CEO Exits… Enter Trouble

Since the financial crisis, the corner office of many financial institutions has become a highly visible revolving door, with consequences impacting more than just the careers of one-time CEOs. With this backdrop, the FCS today staged a Tuesday Breakfast Club presentation and panel discussion on “Communicating Critical Events: CEO Transitions and Risk to Enterprise Value.” FTI Consulting served as the presenting sponsor, with Bryan Armstrong, Managing Director of its Strategic Communications practice, introducing compelling research about the connections between CEOs and corporate financial performance.

Armstrong pointed out that “public company CEOs in North America face particularly strong pressure from Wall Street, which has resulted in higher than average CEO turnover.” FTI’s research shows that 43% of CEO transitions are unplanned, due to either resignations or special situations, which includes fraud, strategic transformation, death or health issues, bankruptcy/restructuring, and miscellaneous crisis (e.g., scandals). Noting that one of the main roles of a public company’s CEO is to communicate strategic objectives and performance results to the investor community, Armstrong explained that 32% of investment decisions are based on the perception of a CEO – underscoring the importance of that CEO’s reputation.

How to protect and promote a CEO's reputation became the topic of the panel discussion that followed the research presentation. Moderated by The Wall Street Journal’s Francesco Guerrera (currentaccount@wsj.com), editor of “Money & Investing,” the panel addressed the concerns of succession planning, employee and external communications, media exposure, and the role of the Board of Directors.

Here are some highlights of the panelists’ observations:

Elizabeth Saunders, Chairman, Strategic Communications, FTI Consulting:

• The Street [Wall Street buy-side analysts] wants more exposure to more executives, deeper in the organization, knowing that they represent potential successors. “But with more exposure, there’s more risk.”
• It’s the communications professional’s job “to know the new CEO’s background very deeply.”
• Another key function for the communication professional is “to assess the most dangerous audience” and prepare specifically for that stakeholder group.
• Dealing with an unplanned transition is “where internal communications professionals earn their stripes.”

Jeanne Branthover, Managing Director, Boyden Global Executive Search

• “Succession must be planned at every level of management, from bottom to top.”
• Communications about succession “must be early and always transparent.”
• “We’re seeing CEO run-off competition more and more.” The practice of pitting two or three internal candidates for the CEO job “can be very healthy and positive for the company.” The candidates want to do their best, so productivity improves. Plus “a run-off attracts news attention,” with everyone now watching for the better candidate to win.

Matt Hickerson, Managing Director, Head of Corporate Communications & Marketing, Macquarie Group, Americas

• Two of the biggest challenges facing an internal communications team are timing and messaging: “they’re usually brought in very late” [when there’s been an unplanned CEO transition], and “there are often competing loyalties among the departing CEO, the new CEO or even several internal candidates.”

The panelists also handled questions from the audience, that touched on the consequences of other C-suite executive departures (e.g, CFOs, Division Chairmen), how Board Directors react when their own reputations are threatened during CEO transitions, and how best to orchestrate a communications plan across in-house and external professionals.

Guerrera cited several cases of recent CEO transitions at financial companies that were not handled well, resulting in damaged reputations for the firms, as well as the incoming and outgoing CEOs. Each panelist also offered real-life examples of CEO transitions that offered undeniable lessons for communications professionals, working for both internal corporate teams and PR agencies.

For more information on the research presented by FTI Consulting, please visit: http://www.ceotransitionstudy.com/.

Advertising is Never Child’s Play for E*TRADE and Nick Utton

Yesterday, more than 120 FCS Members and guests packed into our February luncheon at the New York Yacht Club to see a presentation about babies and the Super Bowl. Of course, the speaker could only be Nick Utton, Chief Marketing Officer of E*TRADE.

During his remarks, Utton explained the birth and maturing of the now legendary E*TRADE Baby commercials, but also provided a deeply insightful look behind the scenes at how “scientifically” E*TRADE tests, reviews, and executes its advertising.

With a presentation titled, “The Race for Marketing Optimization,” Utton reviewed for the audience the important tenets that drive the development for all E*TRADE campaigns. He began by stating that “marketing is the science of logic” and founded in the fundamental “4 Ps”: product, price, place, promotion. Referring to the classic AIDA model (Awareness, Interest, Desire, Action), Utton emphasized how advertising must drive to Action – something that is often lost when a campaign uses humor to break through clutter and focuses on awareness/brand personality alone.

Utton warned that a major challenge in the voice and messaging of financial advertising lies in the proper balance of emotion and reason. He feels that too many ads in the category are “magnificently rational” yet “emotionally bankrupt.”

In a highly competitive category, where E*TRADE is outspent by four of its competitors, Utton pointed out that “brand differentiation is everything.” E*TRADE relies on its ad campaigns to underscore the company’s distinctiveness, and Utton’s mission is to maximize his media spend so that “every $1 spent works like $2 to $3.”

Over 8 years, Utton has moved E*TRADE’s marketing spend from 10% online to approximately 37%, a strategy designed to acquire prospects more effectively and efficiently. Despite that, Utton credited “word of mouth” as the most effective factor in influencing prospects to consider E*TRADE, followed by television. However, neither of those avenues can be measured with the precision of digital advertising, and measure is something E*TRADE likes to do. Utton provided several examples of how E*TRADE “does lots of testing” and measures everything from CPA (cost per acquisition) online, to site analytics for its various web pages, from the effectiveness of buttons vs. banners, to the value of different media categories, such as news and sports.

In reviewing the E*TRADE Baby ads, Utton explained that the next step is a series of television spots tied to life events, e.g., marriage, retirement, births. His very entertaining reel of past spots included the “Speed Dating” commercial that aired during this year’s Super Bowl (btw: Giants 21, Pats 17). Utton also discussed the tremendous publicity garnered for the company through a highly effective PR campaign that placed the E*TRADE Babies in high visibility media coverage, including NFL playoff games, entertainment news coverage, and both the mainstream and financial press.

Utton also explained the strategy behind upcoming campaigns that don’t feature the Babies, but focus on product demos to promote the company’s new 360, Pro, and Retirement services.

Taking questions from the audience, Utton noted that, to date, three babies have been used over the life of the television campaign, with each baby-actor having a “shelf life of about 18 months before growing too old.” He also commented on how price and service are the two main factors for competitive advantage among online brokerages, and how volatility in the stock market (VIX) can be an indicator for new account activity for E*TRADE.

As a past winner of the FCS Financial Marketer of the Year, Utton proved once again that he is a masterful CMO, successfully managing the significant brand value of a treasured advertising campaign through wildly competitive times.

BONUS:  Did you know that the E*TRADE babies make cameos in the 2010 and 2011 FCS Portfolio Awards Music Videos?  Click on the links in the right-hand column to check them out on YouTube.

Surge of Activities at the FCS

What do Super Bowl commercials, Baby Boomers, CEO firings, tuxedos, Chief Life Officers and the Internet have in common?
The FCS, of course.  Read on to find out why.

On Thursday, February 23, the FCS will welcome Nick Utton, CMO of E*TRADE, as the featured speaker at our monthly luncheon. Nick will be on hand to present a review of the legendary E*TRADE Baby commercials and to discuss how a super Super Bowl strategy has been a touchdown for E*TRADE year after year.

Our first Tuesday Breakfast Club event of 2012 will be held on February 28th. Join us at the New York Yacht Club for a very engaging presentation and discussion on “Communicating Critical Events: CEO Transitions and the Risk to Enterprise Value.” Research will be presented by FTI Consulting’s Bryan Armstrong, Managing Director & Head of Capital Markets Research, followed by a panel featuring his colleague Elizabeth Saunders, Americas Chairman of the FTI Strategic Communications Practice, as well as Matt Hickerson, Head of Corporate Communications & Marketing, Macquarie, and Jeanne Branthover, Head of Global Financial Services Practice, Boyden Global Executive Search. The panel will be moderated by Franceso Guerrera, Editor, “Money & Investing,” The Wall Street Journal.

On Thursday, March 22, Michelle Peluso will join our monthly luncheon to talk about Citi’s global marketing strategy for 2012 – the bicentennial year for the bank. As the bank’s Global Consumer Chief Marketing & Internet Officer, she’ll talk about how a digital strategy is a key component for Citi’s marketing approach.

In April, we have two main events. On the 11th, we’ll stage the FCS Executive Education Summit at 3 Times Square, home of our host, Thomson Reuters. The very compelling topic will be, “Baby Boomers… or Bust: How to Market to and Influence the 50+ Consumer.” The full-morning agenda will feature presentations by Joe Coughlin, who founded MIT’s AgeLab, and Brent Bouchez, co-founder of Five-0, an agency dedicated to marketing to baby boomers. We’ll have two panels, moderated by journalists from Ad Age and our presenting sponsor The Wall Street Journal. Panelists from leading financial companies will discuss how they’re overcoming the challenges of reaching the 50+ consumer, including the implementation of effective and perhaps surprising digital tactics.

Our monthly luncheon in April will take place on the 19th and feature Dave Wozniak of Lincoln Financial. Dave will report of Lincoln’s new “Chief Life Officer” campaign.

All of this activity is leading up to the “Egg McMuffin” of FCS’ events: the 18th Annual FCS Portfolio Awards. This year’s black tie gala dinner and awards presentation will be held on Wednesday, May 16th at Terminal 5 in NYC. But, at this point, the far-more-important date is Friday, March 16th. That’s the deadline to enter this year’s competition. Whether you’re a marketer, an agency pro or a media rep, you should be thinking about the great advertising, collateral and public relations work executed in 2011 and get your team – or your clients – to enter. Digital media (online ads and websites) continue to grow as one of the most competitive categories. And remember, we also give out trophies for Return on Investment. And, there’s a Best in Show award for Multicultural work. To download the Call for Entries form, just go to our web site and click on the Portfolio Awards tab.
As always, we invite you to get involved in the FCS. As the biggest event of the year, Portfolio has the biggest to-do list and needs the biggest committee. But you don’t have to take on the biggest task. There’s always a way to help, no matter how big (or how limited) your involvement can be.

And of course, we’re always looking for Programming ideas and support, from luncheons and breakfasts to cocktail receptions and special events.

Give me a call (212-413-6044) or drop me an email (kevin@fcsinteractive.com) to talk about how you can get more out of your FCS membership.