your muster station. You're listening to the Carnival Cruise Line's onboard safety video. On Friday, January 13, 2012, a Carnival cruise ship hit a reef and partially sank off the coast of Tuscany, Italy. Our main news this morning, at least three people have died after an Italian cruise ship hit a reef and partially sank off the coast of Tuscany, Italy. Our main news this morning, at least three people have died after an Italian cruise ship ran aground off the coast of Tuscany last night.

But the Italian authorities say they are still searching for possible missing people. Some 4,200 people were aboard and at least 30 people lost their lives. For Carnival, it was a crisis of epic proportions. In the case of most catastrophes, a company can have a crisis plan in place, but when it finally happens, it's almost always something they never counted on. As Mike Tyson once said, every fighter has a plan until he gets hit. In the case of the 17-story Costa Concordia,

no one thought it would hit rocks just 800 meters off the shore. It was an alarming sight, seeing a 114,000 gross ton cruise ship lurched onto its side, in a passageway that ships navigate every week, every year, without incident. So what went wrong? Soon, reports surfaced that the captain had brought the ship in too close to port

to show off to former colleagues on the shore, that he didn't order evacuation until 76 minutes after hitting the shoal, and that he had abandoned the ship before all passengers were safely off. It wasn't enough that the accident was the worst in the company's history, but those details threw the story into another stratosphere altogether. A crisis like this, in marketing terms, requires several things to happen immediately. First, the company and its PR firm

has to implement its crisis strategy right away. Assuming, of course, they have one. If they do, it usually means gathering all the available information, assessing the situation, and drafting initial communication for the press. Next, a company has to display visible leadership. The CEO has to be put in front of cameras as soon as humanly possible. It goes without saying that the tone of the press conference should be one of genuine concern, sympathy, and empathy. In almost all disaster scenarios, one of the first things on the crisis checklist is to suspend all advertising. But in the case of Carnival,

reports stated that the company didn't pull its advertising until one week after the event. Highly unusual, in my experience. Recently, Carnival had been increasing its television commercial airtime. Last year, according to Nielsen, which tracks advertising spending, Carnival ran 10,213 TV ads, a 12% increase over 2010.

When I worked on the Eastern Airlines account years ago, there was a firm policy to pull all advertising when a plane crashed, regardless of which airline suffered the tragedy. I think it's safe to say all airlines shared that philosophy. Yet, I saw this commercial not long after the Carnival disaster. Special family time. Special kid time. And even special you time. What makes everyone's dreams come true on a Disney cruise? Well, if we told you that, it wouldn't be magic,

now would it? Disney Cruise Line. Call now and find out more about amazing trips like Alaska and Europe. I'm not sure what Disney's policy is in a case like this, but I have to think they are clearly hoping to attract business that Carnival would be losing in the near future. Another vitally important factor in a crisis is optics. That means the company can't just be working its heart out to deal with a catastrophe,

but it has to be seen working its heart out. One criticism leveled at Carnival was the fact its CEO was running damage control from Miami, 5,000 miles away. It made him look detached. As PR specialist Carmen Gallo recommended to the Carnival CEO in a Forbes magazine article at the time, get on site now. He also suggested that while the Carnival CEO was on a plane to Italy,

he should be memorizing the names of all 11 people who had died, his staff should be finding out information about them, and he should be meeting with their families as soon as possible. Gallo also recommended that the CEO remain highly visible and maintain daily, if not twice daily, news conferences. In a crisis, communication is everything. In the days following the disaster, it also became clear that Carnival had no plan for dealing with social media. Its main Facebook page continued to offer the usual updates on trips and deals. CEO Erison, an avid tweeter, went virtually silent.

Six full days after the accident, a post appeared on the Carnival Facebook page saying that, out of respect, they were going to, quote, take a bit of a break from posting on our social channels. But after virtually no online activity for nearly a week after that, people started to post negative comments on ship safety and expressed shock over Carnival's 30% discount offer to the Costa passengers. Advertising Age magazine framed the problem perfectly.

In times of crisis, it's easy to suspend all advertising, but you can't suspend social media. Online never shuts down, and the public traffic only grew more intense and more negative. But a crisis is a maelstrom, and managing it perfectly in the whipsaw of a disaster is almost impossible. In the world of business, the gold standard when it comes to handling a crisis

is the Tylenol tampering case of 1982. And we'll be right back. In case nobody's told you, weight loss goes beyond the old just eat less and move more narrative, and that's where Felix comes in. Felix is redefining weight loss for Canadians with a smarter, more personalized approach

to help you crush your health goals this year. Losing weight is about more than diet and exercise. It can also be about our genetics, hormones, metabolism. Felix connects you with online licensed healthcare practitioners who understand that everybody is different and can pair your healthy lifestyle with the right support to reach your goals. Start your visit today at Felix.ca. That's F-E-L-i-x dot c-a

if you're enjoying this episode why not dip into our archives available wherever you download your pods go to terryoreilly.ca for a master episode list. outselling the next four leading painkillers combined. It also accounted for a third of parent company Johnson & Johnson's annual profit. Then, disaster hit. Eyewitness News Update with Jack Williams. Five people are now dead, one in critical condition after taking extra-strength Tylenol. Bottles of the pills with the serial number MC2880 are being recalled. Soon, a total of seven people in the Chicago area would suffer the same fate. Suddenly, the makers of Tylenol had to explain to the world

why their trusted product was suddenly killing people. It all started when the company got a call from a reporter saying a medical examiner had just given a press conference stating that people were dying from poisoned Tylenol. And the reporter asked for a comment. But that was the first news the company had received about the poisonings. In that first call, they learned more from the reporter than the reporter learned from them.

One of the most important points about a crisis is seen in this moment, that, in most cases, the press will often be the first on the scene and will know more than the company. Johnson & Johnson CEO James Burke reacted immediately by forming a seven-person strategy team that was charged with two tasks. First, how do we protect the people? Second, how do we save the brand? The first thing the team did was alert consumers via the media to not consume any type of Tylenol product. Then, they halted all Tylenol advertising. They stopped all production of Tylenol product. Then, they halted all Tylenol advertising. They stopped all production of Tylenol products. A 1-800 number was established to answer any questions the public had.

They also created a toll-free line for news organizations to receive updates. As a company in crisis, they immediately understood the benefit of open communication. CEO Burke gave non-stop national press conferences and TV appearances to clearly demonstrate his leadership and deliver the latest updates. Most importantly, Johnson & Johnson withdrew all Tylenol products from shelves in the Chicago and surrounding area. When two more tampered products were discovered, they recalled over 31 million bottles nationwide at a cost of over $100 million. That decision was very important. It showed that the company was not willing to risk the public's safety,

regardless of the financial costs. Soon it was discovered that several bottles had been laced with cyanide and put on the shelves by a person or persons unknown. Johnson & Johnson had clearly been the victim of a malicious crime. Within five months, Tylenol became the first product to use a new tamper-resistant triple-seal safety packaging.

And within six months, it had regained 70% of its lost market share. But the way Johnson & Johnson handled the crisis was so revealing of the company's integrity, which included giving the grieving families counseling and financial compensation, even though the company was not at fault. Scholars have come to recognize Johnson & Johnson's handling of the case as the example for success in a crisis. It's important to note that the crisis also threatened the very existence of the company. Within one week, 90% of the American public was aware of the tragedy.

One news source said the Tylenol deaths had resulted in the widest domestic coverage of a story since the assassination of President John F. Kennedy. Regardless of the fact Tylenol had been absolved of any guilt, a sizable percentage of the public still had their faith in Tylenol rocked. So Johnson & Johnson began the long road back to regaining that trust through marketing. They issued coupons, reduced the price by 25%, and sent 2,500 representatives out

to reassure the medical community. When that was achieved, they created advertising declaring that, even post-crisis, hospitals still chose Tylenol over all other painkillers. Today, hospitals can use modern advances to help locate the source of pain. When it comes to relieving pain, the pain reliever hospitals use most is Tylenol. Look, last year, hospitals dispensed Tylenol 10 times more than the next four brands combined. So the next time you or someone in your family has a headache, ache, or pain, shouldn't you use Tylenol too? Tylenol, the pain reliever hospitals use most. Even though the case was never solved,

and in spite of experiencing one of the most devastating tragedies a company can endure, Tylenol was able to completely regain its market share. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you,

whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. The city of New York was dealing with one of the biggest crises of them all after the attacks of 9-11. It was a perfect example of having an emergency plan in place that couldn't begin to deal with the enormity of the crisis.

But Mayor Rudolph Giuliani did the best he could. One month after the attacks, instead of pulling all advertising, he placed a call to ad agency BBDO to order some. He believed it was critically important to tell the world New York City was still open for business. He requested a campaign to lift the spirits of New Yorkers, and he wanted to create a sense of vitality and exuberance that would give a holiday boost to the city's beleaguered tourism, retail, restaurant, and entertainment industries. Very quickly, a strategy was created around a dual theme,

that everyone has a New York dream, and realizing it is the miracle of New York. Within 48 hours, BBDO had created storyboards for ads that captured the dreams of certain New Yorkers. Those certain New Yorkers were quintessential Big Apple celebrities. The mayor gave the ideas fast approval, and when his office reached out to those celebrities, they all offered to donate their services for free. Nine commercials were shot in record time.

In one, actors Billy Crystal and Robert De Niro dressed up as a turkey and a pilgrim. You want me to be the turkey? Yeah. I don't think so. In another, the New York Philharmonic is seen being directed by a very animated conductor, who, when he turns around, is none other than Yogi Berra. Who in the heck is this guy Phil Amonik? In another, we see a man running the bases all alone

and sliding into home plate at Yankee Stadium. Derek who? It's Henry Kissinger. In yet another, a woman sits at the famous Carnegie Deli and looks at a menu of sandwiches named after New York celebrities. Mmm, they all look so wonderful. How's the Ben Stiller? Ben Stiller, very popular.

Okay, I'll have the Ben Stiller. One Ben Stiller. Oh, and can I get that with bacon? With bacon, you got it. Hey, Stiller! Table three! With bacon! Then, at the back of the restaurant, up pops the real Ben Stiller and Kevin Bacon.

Everyone has a New York dream. Come find yours. The New York Miracle. Be a part of it. Waiter, can I have a doggie bag? Every commercial ended with Mayor Giuliani inviting people to be part of the New York Miracle. Maybe the funniest commercial of all shows a person skating all alone at the famous Rockefeller Center rink.

The skater is doing joyous jumps and triple axels and spins at Olympic speeds. Then he skates up to the camera and says, You're not going to believe this. That was the first time I put on ice skates in my life. When you realize it's Woody Allen, it's hilarious and seamlessly done. You have to see it. And you can find all the New York Miracle commercials on our website.

As Advertising Age magazine noted, the media response to the campaign was overwhelming. Even before the commercials hit the air, they got international press attention. The uniqueness of the campaign and the fact it was produced so quickly in a time of crisis made it into a news event. And marketing began to do its small part in not only lifting the spirit of New Yorkers,

but telling the world that New York was open for business. Marketing in a crisis can be a watershed moment for most companies. For in the crucible of a disaster, a company is laid bare for the world to see. The quality of its leadership is exposed. Its responsiveness is graded. Its empathy and concern

for its customers is revealed. And the ultimate test of what lengths it's willing to go to to resolve the crisis, regardless of the costs, can be measured for all to see. It's willing to go to to resolve the crisis, regardless of the costs, can be measured for all to see. It's interesting to note that Tylenol had no crisis plan in place in 1982. Cyanide tampering was almost unthinkable 30 years ago.

Yet, the company not only handled the tragedy with integrity, but it wrote the book on crisis management. Tylenol also had the advantage of dealing with the crisis before the advent of social media and a 24-hour news cycle, allowing them a greater degree of control. Yet, in spite of trying circumstances, Tylenol rose to the occasion, New York's indomitable spirit showed its true colors,

and Alec Baldwin is still a busy actor. Whether history will speak kindly of the Carnival Cruise Company, time will tell. Someone once said, never waste a crisis. It's a lesson that should be taken to heart, because inside every crisis is an opportunity to make the world a better place. To implement more safeguards. To make crisis plans more comprehensive. And to become a little wiser. Now all we have to do is figure out a way to stop those pesky asteroids from slamming into a certain blue planet

that's under the influence. I'm Terry O I have a problem with the podcast for the radio show Under the Influence. I'm sitting here trying to download last week's show and I can't. It just won't download. I'm using it for research for a school project and it's due tomorrow. Do you understand people? It's due tomorrow, but it won't download. It's so annoying. It just won't. Oh, wait, there it goes. Crisis averted.

Under the Influence was produced by Pirate Toronto and New York. In case nobody's told you, weight loss goes beyond the old just eat less and move more narrative. And that's where Felix comes in. Felix is redefining weight loss for Canadians with a smarter, more personalized approach to help you crush your health goals this year. Losing weight is about more than diet and exercise. It can also be about our genetics, hormones, metabolism. Felix connects you with online licensed healthcare practitioners who understand that everybody is different and can pair your healthy lifestyle with the right support to reach your goals.

Start your visit today at Felix.ca. That's F-E-L-I-X dot C-A.