One of the key features of our stock market is one that is occasionally trumpeted by serious investors, but, as of yet, has not ingrained itself in the public consciousness. Namely, the price of a stock has nothing to do with the value of the company that it represents. A company that has no profitability, and could even be losing money, can possess a huge stock price, while a company racking in insane profits can be flying under the radar with a relatively low stock price. The only thing that determines stock price is how many people are buying or selling the stock. If it’s a popular stock and investors are jumping in, then the price goes up. If the company becomes unpopular (irrelevant of profitability) and investors sell the stock, then the price goes down. In short, the stock market is translating PR into dollars.
Mark Cuban, one of those crazy rich guys who is way better off than you are, has blogged about this phenomena more than once. Helaine Olen, in her bestselling “Pound Foolish”, expounds on this idea forcibly and credibly. Even the super conservative government minders of the nation’s financial system frequently fret about certain news tidbits because of the effect that they’ll have on the market. The world generally considers PR pros to be at best an entertaining nuisance, but on a global scale it’s PR that can make or break fiscal health and government policy. Academics like to sugarcoat this concept by relabeling PR as the “power of ideas”, but whatever you call it, the crux of the matter remains the same. What people believe and feel is often the ultimate decision maker for real world events.
Here’s a few recent examples from big stages:
- The world’s perception on Syria constantly changes based on the reporting and handling of the events happening. Putin’s op-ed in the New York Times is just the latest twist in the story.
- Twiiter tweets its IPO announcement and the media world erupts driving even more Twitter frenzy.
- President Obama recently hired Rick Stengel from Time magazine to be his undersecretary of state for public diplomacy and public affairs.
A recent news items show via a PR lens why race is still a practical topic in America, as well as one that is increasingly becoming interesting to marketers. (And, no, we’re not talking about Mayor Bloomberg’s racially inflammatory comments about Bill de Blasio.)
If you had to think of the most racially neutral places in America, what would come to mind? For many people the answer to this question would be the great outdoors. America has made a point of maintaining a number of beautiful national parks, and has justifiably taken pride in preserving some beautiful natural experiences. These dedicated areas possess remarkably little branding, are easily accessible to whoever wishes to visit, and have an intrinsic apathy to any cultural bias. And yet the question of race is at the forefront of items which keep park managers up at night.
In a recent article, the NY Times reports that if one breaks down the numbers of park visitors by race, the figure comes out incredibly skewed. Only one out of every five visitors is not white. An even more striking factoid is that less than one out of ten is Hispanic. These numbers certainly don’t jive with the population figures at large, and especially so for those who want all Americans to enjoy the scenery. So what is a national park supposed to do about it? Follow the money, of course.
In a move that comes as little surprise to PR pros, the national parks are looking to private industry to do some promotional cross branding. What does industry get out of it? A hot and rapidly expanding market for hiking, camping, and other outdoor equipment. From an outsiders view it looks like a game of hot potato. The PR race burden seems to merely be shifting from the public sector to the private one. But seriously! Who are we kidding? Pandering to specific demographics, be it race or otherwise, is what private industry does best. Score one for the national parks.
In the hot intellectual world of behavioral economics, one of the key terms bandied about is that of anchoring. This refers to a phenomenon where if one hears a certain number beforehand, any further thoughts, even if unrelated, will be related to that number as well. The common example is to tell one person the number 50 and tell a second person the number 75. Then ask them both for the average cost of a vacuum cleaner. The one who was told 75 will generally give a higher estimate than the one who was told 50. The initial number provides the anchor for all thoughts that occur in the near future.
Two recent examples show the PR relevance of this idea. Tumblr was a hot social media website for teenagers and those of an artistic bent, but if you were outside those demographics, then chances are you never heard of it. Of course that all changed when Yahoo bought it. Suddenly Tumblr became the biggest thing ever and Yahoo’s most important purchase. The truth is that Yahoo actually acquired a number of web companies, but only Tumblr received that kind of popular recognition. Why? Because Yahoo paid a billion dollars for it. Even though Tumblr was losing money, and was not any more profitable than Yahoo’s other acquisitions, the billion dollar price tag made it an item of worth in the public eye. Maybe not a billion dollars, but certainly something close. Certainly more than those companies (whatever they were) that Yahoo paid significantly less for. The public fell for the real time anchor, and in the process made both Tumblr and Yahoo forces to be reckoned with.
An even more egregious example of anchoring is currently taking place with the PR push for Oscar nominations. A24 Films are pushing the anchor envelope by using language promoting James Franco in a way that goes beyond even standard Hollywood hyperbole. Presumably, the thought is that by pushing Franco into the ethereal world of historically meaningful performances (if such things even exist), Academy judges will balk but not too much. If the anchor of historical significance is properly played, maybe that will be just enough to push Franco past the other “worthy” contenders.
In the PR world we often hear a lot about being truthful and sticking to simplicity. Anchoring disagrees and can definitely be employed occasionally to provide meaningful results.