For anyone attuned to the news lately, American International Group Inc. (AIG) might evoke images of accounting scandals, angry regulators, and a dramatic showdown with ousted Chairman and Chief Executive Maurice R. "Hank" Greenberg. Yet in its ads, the $99 billion New York insurer brags about its prowess in the marketplace, casting the company as the place to put money for your "great-great-great-great-great grandchild." The only nod to scandal is the sudden disappearance of its now loaded slogan -- "We know money" -- which spokesman Steven A. Rautenberg concedes "might be too assertive for the current environment."
That kind of business-as-usual strategy would have been considered hubris or just plain stupid a decade ago, but the sands have shifted. In an age of instant news, and tighter financial regulation, staying silent isn't an option. Whether the problem is product tampering, CEO scandal, or an investigation, there's no time to see how things play out. These days, it seems, the best offense is a good ad.
Demanding boards and investors have put pressure on companies to be proactive, but strategies differ depending on the type of storm. Crisis response can entail anything from trotting the CEO around the talk show circuit to turning up the volume on brand ads and even addressing consumers via the Internet. Here's how some companies are coping with crisis in the new era.
AIG: Divide and Conquer
When New York Attorney General Eliot Spitzer and other regulators came knocking to investigate a suspicious transaction linked to Greenberg, AIG's board moved quickly to seek his resignation and distance the company from the scandal. "The idea is to separate the king from the kingdom and demonstrate to the customer base that the kingdom is still operating," says reputation consultant Eric Dezenhall. "AIG has been getting the idea across that this is a Hank Greenberg problem, not an AIG problem."
While the accounting issues have multiplied, leading to more resignations and $3.9 billion in profit restatements, AIG has consistently put out a message that its operations are strong. Throughout the scandal, AIG has tracked public attitudes via focus groups with customers, agents, and employees. Surprisingly, Rautenberg says, "the current issues do register, but there have been no large changes in how consumers view AIG."
Merck: Accentuate the Positive
Big pharma's image has suffered lately from drug recalls and election-year mudslinging over heath-care costs. But Merck & Co. (MRK) has been charging back with a multimedia image-building campaign. That's despite CEO Raymond V. Gilmartin's stepping down in May as reports continued to surface about the company's questionable tactics in promoting its now-withdrawn painkiller Vioxx. Merck's latest ads play up its efforts to cure childhood diseases and to offer discounted drugs to seniors. "Most of our image and reputation is being defined by third parties, and that shows in their [negative] perceptions."says Len Tacconi, executive director for corporate communications at Merck.
Morgan Stanley: Micromanage the Ad Buys
Financial services giant Morgan Stanley (MWD) has seen an exodus of key talent amid accusations of outgoing CEO Philip J. Purcell's mismanagement. While Purcell battled to hold onto his job before announcing his retirement on June 13, the company increased ads shouting that the clients come first.
But the beleaguered bank also recently began requiring notice of negative Morgan Stanley stories from media outlets so its ads won't appear nearby. Such agreements are common with airlines that don't want to run feel-good ads after a crash. But demands to media outlets to reschedule ads to sidestep negative stories are relatively new. Says Interbrand Chief Strategy Officer Gary Singer: "There is a presumption of guilt [of the advertiser] in this environment."
Marsh: Mea Culpa, and Reinforce the Brand
Regulators swooped down on insurance broker Marsh & McLennan Cos. (MMC) last year for alleged bid-rigging and conflicts of interest because of its contingency commission charges, which rewarded insurers that funneled business to its brokers. With charges settled and new management in place, the company recently launched a major rebranding campaign aimed at restoring faith in the Marsh name. The campaign, dubbed "The New Marsh: Making changes to restore your trust," focuses on Marsh's executive bench and global reach.
In an era of fragmented and viral media, rumors can soon escalate into a full-blown crisis. Fast-food chain Wendy's International Inc. (WEN) raised ad spending after a customer claimed to find a fingertip in her chili at a San Jose (Calif.) outlet on Mar. 22. Ads for chili were pulled, but promos for other products continued because the company (correctly) felt the customer faked the story. "If we didn't do anything wrong, what do you apologize for?" says Wendy's spokesman Dennis Lynch.
Right or wrong, it seems the crisis-management playbook has changed. Instead of going dark when a crisis hits, advertisers are turning up the lights.
By Diane Brady in New York, with Michael Arndt in Chicago and Amy Barrett in Philadelphia