levick weekly - july 27 2012
DESCRIPTION
Barclays and Libor: Swim, Dammit, Swim Scandal: What Every Business Needs to Learn From Penn State and the Freeh Report Adjusting Your Content Strategy: for the Penguin Update 5 Ways Insurers Can Position Themselves to Win Under the ACA BPA: Emotions Trump Science at Every Turn Mike Koehler on Foreign Corrupt Practices Act Reform www.levick.com/insightsTRANSCRIPT
EDITION 1
WeeklyJuly 27, 2012
Barclays and Libor: Swim, Dammit, Swim
Scandal: What Every Business Needs to Learn From Penn State and the Freeh Report
Adjusting Your Content Strategy: for the Penguin Update
5 Ways Insurers Can Position Themselves to Win Under the ACA
BPA: Emotions Trump Science at Every Turn
Mike Koehler on Foreign Corrupt Practices Act Reform
Of course for American banks, the tsunami
du jour is the Libor-fixing scandal that has
already cost Barclays $450 million in fines,
exposed that British banking giant to an entire
generation of litigation, and forced Chief Ex-
ecutive Robert Diamond and Chairman Marcus
Agius to resign.
It’s a little surprising that an event that so
fundamentally compromises the global mar-
ketplace has generated widely divergent
commentary. There are even suggestions from
high-authority sources that the scandal has
been significantly overstated by vengeful me-
dia and self-interested politicians. On the other
side, equally informed commentators warn
that, if attempts to manipulate Libor were suc-
cessful, it could be “the biggest securities fraud
in history, affecting investors and borrowers
around the world.”
Since Libor involves literally trillions in global
instruments, an incalculable number of people
(like homeowners) can file lawsuits. In just
one American city, the Federal Reserve Bank
of Cleveland has already warned that a big
percentage of prime adjustable-rate mortgages
and subprime ARMS are tied to the Libor
index. In some cases, it may be difficult for
plaintiffs’ lawyers representing homeowners
to show causation but they’ll certainly try, and
won’t stop trying for years.
Can you say “asbestos?” It’s a neat comparison
and a vexing one. The world can (and does)
live without asbestos. It cannot live without
banks.
There is, as has been pointed out, every reason
to anticipate that U.S. financial institutions
are also in for their share of severe regulatory
fines, incessant litigation, and further political
calumniation. Earlier this year, it was reported
that traders at Citigroup and UBS tried to
manipulate Libor rates for the yen. UBS has
reportedly already cut a deal in various inves-
SwIm, DammIT, SwImThe thing about a tsunami is that, if you haven’t gotten to a safe place soon enough, there’s not much you can do except watch your own extinction roll in from the deep.
BarclayS aND lIBOr:
richard S. levick, Esq.Originally Published on Forbes.com
Weekly
in order to fix the prime rate. That the Libor
investigations stretch back to 2007 only exacer-
bates the communications challenge because it
additionally underscores the fact that the prob-
lem was systemic, not aberrational. And, when
Robert Diamond agrees to forego $31 million in
stock bonuses, it too fuels public ire by begging
the question, why was the man responsible for
this bank about to get so much money but for
the inconvenient fact that Barclays got caught?
Absent an extraordinary communications cam-
paign, there are long-term risks looming for
the entire financial industry. In the UK, “the
big unanswered question is whether we will
now see consumers begin to desert Britain’s
main street banks,” says Paul Mason, econom-
ics editor of the BBC’s Newsnight. “There’s an
uptick in inquiries about account transfers to
mutuals and ethical banks...Once customers
realized that manipulation may have artificial-
ly inflated the price of credit across the whole
economy, maybe for years, that’s a bread and
butter issue.
“After we then found out the Libor market was,
to use Paul Tucker’s word, a ‘cesspit,’ you were
bound to get the whole issue of banking reform
reopened,” adds Mason.
We’re reminded of a similar uptick in the U.S.
a few years ago when community banks saw
some increase in their business as a result of
the banking scandals. But the more pressing is-
sue on both sides of the Pond is the prospect of
new legislation that could dwarf Dodd-Frank.
In the U.S., the banks particularly need to take
the ongoing revival of interest in the Glass-
Steagall Act (the law limiting the securities
activities of commercial banks, passed in 1933
and repealed in 1999) very seriously.
Richard Levick, Esq., President and CEO of LEVICK, repre-
sents countries and companies in the highest-stakes global
communications matters — from the Wall Street crisis
and the Gulf oil spill to Guantanamo Bay and the Catholic
Church.
“ There’s an uptick in inquiries about account transfers to mutuals and ethical banks...Once customers realized that manipulation may have artificially inflated the price of credit across the whole economy, maybe for years, that’s a bread and butter issue.”
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tigations in exchange for leniency on criminal
charges. Bank of America was subpoenaed
last year. JPMorgan Chase, HSBC, and others
sat on the Libor panel during the period
under investigation and may also face
unpleasant questions.
A realistic assessment is that the industry’s
actual exposure, civil and criminal – as well
as the looming harm to global markets – lies
somewhere between “this is just a witch hunt”
and “this is an unprecedented disaster.” At the
same time, the impact of the tsunami will be
measured at least as much in terms of public
response and political reaction as in direct
economic fallout.
After all, we’ve reached something of a break-
ing point as stakeholders simply cannot toler-
ate more of the same betrayal they’ve endured
since the subprime disaster. In that sense, even
a much less threatening crisis than Libor could
become the straw that breaks the camel’s
proverbial back. As financial institutions wait
their turn to enter the Libor line-up, they must
therefore face an extraordinary communi-
cations challenge: how do we talk to people
who’ve given us every chance to talk to them
in the past but who, at this belated point in
time, are no longer inclined to listen?
Right now Americans are experiencing much
less of a media feeding frenzy over Libor than
the Brits, but that might change once they real-
ize that this scandal is almost tantamount to
some bank manipulating the Federal Reserve
With over 300 years of history and expertise in banking, Barclays operates in over 50 countries and employs 140,000 people.
Tupungato/shutterstock.com
Scandal:
This week, former FBI Director Louis Freeh confirmed what most people following the Jerry Sandusky scandal have believed since the story was first reported; that the most senior Penn State officials knew about the coach’s reprehensible acts and did nothing to protect the children he was abusing for more than a decade.
What EvEry BuSinESS nEEdS to lEarn From PEnn StatE and thE FrEEh rEPort
richard S. levick, Esq.Originally Published on Forbes.com
Weekly
all, a few community members posting on an
internal social network don’t carry the weight
of 60 Minutes or the New York Times. The con-
tent was certainly damaging, but it was being
circulated by folks who seemingly lacked the
influence to be widely believed.
The problem, however, is that the message
board postings were, by definition, the breed
of high-risk, low-authority conversations that
can cause real problems in the social media
era. All potential news falls into one of four
categories. Let’s stick with the Penn State
example and add a few hypothetical stories to
illustrate the point:
• High-risk/high-authority: The Wall Street
Journal publishes front-page accusations
that Jerry Sandusky has been abusing
children for years. This is the moment the
story goes viral.
• Low-risk/high-authority: The Wall Street
Journal publishes a back-page report that
freshman applications at Penn State are
down slightly from the previous year.
• High-risk/low-authority: Community mem-
bers post to a message board that Jerry
Sandusky may be abusing children. This
is the moment that institutions should be
on notice. Monitor aggressively and advise
decision makers of the rumors and that,
critically, they are no longer operating in a
vacuum.
• Low-risk/low-authority: A student posts to
a message board that the dining hall food
gave him athlete’s foot.
Companies and organizations know how to
deal with three of the four quadrants outlined
above. High-risk, high-authority stories need
to be dealt with aggressively and immediately.
Low-risk, low-authority stories are best left
alone. And low-risk, high-authority stories may
require some form of response, but nothing on
the level of a national news conference.
It’s when we come to the high-risk, low-author-
ity stories that we see companies and organiza-
tions stumble. Penn State is not alone. It is the
warning shot across the bow. Your risks may
not be pedophilia, but what enterprise risks
are people talking about now that provide you
early warning?
Time and again, we’ve seen children’s product
companies fail to take what’s written on the
Mommy blogs seriously. We’ve seen food pro-
ducers ignore what the plaintiffs’ bar is writing
on its blogs as it searches for the next big class
action case. And we’ve seen single customer
service snafus detailed on YouTube evolve into
national scandals before the purveyor of said
service even knows what hit it. And it’s not just
bloggers and social media. It’s all sources. How
does your company stack up in search engines
when you type in risk terms, not just the name
of your company or brand? When you whistle
past Penn State, don’t whistle too loudly.
The advent of social media has provided even
the most low-authority sources with a mega-
phone that helps their messages reach the
mainstream media, plaintiffs’ attorneys, regu-
lators, analysts, and others who can do lasting
This week, former FBI Director Louis Freeh
confirmed what most people following the
Jerry Sandusky scandal have believed since
the story was first reported; that the most
senior Penn State officials knew about the
coach’s reprehensible acts and did nothing
to protect the children he was abusing for
more than a decade.
The only conclusion one can draw is that
former president Graham Spanier, former
athletic director Tim Curley, and the late head
coach Joe Paterno believed that whispers about
Sandusky’s gruesome acts were safely con-
fined within community walls. As long as they
kept the lid tightly shut, the accusations would
never spring forth from this particular
Pandora’s Box.
Among their many greater sins, they failed to
understand the transparent nature of this digi-
tal age—that institutional privacy has vanished
and everything is now discoverable. As a re-
sult, the rest of us have been provided a salient
lesson in how high-risk, low-authority chatter
ought not to be ignored by anyone responsible
for protecting a brand or high-profile reputa-
tion (not to mention children at risk).
When 22-year-old reporter Sara Ganim broke
the Sandusky story open, she did so by follow-
ing up on conversations she stumbled across
on Penn State’s own online message boards—
conversations that Penn State officials either
were not monitoring or disregarded as not
credible enough to ever cross the thinning
line between rumor and “real news.” After
Richard Paul Kane/shutterstock.com
Weekly
With the release of Google Penguin, it’s
likely time to take a good hard look at your
content strategy. Content has always been
king, but unique content that offers value
and substance in order to earn Penguin-
proof links is now absolutely essential.
How can organizations ensure that the Pen-
guin update doesn’t devalue their content
under the new paradigm?
First, assess your current content situation.
Check Google Webmaster Central to see if you
have a message from Penguin. If your content
was impacted by the update, chances are if you
will have been notified. Check your Analytics
to assess potential Penguin damage. A simple
90-day traffic report should tell you if you lost
visitors. Also, be sure to check your keyword
referrer report, as well as manually check
the rankings on some of your top keywords.
Finally, be sure to use link tools to see your link
profile and ensure that “spammy” or unnatural
links aren’t hurting your rankings.
Second, make your content shareable. Chances
are that the content you write will end up on a
social network. So why not write about con-
cepts in a manner that will gain popularity on
social media and social networking sites? This
way, you don’t have to rely solely on Google
rankings for traffic. Be sure to create meaning-
ful headlines, as most social users today won’t
read past the first 70 characters. Also be sure
to focus on quality and the value your readers
garner from your insights.
And third, watch your keyword use. While
keywords are great, the latest Google update
means that over-use will scream spam. While
we’ve all be trained that we should use the
same keyword combinations throughout our
content so that we’ll rank well for a particu-
lar phrase, you will now be penalized and
removed from the rankings all together if
keyword density is too high. It’s now best to
write content that is closely associated with
your business while not limiting yourself to
keyword containing topics. Instead, embrace
all relevant concepts, even if they don’t offer
many keyword opportunities. And remem-
ber, never write your content first and then
sprinkle in your keywords at the end. Do your
research ahead of time and naturally incorpo-
rate any keywords as you write.
Lauren Yontef is a Social and Digital Media Account
Supervisor at Levick and a contributing author to
Bulletproof Blog™.
Lauren Yontef Originally Published on Bulletproofblog.com
Adjusting Your Content strAtegY: for the Penguin uPdAte
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Annette Shaff/Shutterstock.com
harm to a brand or reputation. At the same
time, however, it’s most important to note that
social media have also provided companies
and organizations with a crystal ball of sorts—
a tool by which they can see into the future to
identify the issues that may eviscerate their
brands in the coming hours, months or years.
Of course, that’s only true if they take the time
to study the tea leaves.
How can otHer companies and organizations best ensure tHat tHeY staY on top of HigH-risk, Low-autHoritY issues?
1. institutionaLize a sociaL media moni-toring structure: The task is greater than
simply having interns or assistants hand over
an aggregation of Google News items each
morning. Companies need to make use of the
myriad analytical tools available to know what
is being said about their brands online, who is
saying it, and—perhaps most important—who
and how many people are listening.
2. incLude risk and competitive anaLYses: Companies can’t just scour the Web for men-
tions of their brands or leadership; they need
to anticipate their greatest brand risks and
include related risk terms in their sweeps
as well—whether they be “product recall,”
“bribery,” or “white collar.” When worrisome
chatter is detected, they also need to perform
competitive analyses that tell them if the prob-
lem is theirs alone or an industry-wide trend.
To return to the PSU example, this would have
meant looking at the social media buzz sur-
rounding Notre Dame, Pitt, and other similar
institutions to see if speculation about football
coaches’ behavior is as rampant across the
NCAA as it was in State College.
3. understand tHat Low-autHoritY sources matter: A recent Agenda article authored by
Amanda Gerut details just how much weight
some forward-thinking companies lend to
social media chatter. Coca-Cola, for instance,
uses social media to “head off thorny issues.”
Proctor & Gamble CEO Robert McDonald is
personally involved in the monitoring process,
saying “I personally see the comments about
the P&G brand. This allows for real-time reac-
tion to what’s going on in the marketplace,
because we know that if something happens
in a blog and you don’t react immediately—or,
worse, you don’t know about it—it could spin
out of control by the time you get involved.” I
couldn’t have said it better myself.
Once we step back from the negligence carried
out by PSU officials, we begin to see how they
could believe such inaction was even possible.
They made the fundamental mistake of believ-
ing that low-authority sources lack the power
to take down an empire. Don’t make the same
mistake. The emperor’s clothes are as invisible
as they’ve ever been—even if the garment in
question is a navy blue football uniform.
Richard Levick, Esq., President and CEO of LEVICK, repre-
sents countries and companies in the highest-stakes global
communications matters — from the Wall Street crisis
and the Gulf oil spill to Guantanamo Bay and the Catholic
Church.
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It’s not every day that an industry has as many as 46 million new customers delivered to its doorstep. But when the U.S. Supreme Court voted 5-4 to uphold the Affordable Care Act (ACA) and the controversial individual mandate last week, that’s precisely what happened for health insurance companies across the country.
The law has new hurdles to clear in
Congress and the November election results
could change the dynamic yet again—but
the machinery of government is nonetheless
lurching toward implementation as the
American public grows more accepting of
the new healthcare reality. Tens of millions
of Americans who previously chose to forgo
health insurance will soon seek coverage.
Let the battle for their dollars begin.
That contest will be predominantly fought in
the 50 state-run Health Insurance Exchanges
(HIX) that the ACA establishes to provide indi-
viduals and small businesses with affordable
coverage options from the industry’s private
carriers. The vast majority of U.S. states were
waiting on the decision before passing legisla-
tion to establish their exchanges. But with the
SCOTUS decision, most will begin propping up
their exchanges by 2014 rather than allow the
feds to step in and do it for them (a few ideo-
logical stragglers notwithstanding).
The influx of consumers is also problematic for
the industry. With more high-risk patients on
the rolls, insurers will need to offset increased
costs by aggressively pursuing young, predomi-
nantly healthy consumers who would not en-
ter the market but for the individual mandate.
If they don’t do so effectively, premiums will
rise even as the exchanges introduce unprec-
edented levels of competition.
You don’t need an advanced business degree to
know what that scenario will mean. It is now
incumbent on private insurance carriers to
modify their marketing and communications
strategies to navigate these new challenges.
Insurers can no longer simply focus on large
HR departments and other traditional custom-
er funnels. They must reach a generation of
American youth not entirely convinced of the
value proposition.
Richard S. Levick, Esq.Originally Published on Forbes.com
5 WaySInSuRERS Can PoSItIon thEmSELvES
to WIn undER thE aCa
Weekly
3. Understand that “yoUng people” is not one aUdience.
It’s not enough to define this new audience as
“young people.” Insurance companies need
to dig deeper and build brand identities that
cater to the separate market segments under
the “young people” umbrella. Whose brand
will be known for the policy that is tailored to
the young, single customer yet to start a fam-
ily? Whose brand will be known for the policy
that is tailored to small business employees?
Whose brand will be associated with policies
designed for 30-somethings with kids in tow or
on the way?
Establishing connections between the brand
and these microtargets will go a long way
toward defining a policy as best in class. Here,
the well-known brands have a head start be-
cause they are already viewed by many youth
buyers as a safety sell. These companies can
continue to leverage this trust and familiarity
as they have in the past.
4. localize oUtreach to 50 different exchanges.
Many young people will rely solely on the
exchanges that will be set up in each state for
comparative policy shopping. The devil will
be in the proverbial details as each state will
present coverage options in different ways.
Some will highlight deductibles over yearly
premiums. Others will focus more on coverage
details versus price.
Insurers must therefore be keenly sensitive
to how their brands look viewed through 50
separate prisms and either adjust their policy
terms or market the competitive advantages of
their coverage to address these varying local
priorities.
5. excel at cUstomer service.
Most of us who have had health insurance
for years still don’t fully understand every
nuance of our policies. From co-insurance to
deductible rates, to the medical definition of
an “experimental procedure,” today’s first-time
customers will be all the more perplexed by
the restrictions in effect and the options on the
table. They will have a myriad of questions
and concerns.
Customer service will therefore be paramount
to hold on to an especially fickle youth demo-
graphic and transform these buyers into life-
long brand loyalists. Full transparency must
be a priority to ensure that customers under-
stand their coverage limits. For the healthcare
industry, Sy Sims’ maxim, that “an educated
customer is our best customer,” is definitive.
Thanks to the Roberts court, an elusive market
segment long coveted by insurers is within
reach—but only for those companies that
speak to the needs of young consumers, and do
so in a language that educates, motivates, and
inspires them to make the right choices.
Richard Levick, Esq., President and CEO of LEVICK, repre-
sents countries and companies in the highest-stakes global
communications matters — from the Wall Street crisis
and the Gulf oil spill to Guantanamo Bay and the Catholic
Church.
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1. Understand that the individUal mandate is anything bUt mandatory.
There is a sense among industry insiders that
many young people will opt to pay the modest
monetary penalty set forth by the individual
mandate, rather than premiums for policies
they don’t think they need. The ACA imple-
ments a maximum yearly penalty of $695 for
those who don’t obtain health care coverage,
which could look pretty attractive to potential
customers in lieu of policies they don’t believe
they will use.
As such, insurers cannot just articulate cover-
age details or the pricing advantages of their
policies. They must also show that it’s too great
a risk to decline coverage. Carriers need to
discuss the importance of preventative care;
how spending a little on routine doctors’ visits
can save your life; and the monumental costs
young people will incur if they contract a seri-
ous illness or simply break an ankle.
2. emote online.
Under the ACA, young health insurance con-
sumers are now able to rely on their parents
for coverage until they are 26—but they will
rely on the web thereafter. The 27-35 year-old
demographic is, of course, a digital animal.
That means insurance carriers must now begin
a new race to be found and chosen online.
Which companies will dominate search en-
gine optimization (SEO) and marketing (SEM)
for the terms used to research their coverage
options? Which companies will make effec-
tive use of blogs and social media to enhance
awareness of and affinity for their offerings?
Most important, which companies will gener-
ate the emotionally engaging video content
that helps consumers immediately understand
that the risk of not being covered is too high?
Two decades ago, the “Harry and Louise”
television campaign blended information and
a healthy dose of fear to effectively kill health-
care reform in the Clinton era. Today, the same
approach can be taken—with the opposite end
goal in mind—via YouTube and other venues
that young people populate. When they emo-
tionally connect to the benefits and risks of
not being covered, they will get it. Action fol-
lows understanding.
5 here are five strategic imperatives the will help private carriers carve oUt a significant slice of this still skeptical pie.
Bisphenol A (BPA) is back in the news. This
time, it’s the General Mills brand Progresso
coming under fire for using the chemical
as an acid-resistant sealant in the lining
of its metal soup cans. Despite a mountain
of scientific evidence that BPA is harmless
in the amounts found in food packaging,
more than a few Progresso customers are
demanding the brand discontinue its use o
f BPA and find other alternatives to
preserve its products and maintain
nutritional quality.
On Progresso’s Facebook page– which is
213,000 “likes” strong – and via a consumer
petition circulated being circulated online, con-
sumers are voicing frustration with the brand
in increasing numbers. They are concerned
about sensational reports that BPA can leak
into water and food and cause a host of serious
health problems.
It doesn’t really matter that the science doesn’t
actually support a ban on BPA. When it comes
to the safety of the food they put on their
tables, American families don’t pay much at-
tention to what the guys in white lab coats say.
Instead, they respond emotionally, taking steps
to limit risks, no matter how insignificant they
might be.
That’s undoubtedly why Campbell’s Soup made
the decision to go BPA-free earlier this year
and countless other brands of canned foods
have previously done the same. It’s certainly
why Beef Products Inc. had to shut down two-
thirds of its plants after parents campaigned
against the use of ammoniated “pink slime” in
school lunch hamburgers – even though the
fine-textured beef had had doubtless prevent-
ed thousands of cases of foodborne illness.
Consumer emotion is also why Progresso
probably will have no choice but to follow
suit. Fear – now jet-fueled by the Internet –
represents one of the most powerful motiva-
tors in the marketplace. When fear attaches
itself to a brand – rightly or wrongly – a com-
pany’s best course is to do is whatever it takes
to assuage anxiety and demonstrate that con-
sumers come first.
Gene Grabowski is Executive Vice President at Levick Strate-
gic Communications, the nation’s top crisis communications
firm. He is also a contributing author to Bulletproof Blog.
Connect with him @crisisguru.
L
Bisphenol A (BPA) is back in the news. This time, it’s the General Mills brand Progresso coming under fire for using the chemical as an acid-resistant sealant in the lining of its metal soup cans. Despite a mountain of scientific evidence that BPA is harmless in the amounts found in food packaging, more than a few Progresso customers are demanding the brand discontinue its use of BPA and find other alternatives to preserve its products and maintain nutritional quality.
EmotionS trumP SciEncE at EvEry turn
gene grabowski
BPa:
Weekly
mikE koEhlEr
Mike Koehler, J.D., Assistant Professor of
Business Law at Butler University, discusses
the Foreign Corrupt Practices Act (FCPA). Mr.
Koehler believes the FCPA needs to receive
non-binding Department of Justice guidance.
Additionally, he stresses that the FCPA needs
some limited structural reforms and outlines
his personal suggestions to enhance the FCPA.
viSit
Foreign corrupt Practices act reform