Wal-Mart vs. the Blogosphere


Fallout from the retailer's "astroturf" blog scandal may end up hitting PR firm Edelman the hardest

Last week, Wal-Mart (WMT) took a hit when bloggers on the Internet attacked the behemoth's effort to burnish its image via its own bloggers, who were receiving compensation from the retailer for their efforts. The episode may turn out to be an even bigger public relations disaster for Edelman, the retailer's PR firm. It culminated on Oct. 16, with a mea culpa from CEO Richard Edelman on his blog.

It all started last month, when a folksy blog called Wal-Marting Across America was set up. The site featured the musings of a couple known only as Jim and Laura as they drove cross country in an RV, and included regular interviews with Wal-Mart workers, who were dependably happy about the company and their working conditions. BusinessWeek.com wrote the first exposé about the blog. The story shot down speculation that Jim and Laura weren't real people, identifying the woman as Laura St. Claire, a freelance writer and an employee at the U.S. Treasury department. But it also disclosed that Wal-Mart was paying plenty for the couple's support, including money for renting the RV, gas, and fees for writing the blog (see BusinessWeek.com, 10/9/06, "Wal-Mart's Jim and Laura: The Real Story").

Once bloggers heard that Jim and Laura had undisclosed benefactors, they were furious. Shortly after the story was published, it was revealed that the other half of the couple was Jim Thresher, a staff photographer at The Washington Post (WPO). The Post's executive editor quickly made it clear that Thresher's involvement violated internal ethics guidelines, and Thresher had to pay back any money received for the trip and remove his photographs from the blog. "Today, there's nowhere to run and nowhere to hide," says Paul Rand, a partner at Ketchum public relations. "The moment you hide something, you will end up being exposed and picked apart."

CLEARING THE GROUND RULES

The Edelman firm may end up suffering even more than Wal-Mart from the mess. The firm says it's solely responsible for organizing the RV trip via a group called Working Families for Wal-Mart, which is funded by Wal-Mart. The retailer declined comment. "We won't comment on the RV tour, since it was a Working Families for Wal-Mart initiative and we didn't have anything to do with it," says Wal-Mart spokesman David Tovar.

As CEO Edelman says on his blog, his firm helped write the rulebook for companies trying to tap into the blogosphere. But his firm didn't follow its own rules for transparency with the Jim and Laura blog. The first of six key guidelines, as spelled out by the trade group called the Word of Mouth Marketing Assn., is that "Consumer protection and respect are paramount." The second: "Honesty of Relationship, Opinion, and Identity." Outsiders marvel that the firm could go so far off track. "They certainly weren't doing what they preached," says Kevin O'Keefe, a lawyer-turned-blogger who founded LexBlog and helps law firms set up their own blogs.

The question in the blogosphere is: How could Edelman have tried to pull something like this over on us? After all, Richard Edelman has lectured blog writers, America's largest companies, and even politicians on how to use this new medium. In February, the company hired Steve Rubel, a recognized blogging expert, to help it devise strategy on how to use blogs most effectively.

SILENT PARTNERS

In terms of PR strategies, Rubel last year told BusinessWeek that the first job for companies is to monitor the blogs to see what people are saying about them. The next step is to think of damage-control strategies. And when blogs attack, he says companies have to learn to track what blogs are talking about, pinpoint influential bloggers, and figure out how to buttonhole them, privately and publicly (see BusinessWeek.com, 5/2/05, "Blogs Will Change Your Business"). Edelman's Web site states that, as senior vice-president in Edelman's me2revolution practice, "Rubel is widely viewed as an expert on conversational marketing."

Yet Edelman and Rubel stayed silent, even as the blogosphere called on them to speak out. Some calls were civil. Blogger Duncan Riley wrote an open letter to Rubel: "Your employer, Edelman, is embroiled in a pretty shady astroturfing scandal. A fake blog promoting Wal-Mart… I'd really like to read your take on this." Others were more shrill. Shel Holtz, a fellow corporate communications expert, wrote on Oct. 13: "So where is Edelman in this particular conversation? Missing in action." O'Keefe of LexBlog says: "On the worst day, you crawl into your shell and wait until the Internet stops."

How the public relations firm handled its own PR quickly became the biggest story on the Internet. Both Rubel and Edelman write widely read blogs. On Oct. 16, Edelman finally wrote: "I want to acknowledge our error in failing to be transparent about the identity of the two bloggers from the outset. This is 100% our responsibility and our error; not the client's." And Rubel says: "Our firm failed to be completely transparent. I am sorry I could not speak about this sooner. I had no personal role in this project." When contacted for comment, an Edelman spokesman said that neither of them would be available for an interview.

Gogoi is a reporter for BusinessWeek Online in New York.

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