Here is the story behind this award and our success.

1 ) My parents, Dan and Ruth Edelman, are founders and entrepreneurs in the true sense of the word. They could have chosen to take the big bucks by selling out to one of the holding companies. Instead, they chose to maintain the company in family hands so that our values of client service, creativity, and being a part of the community are our primary purpose. My father, at age 91, begins every conversation with me as follows: “How are we doing? Who is your toughest competitor? Never take the client for granted. Good that you are seeing clients and media.” My mother, who broke her hip and had a new one installed on Wednesday, asked me, when I saw her post surgery, “How was your trip to Silicon Valley? Are the clients happy?” They are not fancy people; they just want to make sure that their legacy is an outstanding PR firm that cares for its clients and its people.

2 ) By remaining independent, we have been able to invest in building a global integrated network by reinvesting earnings. We started our first international office in London in 1967 and now have 54 wholly owned offices. Our company is at once local and global; we have important client relationships in local markets that connect us to opinion leaders and media, enabling better work for our global clients. We strive to nurture a global mindset through initiatives like the Fellows program, which we established sixteen months ago to move key executives from developed to fast-growing markets. We are about do the reverse – transplanting a dozen emerging leaders from offices in Mumbai and Moscow to offices such as Toronto and London.

3 ) We made quality an obsession. Our Q program—enabling every client to evaluate us across 36 key metrics regularly, initiated and run by Janice Rotchstein, is operated separately from the client service teams and gives us an independent feedback loop. It identifies service issues early so that we can address them and, often, build even stronger connections with our clients as a result.

4 ) We invested in intellectual property, such as the Trust Barometer, Health Barometer, 8095 study and Good Purpose to enhance our understanding of markets around the world, and to improve our service and counsel.

5 ) We are ahead in digital because we have been at it for 15 years. We understood early that the Internet would transform how a client does business. We were pioneers in putting embassies on Facebook and Twitter, the essence of “social digital.” Our work in info-graphics is at the highest standard. We are creating content that prompts viral behavior and co-creation. We run Edelman Digital as a true partner of the main firm, with an integrated work product.

6 ) We do not put all of the power into a single office, but rather spread it across many locations. Seattle is home to our technology practice leader, Seoul and Chicago to our crisis practice leads, and Atlanta to our consumer practice lead. London is a center of excellence for content creation.

7 ) We run a triangle offense for clients, including geography, practice, and global client leaders. It may be more complicated but ultimately this approach leads to best outcomes, because it brings local knowledge, sector awareness, and strategic insights to the client.

8 ) We have a culture that demands relentless achievement. It is a culture of YES. “Go ahead and take the initiative.” We are never self-satisfied or complacent. This comes from my father. (Quick deviation here—I was pretty good American History student—got 780 out of 800 on my Achievement test for college—his only comment, “I thought you were perfect in American History. What did you miss?”)

9 ) We give back to the community. We donated $5.1 million in public relations pro-bono work and cash contributions last year. My brother, John, runs the Edelman Community Grants program. He gave out 62 grants last year to enable employees to support their personal causes.

10 ) Most of all, we work for great organizations on ground-breaking programs, such as Pepsi Refresh, which won the Holmes Report Best Program of the Year (with Weber Shandwick, our worthy competitor) and Social Media Campaign Sabre (also with Weber), and the Xbox Kinect launch, which won in the Product Media Relations category.

I am deeply humbled by the recognition of our firm. Edelman will continue to evolve, but I will continue to operate our company guided by the values upon which Dan founded the firm. Now I am off to the hospital to see my mom.

Image credit: The Holmes Report

Tomorrow morning, I will be on stage at the Belvedere Hotel in Davos, releasing the results of our latest 23-country Edelman Trust Barometer study. The lead of the story must be that trust is transformed. In the wake of the financial market meltdown at the end of 2008, we have gone through a series of corporate crises during 2010 — from oil spills to product recalls affecting the leading enterprises in five sectors to the near-bankruptcy of five nations in the EU. The result is an even more profound shift in the expectation of companies to operate with increased transparency and in a manner that delivers profit while improving society, captured by my client Indra Nooyi, CEO of Pepsico, in her phrase, “Performance with Purpose.”

We also found unprecedented skepticism, a need to hear, see or watch news as many as ten times before achieving belief, plus an increased reliance on those with credentials and expertise.

Here are the key findings for your perusal:

A. State of Trust

1. Trust in Business—There are now three clear country groupings – the Trusters, the Neutrals and the Distrusters. The Trusters, notably Brazil, China, and India, withstood the financial crisis and had positive economic performance this year. There is evidence of rising trust in business over the past two years even in flat-lined economies such as France, the Netherlands and Italy. The key change in 2011 is the switch of Germany and the USA, with the former now in the Neutrals with Japan, while the USA moves to the Distrusters along with Russia and the UK. Business is as or more trusted than government in 19 of the 23 nations we surveyed this year.

2. Trust in Government—There are fewer countries in the Truster category for government, including Brazil, China, Singapore and the UAE. The largest drops in trust in government were in Germany and the USA. Note that in general, trust in business and government is now in sync, a change in the past two years. Though there are exceptions, such as Germany, where rising trust in business is observed despite less confidence in government.

3. Trust in Media—We note that trust in media continues to rise in the developing world and to slide in the developed economies. The most depressing findings for media were in the US and UK, respectively 27% and 22%, which we attribute to increased politicization, aggressive tone and scandals.

4. Trust in Non-Governmental Organizations—For the first time, trust in NGOs in key developing markets is equivalent to that of business, a remarkable rise over the past five years, which we attribute to the evolution of local civil society brands and rising prosperity. NGOs continue to be the #1 ranked institution in trust in the Western economies, the Fifth Estate in global governance picking up trust lost by the other three institutions.

5. Trust in Industries—Technology continues to wear the halo as the number one industry in both developed and developing economies (98% trusted in China). Banking and Financial Services are now the least trusted industries of the 16 we review annually. The reputation of banks continues to plummet, especially in the US, UK and Ireland, down nearly 50 points in the US in the past three years to a new low of 25%. Automotive has made an amazing recovery, to rank as the #2 trusted industry in the world, attributable to the GM IPO, the launch of electric cars and the association with modernity in the developing world.

6. Trust in the USA—The US was the only country to see a decline across all four institutions, what we describe as an echo decline. We have three hypotheses for this cross-sector drop: the US was the epicenter for most of the corporate crises this year, which centered around leading category and iconic companies; US citizens had strong expectations for economic recovery dashed in a mid-year slump; and most importantly, business and government continued to clash on regulation and taxes, although President Obama has moved in the past month to improve this situation.

7. Trust in Nationality—The companies headquartered in Canada, Germany and Sweden continue to enjoy a trust advantage, while the UK and Switzerland are closing the gap. American companies are much better regarded in the past two years, especially in Germany and Russia, while preserving a strong reputation in such key future markets as Brazil and China. The companies based in the BRIC nations saw rising trust scores in developing nations, but a decline in markets such as the USA.

   
   

   B. Earning Trust

8. What Drives Corporate Reputation—The top four factors are High Quality Products and Services; Company I Can Trust; Transparent Business Practices; Treats Employees Well. The bottom two are Highly Rated Leadership and Delivers Consistent Financial Returns. This is the second year in a row that we see a reversal of constituent elements of reputation, suggesting a rebalancing of priorities for business.

9. Shareholder vs. Stakeholder—We asked specifically about Milton Friedman’s contention that the social responsibility of business is to generate profit; about 50% of respondents agreed. But, we also probed whether companies need to create shareholder value in a way that benefits society even if that causes a reduction in shareholder value; about 80% agreed with that point of view, from developed to developing economies. This indicates a desire for profit and purpose, a stakeholder approach to shared value.

10. Credible Spokespeople—Given the uncertainty in the economy and plethora of sources of information, respondents said that they believe spokespeople with proven expertise, in order Academics, Technical Experts from a Company (for first time), Financial Analysts and Chief Executive Officers. The recovery of the CEO in reputational terms is remarkable; this is the highest score we have seen in nine years, though in the UK and US that means only about one third believe a CEO is credible. We also found that in a crisis, the number one trusted source is the CEO, followed by an Outside Expert, followed by a Technical Expert from the company.

11. Information Sources—More people go initially to search engines, then to online sources for information about a company. The brands most noted are the familiar mainstream media stalwarts such as the Financial Times, Wall Street Journal, BBC, Globo, CCTV. Blogs and social networks substantially lag the mainstream brands.

12. Benefits of Trust—If you go into a crisis as a distrusted company, it takes only 1-2 negative stories for a person to believe negative news. If you go in as a trusted company, it takes only 1-2 positive stories for you to achieve belief. Trust is a protective agent, a facilitator of action. We find further evidence of desire to buy products, recommend products/services and buy shares in a trusted enterprise.

Trust is no longer a commodity that is acquired but rather a benefit that is bestowed, earned through action, reinforced by transparency and engagement. Business has the opportunity to build an enduring foundation of trust if its leaders commit to a strategy that brings value to both investors and society — the What and the Why. However, today it must further explain How it makes money, a new level of transparency on business practices — for instance, ingredients in products. Finally, it must build relationships across the entire stakeholder universe, the Where, by engaging audiences across the four leaf clover of media (Mainstream, New, Social, Owned) and joining the continuing conversation by adding value and learning from the critics.

Originally posted on Richard Edelman’s blog.

Like many of you, I was transfixed by the movie, The Social Network. This is the period piece for the decade, in much the same way as the movie Wall Street captured the sensibility of the late 80s. The ability to create an enterprise from your college dormitory, that transforms social interaction while generating huge financial returns, is the ambition that motivates this generation. The monomania reminiscent of Captain Ahab in Moby Dick is present in Mark Zuckerberg; the same intensity that yields successful entrepreneurs. I for one found Zuckerberg, for all of his flaws, a much more appealing character than the investor Saverin or the potential partners/twin rowers Winkelvoss.

Though The Social Network is entertainment more than a factual treatment, I left the theater profoundly depressed. I would ask those of you who saw the movie a simple question. Are you comfortable with this line, “Harvard graduates believe that inventing a job is better than getting one”. I reject this thesis as a false choice (and I come from a family who doggedly built one of the world’s largest firms in its sector).

Zuckerberg began his own enterprise at school because his future could not wait. This attitude is best exemplified by Zuckerberg daydreaming in his advanced programming class, jumping out of his seat when he has a brainstorm about how to improve his Facebook product. His teacher asks him how to solve a difficult problem, which the prodigy answers brilliantly as he pushes open the door of the classroom to rush back to his room to write new code. That is the sole flash of intellectual pursuit in a two hour movie. (Correction: Eva Rijser of Edelman pointed out that I conflated two separate scenes in the movie. Zuckerberg left class because he got a nasty note from a female classmate. He comes up with the new programming idea when the classmate asks about the dating status of a female in Mark’s class. Even more a reason to learn when you are young because age dulls the memory!)

Higher education is not simply about vocation. It is about learning in order to live well. Why take a course on Greek literature when the subject is not immediately applicable to your future as a biotech investor or software guru? Because it might teach one about the risks of hubris or the importance of team over individual. Why insist on distribution requirements which force an English major to take science? We need a passing acquaintance of the sciences to vote intelligently on nuclear waste disposal or the advisability of vaccination of a child in the face of scaremongering. Expansive education has formed the core of my values that guides and enriches my career and personal life, daily.

I know that this is a moment of great transformation, in which brilliant and committed programmers can make fortunes and change the world. Just don’t shortchange yourself in the process by rushing to adulthood, in so doing precluding education that is broad and self-reflection that is deep.

Originally posted on 6 A.M.

At Edelman’s fourth Annual New Media Academic Summit, we convened a superb group of senior media executives who offered insights into the future of the sector. They included Raju Narisetti, managing editor of the Washington Post; Greg Coleman, president of Huffington Post; Gerard Baker, deputy editor in chief of the Wall Street Journal; Jonah Bloom, CEO and editor in chief of Breaking Media; Mark Lukasiewicz, VP of NBC Digital Media; Mike Oreskes, senior managing editor of the Associated Press; David Carey who has just joined Hearst as President of the Magazine Unit; and Jon Miller, CEO of Digital Media at News Corp.

These media leaders are addressing challenges head-on, and are optimistic about their future. Here are a few of the most important insights:

1. New Readers & Channels—David Carey, Conde Nast group president cited the incremental revenue and readers for its relaunched Gourmet food magazine and Wired’s completely reimaged iPad app (they sold 95,000 digital copies at $4.99 each in June), as only the beginning as people are willing to pay for mobility and engagement. Baker described the iPad as a potential game changer, noting that the WSJ has sold many subscriptions at $208 per year for this platform, and the Washington Post charges $1.99 for iPhone application for a year.
2. New Revenue Options—Bloom believes Media will integrate eCommerce directly into content so “media will sell stuff directly.” So, right beside a book review will be the option to buy the book. Access to the archives, conferences and direct access to journalists via email are also being considered viable premium paid options.
3. The Pay Wall—Narisetti offered a strong defense of the Washington Post policy on free access to content. “Subscription revenue has always been a tiny part of the newspaper business model. We have 30 million unique visitors each month to our site.” Baker went the other direction describing the Wall Street Journal pay model, “In the beginning of the web, there was optimism that we could focus advertising so ad revenues would suffice. Now it is clear that we need other revenue streams.” News Corporation is bringing in paywalls for its British newspapers and Miller emphasized that will keep investing in quality content to get people to pay.
4. Trust in Content—Baker noted that the decline in trust in establishment institutions (business, government) extends to mainstream media. “We often fail to properly represent the views of the majority of our readers.” He quoted Oscar Wilde, “The parts that were original were not true and that which was true was not original.” Jonah Bloom noted that “there is not enough originality in stories being tackled.” Lukasiewicz said that “transparency is the new objectivity. We will have a point of view in stories.” Oreskes took a strong position on “Journalism being distinguished by its higher standards for quality, not by ownership of the printing press.”
5. Narrow-casting—Narisetti wants to get away from the single “front page approach” so that a reader can focus only on specific more narrow interest (politics or sports). “We need multiple front doors to the house, such as PostLocal.com, PostSports.com, PostPolitics.com.” He said that “we link to other sites on stories they break (Politico as example)—we need to offer everything that is relevant.”
6. Value from Conversation—Coleman said that the Huffington Post gets three million comments from its users each month. “Our content model envisages 1/3 from each of bloggers, original reporting and aggregation.” Narisetti added, “Comments may reflect the market’s view but those who comment represent a narrow slice of readers—but we keep comments as open as possible because these are the most engaged readers.”
7. New Measurement for Reporters—Narisetti said, “Newsrooms have never wanted to measure how they are performing—specifically how many readers look at each article. We now do a daily report to 120 editors, with page views, time spent, unique visitors, which photos are preferred—metrics that are key to the business.” He said that his reporters must use meta-data to be sure they use words that “help readers to find your story…people search for Republican Party, not GOP, so use that term in stories.” Bloom added that reporters must be able to market their stories via Twitter and Facebook.
8. Power of Visuals—Oreskes noted that while the AP may have 50 reporters on the coverage of the oil spill in the Gulf of Mexico, the most powerful content has been visual. “People remember the pelican photo or the AP photographer donning scuba gear to get unique video.” He quoted Walter Lippmann, media pundit, “The world outside, the pictures in our head.” At our dinner, key note speaker, Tom Cibrowski, Good Morning America Executive Producer, ABC, also mentioned they are rapidly adopted new hi-def video cameras to reporters to report more quickly and cheaply with video.
9. Importance of Local Market Dominance—The Washington Post reaches 45% of Washington area households. You need 30 ads on local TV or 60 ads on cable TV to achieve the same reach as one ad in the Washington Post. Of the 18-34 year olds in the area, 62% use the Washington Post on-line. This is group most easily monetized in advertising. Note that 86% of the Washington Post web traffic comes from outside of the DC area.

Those of us in PR would be wise to adapt our business model to reflect the new demands of immediacy, visualization, conversation and localization.

Originally posted on 6 A.M.

This week I spoke at Edelman’s fourth New Media Academic Summit, jointly hosted by New York University and Syracuse University, attended by more than 100 professors from 10 countries. My bold assertion is that there is a Third Way for companies to communicate, beyond paid and earned media, by embracing Public Engagement.

Today, there is a dispersion of authority, away from the mainstream media and classic sources of influence toward open platforms and new voices driven by passion and personal experience. Smart companies are changing their games, moving from strict message control to a more open discussion with stakeholders. Mike Slaby, who just joined our firm as chairman of Edelman Digital, said, “We are moving from speaking at audiences to participating with them by drawing them into organizations with authentic communications”.

The Third Way asserts that companies need to complement their usual paid and earned media strategies by embracing new, social and owned media. The Third Way envisages:

• Utilizing the evolved mainstream media, with its numerous opportunities for participation, such as video, commentary from mid-level employees and shared experiences of customers.
• Reaching out to new media with the convening credibility of expert voices. Recognize that Politico or Tech Crunch may be the best starting point for media outreach.
• Utilizing social networks as essential spaces for company embassies. Be an aggregator for discussion. Connect members to related stories. Provide multiple entry points for relating to personal experiences.
• Helping every company become a media company (thanks again, Andrew Heyward, for this quote) via an owned channel. This offers a faithful representation of the present situation while providing context that enables viewers to understand the full story.

The change from impression-based interactions to long-term relationships with clients’ stakeholders requires nothing short of a major reevaluation of our role as PR counsel. We need to provide strategic advice, not simply communications tactics. Our profession must now embrace research to distinguish among idea starters, amplifiers and viewers. We should create the central idea and enable the full exploitation across four screens (TV, PC, Slate and smart phone). Since online platforms and spaces are at the root of the current evolution of media, digital strategy can no longer be seen as a specialty area; it must become a core competence for all PR people.

The new principles adopted by Edelman practitioners in order to maintain our clients’ license to operate, are termed the rules of Public Engagement. These include:

• Open advocacy (why you are here)
• Listening with new intelligence
• Participating real time in conversations
• Create and co-create content
• Socialize media relations
• Build partnerships for the common good
• Embrace and navigate complexity

We should aim for measurable outcomes beyond media impressions and advertising equivalencies, including Building Trust, Changing Behaviors, Deeper Communities and Delivering Commercial Benefit. At the same time we must draw a clear line between journalism and public relations, as we rely on a discerning media sector as a cornerstone of our work.

We will proceed along two dimensions—to encompass a broader set of media options, from Mainstream to New to Social to Owned; and engage stakeholders in deeper, long-term social relationships, as all communications become public. In this way, PR can assume its proper role as the organizing principle for strategy and communications. Herein ends the lecture: please click through my slide show and as always, I welcome your views.

Originally posted on 6 A.M.

We had a Media Future panel at the Edelman Global Leadership meeting this week. Two of the participants, Jonathan Miller of Newscorp and Chrystia Freeland of Thomson Reuters, had particularly acute observations about the way forward for their industry. So did Matthew Bishop, who addressed our team on Wednesday evening.

1. Evolution of Three Segments—Miller and Freeland agree that mainstream media must have a dual revenue stream from advertising and subscription in order to thrive. As the MSM segment begins to charge for content, there will be an even faster rise of the insurgent niche, featuring media such as The Huffington Post. They have tiny distribution costs and small infrastructure of reporters. The third segment is professional service entities such as Bloomberg or Thomson Reuters, who charge high prices to their clients. “The question becomes how much ankle to show in the consumer space in return for ability to attract better reporters and better sources,” said Freeland. Note that Bloomberg makes available its content to the public on Bloomberg.com fifteen minutes after it is posted on the terminal and that only 8% of stories written by Bloomberg reporters make it to the public site.
2. Rise of New Digital Brands That Integrate Backward into Print—Miller spoke about Politico, which “has a print vehicle where they make most of their money via advertising. They are really superb, with true authority. They could start to charge for their digital content.”
3. Commentary More Valuable than News—In an informal poll of Edelman executives at our leadership meeting, the most frequently cited names of “must read” journalists were columnists Thomas Friedman and Maureen Dowd. “Commentary is more valuable than commodity news,” Miller said. “But there is an ever shrinking time frame for readers between news and expectation of views”. Freeland said that there is growing tension in the newsroom between beat reporters and their more celebrated editorialist colleagues. “Tom Friedman wants his content to be free so he can sell more books and deliver more speeches. Meanwhile the business side of the media is installing pay walls.”
4. Power of the Tablet—This is rapidly becoming the fourth screen for media, along with the TV, PC and cell phone. “There will be 40-60 million units in use in the USA within two years,” Miller asserted. “This will change behavior. It is a terrific opportunity for print, both newspaper and magazine, to reinvent itself with a dual paid and free content model.” Freeland sees that video is the key accelerator for mobile devices. “Youth want visual content; video with text.”
5. Three Paradigms—Miller discussed the Mark Zuckerberg web media structure, with the first being linking web sites to each other (Google), the second being applications – especially games (Zynga), the third being the people centric web (Facebook). He is trying to reposition MySpace in the “what you are actually interested in” niche.
6. The Power of Consumer Voice—Fox just held auditions for Glee, my teen daughter’s favorite TV show. Candidates had to create videos to enter; 37,000 were posted in three weeks. Then over 100 million votes were tallied to find the winners.
7. Downward Pressure on Pricing—In prior periods, the media companies were content creators and distribution owners. Now the two competencies are separating. “Apple is really a seller of mobile devices,” said Miller. “They want songs to sell for 99 cents. In fact, iTunes is a break-even business.” The continued squeeze on content producer revenue by distributors is best exemplified by Google, “who think that media is free.”
8. Ultra Premium Brands–The Economist Magazine, according to its US editor Matthew Bishop, expects its readers to devote two hours to each issue. “Our bargain is that you will be truly informed for that investment of time. We don’t see other media as competition. We are competing against other options for your Sunday afternoon leisure time.”

We will have to move ever more quickly to adapt to a world where the extended universe of media is more segmented.

Image credit: Robert Scoble and dkleinst