Don’t Panic... As any good hitchhiker knows, these are sage words, printed in large friendly letters across the front cover of the galactic traveller’s indispensable guide. However, savings holders at Northern Rock reacted as though Dad’s Army’s Corporal Jones had instead uttered the immortal line, and in a true comedy of errors, set about withdrawing all their money from the otherwise stable financial institution, turning it from Northern Rock to Northern Floppy in two short, febrile days. In PR terms, it is Ratner-esque. It is like Britney shaving off all her hair; Charles and his tampax; Imelda and her shoes. Dare one whisper it….Barings Bank. How on earth does a company recover from such a mauling to its image?
However, the effects of such panic are not just felt by the bank and its investors. The Drum understands there are likely to be redundancies at Cravens and TH_NK, which handle Northern Rock’s advertising and digital marketing, respectively. Meanwhile, media incumbent MediaVest Manchester has stepped forward to insist that work with the financial client is “business as usual.”
The total value of the company’s advertising spend across the north east was recently quoted at £6.6million in the last financial year. Given the financial battering the bank has taken in the last fortnight, with its share value plummeting by 70 per cent at the height of the crisis, the impact across the agencies operating in the north east is likely to be significant.
Meanwhile, the future of Northern Rock’s sponsorship of Newcastle United Football Club is also expected to come under review. Both commercial directors at the club – Darren Venn and Warren Palk – took leave this week and could not be contacted, leaving the club rudderless at this crucial time.
No one at the club was willing to comment on their sponsorship arrangements, and there is a real sense that the hatches there are being battened down. However, Ron Stout, assistant director of PR at Northern Rock said the bank will stand by the club until the expiry of the deal in three years time.
“The current deal with Newcastle United lasts until 2010,” he said. Not only are we committed to honouring the contract, Newcastle United are honoured to stand in support of the Northern Rock at this time.”
Like Newcastle FC, Chris Hill, chairman and managing director of Cravens maintains that there is sufficient goodwill in the north east to see the bank through the crisis. “Nobody is giving up on Northern Rock at all. This agency is involved in a massive fightback,” he said. He also maintains that, despite the “feeding frenzy in the media,” the Northern Rock crisis will not have an adverse effect on its total spend in the north east. In fact, he says, it is likely to increase in the short to medium term.
“The marketing and PR spend is higher than ever. The fact that the share price has gone down is not related to the amount of advertising they do,” he said.
“There is a lot of reporting about the brand being completely dead. It is not. We are not really concerned about whether its advertising spend is going to go up or down in the medium term.”
The southern press largely disagree. “As a brand, it is shot” crowed the Daily Mirror, for once offering perceptive analysis of the scale of Northern Rock’s new, non-financial problem.
It is understood that Northern Rock has already enlisted the help of PR specialists in an effort to fend off brand meltdown. The Finsbury agency handle the account for financial and corporate PR, and are understood to have dispatched extra staff to shepherd the crisis. In the meantime, the vultures are already circling. It has emerged that Barclays is capitalising by rolling out a heavyweight tactical advertising campaign promoting their savings credentials in a bid to exploit the crisis engulfing Northern Rock. The bank is launching a series of full-page advertisements to run in the national press created by BBH, using the slogan ‘A great home for your savings’.
The nationwide freesheet the Metro joined in by kicking the Northern Rock while it was down, printing chairman Adam Applegarth’s memo announcing the Bank of England bail out, which signed off with the vaguely carefree “Bloody hurrah!”
Nigel Sarbutt, managing director of Communiqué PR, believes that Northern Rock will be able to salvage its image, but only if it takes the public relations bull by the horns.
“They have to accept that they are at a point in a process. Every crisis goes through a particular trajectory. They need to weather the storm. My advice would be to get the chief exec out there time and time and time again”
Northern Rock chairman Adam Applegarth’s apparent last minute withdrawal from a Newsnight interview – much to the annoyance of host Gavin Essler – was a PR own goal, and a missed opportunity to take a positive message directly to those affected.
“I can’t understand why you would choose to do that. That is a poor choice,” said Sarbutt. “That is your opportunity to put your side of events to an influential audience.
“Painful as it may be to face a grilling, the accepted wisdom is to take every opportunity to state your case, even if part of it is dealing with heavy flak. If I could give one piece of advice, it would be to get out there and weather the storm, starting in the north east.”
Despite the pronouncements of the Daily Mirror, Sarbutt believes the Northern Rock brand can recover, provided a proactive, communicative approach is adopted as soon as possible by the beleaguered bank.
“I don’t think it [the brand] is shot at all; they have to accept that a large proportion of their reputational asset has disappeared. The best thing to do is talk it out. My advice is to hit the road, and go and talk, and talk and talk.”
Rob Brown, PR director at McCann-Erickson thinks that, from a crisis management point of view, Northern Rock helmed the initial emergency very well.
“Beyond the initial error, the way they handled themselves from a PR point of view was quite good,” he said.
“They managed to get the message across very convincingly that, it didn’t matter how many people withdrew their money, they would remain solvent. That was the critical message to get across, and they did that very well.”
However, he does think the intense media coverage, and the sheer size of the PR disaster, may have damaged the company irreparably.
“When you face a crisis on this scale, the business never totally recovers,” he said.
Rick Guttridge, acting MD of Brazen PR, agrees that the brand identity of the Northern Rock has suffered a massive setback that it will find very difficult to recover from.
“It’s more than a hiccup; it is devastating for the brand. Its whole integrity has been brought into question,” he said.
“To recover from that is going to take some doing. I think you will see heads roll in the boardroom over the coming weeks. People are going to be nervous.”
However, he did point to last week’s recruitment of Tyneside legend Sir Bobby Robson in the PR offensive as a step in the right direction. The former Newcastle FC and England manager was pictured opening up an account at the bank, in an effort to begin the public rebuilding process.
“They have absolutely massive loyalty in the north east; that was a good move,” said Guttridge.
“He is such a legend up there. The question is whether they can get consumer confidence back.”
Brown agrees the struggle will be uphill, but playing to the core strengths of the brand – its financial product portfolio – could be the best way to build the brand back up.
“It is a very interesting set of challenges they face from a PR point of view,” he says. “The brand awareness is considerably higher than it was before the crisis. If they can capitalise on that by bringing financial products to the market that will chime with people’s trust, they might be able to turn around the negative exposure.”
Recovering even the worst reputation can be achieved with persistence if the essential product is robust. Up until the late 1980s ‘Skoda’ was a byword for the very worst Eastern European car manglers could cobble together; now it stands for quality and understated reliability, simply through the patient promotion of a quality product.
The goodwill is there for the Rock, and the Bank of England is standing behind it. The question is whether they can harness these strengths to recover from their flop, and stand firm in the North once again. Don’t panic, guys. Don’t panic.