12: Public Relations, Social Media, and Sponsorships

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You just finished reading a great newspaper story about a local restaurant even though you know the company has experienced several lawsuits and many customer complaints. The news story makes the restaurant sound like a great corporate citizen and the best place to eat in town. Sometimes a company gets “free” publicity such as news stories or reviews about its products and services in the mass media, even though the organization has no control over the content of the stories and might not even know about their publication. How did a restaurant with so many complaints manage to get such a great story written about it? How did it get good coverage when it might not be deserved? Perhaps the restaurant used part of its promotion budget to pay for public relations efforts to generate positive stories and positive publicity.

Public relations (PR) includes information that an organization wants its public (customers, employees, stakeholders, general public) to know. PR involves creating a positive image for a company, an offering, or a person via publicity. PR has become more important in recent years because there are now so many media outlets people pay attention to, including YouTube, social networking sites, and blogs. It’s pretty easy for anyone to say anything about a company in public forum. Indeed, publicity is a double-edged sword; it can result in negative news, such as a poor review of a movie, restaurant, or car, or positive news. Organizations work hard to get favorable news stories, so while publicity sounds free, building relationships with journalists does cost money. Just like advertising, public relations, sponsorships, and social media are critical components of the promotion mix and promotion budget for many firms.

Sponsorships (the financial support of different events, buildings, and activities) often create a lot of publicity. As such, more organizations are realizing the benefit of allocating part of their promotion budget to sponsorships. While most people associate sponsorships with sports, companies also sponsor things such as entertainment, buildings, events, and philanthropic projects, as well as brands and products on social media. Expenditures on sponsorships in North America are estimated to be about $18.9 billion in 2012.Joe Mandese, “Sponsorship Loses Steam, but Continues to Outpace Ad Growth,” Normbondmarkets.com, January 12, 2012, http://normbondmarkets.com/sponsorship-loses-steam-but-continues-to-outpace-ad-growth/. While sports dominate the use of sponsorships, sponsorship of entertainment such as concerts and theme parks continues to grow. Social media sponsorship, which occurs when companies pay social media publishers to “talk” (write blogs or post updates) about things such as their brands, movies, products, or contests also continues to grow. Cash-sponsored social media providers are expected to exceed $65 million by 2014.“Social Media Sponsorships,” Izea.com, accessed January 15, 2012, http://izea.com/advertisers/social-media-sponsorhips/.

Organizations also use texting and multimedia messages, including social media, to generate positive customer perceptions and sales as well as for recruiting and hiring. Social media includes methods of online communication among organizations, people, and communities. The social media environment is rapidly changing and continues to grow in popularity. Think about the different types of social media that you use.

Facebook, a social media networking site, has 800 million users worldwide, which exceeds the populations of all countries in the world except China and India. While the United States has the most Facebook users with 155 million, India is second with 43.5 million. Facebook expects their popularity and growth to continue as they target over two billion Internet users worldwide.Nyay Bhushan, “India Has World’s Second-Highest Number of Facebook Users at Over 43 Million,” The Hollywood Reporter, February 3, 2012, http://www.hollywoodreporter.com/news/india-has-worlds-second-highest-286904. Over half of Chinese, Korean, Indian, and Thai Internet users access social media sites through their phones rather than through computers.“Social Network Site Users Ready to Go Mobile But Telecom Carriers Need to Set the Stage for Mass Adoption, Says IDC,” IDC, November 17, 2009, http://www.idc.com/AP/pressrelease.jsp?containerId=prSG22084309 (accessed January 20, 2010). In this chapter, we examine the public relations, social media, and sponsorship tools organizations use and how they contribute to a company’s success.