As published today on OdwyerPR.

As a 34-year-old, born-and-bred New Yorker, as I read the details of Barack Obama’s stimulus plan, many memories come to mind. A product of the NYC public school system, I have worked hard for my money, and according to government classifications am “rich”, as I have made many sacrifices to get to where I am.  I’ve weathered a divorce, failed friendships, dwindling family time, and many others sacrifices entrepreneurs make, and I am sure these self-sacrifices will continue. 

Growing up in a Bronx household where my mother worked very hard, we were “latchkey” kids.  I worked 40 hours a week from the age of 11 in a local pizzeria run by a 30-something, hardworking Italian immigrant.  This man saved his money to open the business and worked 90 hours a week there to send his two young children to Catholic school.  My mom was the daughter of Holocaust survivors, who had instilled in her a unique endurance, but she was stubborn and refused to ever accept help from anyone.  It had to always be her way, and she refused to lose. We never asked nor received any help from the government.  My mother raised my sister and me to believe in ourselves, and she sacrificed herself tremendously so we could advance.

Prior to entering the field of Public Relations, I had one job.  I worked in that same local pizzeria every day until I was 23 years old.  Summers? Eighty hours a week doing dishes, mopping floors, and delivering pizza.  Though it was grueling, I loved it and wouldn’t change it for the world. But from a young age, I promised myself my children would never want for anything.

I was blessed to be accepted to an elite NYC public school, Stuyvesant HS.  I managed to avoid attending my local Bronx high school, described at the time as “one of the most dangerous high schools in the country,” by taking the subway system an hour and a half each day in the pre-Rudy Giuliani NYC.  Those were the lovely days of boom-boxes, graffiti and muggings every minute.  From the age of 14, I learned to navigate those causeways safely in order to reach school.  In high school, I met driven, focused young people for the first time, and was inspired to work harder.  Despite being accepted to numerous elite private colleges, I attended a NY State School, which I graduated from in 3 years after working hours and hours.  Memories of my mother clipping coupons, always picking up pennies from the floor, having me return bottles for the 5 cent return (in the pre-green days), and never using credit cards because you never knew if you’d be able to pay the bills remain in my mind then and now.

I started my agency, 5W Public Relations, in 2003.  Since then, it has grown to become one of the 20 largest independent PR agencies in the U.S., ending 2008 with nearly $12 million in revenue.  We have no debt, pay all vendors on time, and have always had a profitable business, as we work very hard and deliver results.  We don’t accept complacency; we demand and deliver.  We have never had a line of credit, don’t carry credit card balances and pay our bills.

Government to date has affected my firm in many ways: we have footed the bill for jury duty for countless employees; we have matched Medicare tax rates (with little faith the system will exist when most of my employees will eventually need it); and as my firm grew, we paid extra commercial real estate taxes.  Yet, we have always followed the letter of the law and kept forging forth.

Over the last few months, my firm, like many other companies across the world, has seen our business depreciate.  We have lost clients due to finances, collections have become much harder, and we have had layoffs.  Yesterday, the stimulus package arrived at my business.  We learned that my firm will have to pay 65% of COBRA’s costs for each laid-off employee, eventually to be reimbursed in some form of tax credits (as a business owner I pay and pay and pay – and never seem to get credits).  This stimulus package adds bills to my business, which is already down and suffering from lower cash flow. 

I hear about New York’s governor proposing to raise taxes another 4 percent and Obama consumed with the popular tale of “taxing the rich.”  Growing up in NYC, I always viewed the rich as elite folks who were billionaires – Rockefellers who ran humongous publicly-traded corporations – not my boss from 20 years ago, who owns seven local pizzerias and surely makes more than the $250,000 a year our President and Governor deem as the salary of the rich.  These so-called rich are the people who create jobs and who sacrifice.  People who work hard.

Today’s government is putting more strain on the hardworking entrepreneur.  It is taxing energetic people who sacrifice every day to create opportunities for others as well as themselves.   This is simply not the answer to the nation’s devastating problems.  Countless small businesses are comatose and need stimulation; it’s not their responsibility to bail out individuals.   The drivers of the American economy aren’t the poor and the jobless, but the entrepreneurs who create the opportunities for these jobless Americans.

The new government taxes will result in more job losses.  They will penalize the productive and give needlessly to the unproductive.  They will relinquish an entrepreneur’s motivation to work even harder to provide jobs.  This political hurricane sweeping through our businesses will change the country’s landscape for the worse.  It’s nothing more than un-American.  (And by the way, don’t forget, when I die, my kids will be taxed another 50 percent on my money.)

Ronn Torossian

5WPR

Media baron Rupert Murdoch issued an urgent internal document late Monday, warning his staff: “We are in the midst of a phase of history in which nations will be redefined and their futures fundamentally altered….  Many people will be under extreme pressure and many companies mortally wounded….  Let me be very clear about our company: where others might step back from their commitment…we will renew ours.”

I agree.  Anyone who doesn’t understand this, at any level of work and at any size of company, will be on the sidelines for a real long time.  Urgency now.  Immediacy and passion.

Truly amazing times.  Realize it every day.
Ronn Torossian

5WPR

I had lunch today with a group of junior employees, preceded by a meeting with a star former intern looking for advice on his career quest (he lamented, “Could there ever be a harder time?”).  Contrary to public opinion, I think now could be the ideal time for young people to succeed.  Certainly, they are in a better spot than older people who are struggling.  Young people have energy and can go and do endlessly.  Now is the time to use that edge.  There’s less pressure at home, no pre-conceived notion of how to do things, and hopefully not as much debt (or bad mortgage).  If it truly is a new economic world, young people have the best opportunities to succeed in it.  Albeit untraditional opportunities, but opportunities nonetheless.

I had the chance today to attend a class with my Rabbi, who spoke of people taking vacations to deal with the pressure during times like these.  As he said, now more than ever isn’t the time to take vacations.  Will the pressure and problems be solved after vacation?  No.  In reality, the problems and pressure will be twice as bad upon your return.  Now is the time to work twice as hard. Vacations will only compound the problems.  

Similarly, as an entrepreneur, I understand that there is no such thing as a business idea that is 100% right.  People doubting you at times is a healthy thing.  There will always be some opposition, because one who has no enemies has never done anything.  It’s not easy to succeed, or everyone would be successful.  Right now, it’s more important than ever before to keep your head down, focus, work hard and refuse to give in.  Do better and don’t accept failure.

Here at 5WPR, we have actually hired a new full-time recruiter simply to pursue employees who are willing and able at times such as these to do the extraordinary.  Have a client you need serviced properly, but your agency’s falling apart? Call me… Have a small agency but can no longer pay the bills? Are you someone who can get a media hit an hour? We firmly believe these people exist, and we are actively seeking them out. 

This isn’t the time to make short-term mistakes, which harm one’s long term success.  Short-term solutions with a long term vision are the way to victory.

Ronn Torossian

5WPR

Yesterday, I spoke with a group of 40 MBA students visiting from France who came to my office.  As we spoke about job opportunities in the new market, the similarities between the new financial realities of the U.S. and the socialist system of France became readily apparent, as Newsweek in fact recently noted.  While I don’t usually blog on politics, I can’t resist the opportunity to refer to this brilliant letter on how the current political system is adversely affecting entrepreneurs, which has been making the rounds on the Internet and which a number of entrepreneur clients have forwarded to me.  I absolutely agree with the sentiments of it, and I think we are living in tremendously unique financial times. 

As I remarked a few months ago in The Atlanta Journal Constitution, the era of trust in the U.S. simply doesn’t exist these days.  As the era of lies and liars emerges – Bernie Madoff, Bear Sterns, A-Rod – brands that can manage to communicate authentically can win in a major way.  I believe marketing in the short term is best done on a personal basis with niche marketing or hand-to-hand combat. Targeted strategic communications and PR plans will win a lot better in the short term.  It’s a sniper rather than a machine gun (and yes, this economy remains a war). 
 

It’s remarkable that things are so bad these days in the newspaper business that shares in the New York Times Co. on Friday slumped to a low of $3.99, less than the price of the Sunday paper. 
 

While many people often speak about the value of social media, there are also dangers that we must be aware of.  A competitor recently “friended” me on facebook, and then contacted nearly all of my friends in an attempt to send them information on his agency.  Similarly, LinkedIn and other networks are dreams come true for recruiters, competitors and the like.  So be careful with your public contacts.  Risks and reward should both be considered when participating in new social media platforms.
 

Ronn Torossian

5WPR

1:  I am working harder than I have in quite a while.  I vowed a month or so ago not to leave my desk until 10PM at least twice every week.  Sacrifices have to be made; there’s simply too much to be done and extra work is necessary. It’s tiring, and there is no foreseeable end to this need for instant results.  Right now, it seems there’s an inability for brands to look long term.  I think it’s a year to grin and bear it.

Today, a longtime client wrote to me describing a major, very unexpected business shift: “These are not normal times…when I pick up the paper to find out that Macy’s is now cutting 7000 jobs and consolidating 4 divisions into one…In normal times I would be amazed…in these times I am not surprised.”

2:  I very much agree with a comment I read today on www.adage.com: “One, social media is still a hot topic with agencies. Two, among clients, social media is lukewarm.”  I agree that while there’s a lot of dialogue in the agency community, few companies really spend on social media, and that’s surprising.  I think there’s tremendous opportunity for companies willing and able to take chances with their brands, but social media is still lip service more than action for clients.

3: I have made a point of interviewing a lot of people during these tight times; there’s a lot of talent that wasn’t previously obtainable. I have met some great people, but those who want PR jobs need to realize that there’s less time and less money than before.  Lateral moves may no longer be possible, and sometimes people may have to do more for less money. 

While the cream will rise to the top, certain people must be prepared to make less money during times such as these.  I know I will this year, and anyone with a sizeable agency who says otherwise is someone I’d call Pinocchio.

Ronn Torossian
A late night at work in February
5WPR

One of my closest friends, a well-known person in his field, emailed me with a witty one-liner from an industry conference this week: “The game has changed, but I still love playing it.”  This afternoon, a credit card that we have done business with for years called out of the blue and said that we now have a credit limit.  We have perfect credit, and this company hounded us for months to take a credit line with them, and we have never had a credit limit.  But they said the limit was standard for every company they work with.  The times they are changing.

The world has changed; the question is for how long.

I believe those of us in the service industry - PR, advertising, marketing and the like – need to work harder than ever before.  We need to be more focused and keep our eyes on the ball.  We can control our own destiny, but especially now, only excellence can survive.

Ronn Torossian
5WPR

Today we held a press conference for a client, and we were very pleased with the amazing turnout, about 10 reporters or so.   Our client was thrilled as well.  Press conferences are always so much fun: they’re risky because you never know how many reporters will show, but they have the potential to be hugely rewarding.  They’re also a lot of fun to set up.

During the press conference, one very young looking “reporter” from a major news outlet was present.  Although he had credentials around his neck, he clearly wasn’t of drinking age.  I was concerned he might be a fraud.  He asked questions during the press conference, and afterwards, my clients’ first question was, “Who is that?”  I had the same question, and sure enough, the “reporter” was, in fact, an intern, who was reporting on the story.  Budget cuts?

A reporter’s accuracy is very important, so I was surprised that a leading news outlet would send an intern to cover a major story.  Especially for a major publication.  Food for thought.

Ronn Torossian

5WPR

This week, I had separate lunches with two colleague CEOs of Public Relations firms.  Both firms are larger than us, and I respect both CEOs.  I can’t say I often dine or spend time with industry colleagues. Generally, my time is spent with clients, employees, journalists or hunting for business.  Given the pure chaos which exists in the market, it’s necessary to hear (and share) with industry colleagues.

An interesting topic that came up was the definition of Public Relations in 2009.  Not the textbook definition, but the actual definition vis a vis what clients will pay for and what agencies can ask to be paid for.  (As I often say, it’s easy to say, much harder to do.  Running an agency isn’t an experiment or concept – it’s reality).  Particularly in times like these, agencies need to be clear on what they do.  Clients rightfully demand responsibility for every penny spent, and PR firms need to know what they are tasked to deliver (and what can they deliver).

A key question for agencies remains: Do we define Public Relations as PR/marketing, or is PR centered around media and media relations?  Or a combination of the 2 ? I ask this question not as an academic, but more as a practicality of running a business.  It’s very challenging to charge a media relations client $50K a month, whereas agencies who look at PR primarily through marketing eyes can often charge that and more.  Conversely, it’s often a challenge to find senior talent who will call the media (as we at 5W PR expect). The skills to succeed at creating PR marketing programs are often antithetical to the skills required to thrive in media.

It is very, very much unknown just how small the PR agency world is.  There are fewer than 200 independently owned PR firms in the US, and that number is sure to shrink in 2009 with the recession.  Of course, the above list doesn’t count the many 1 or 2 person “PR” businesses, which I really wouldn’t characterize as agencies.  And there are also the 20 or so mega agencies owned by publicly traded holding companies.

As the CEO of the 21st largest independent firm in the US, I am often amazed at the small size of PR retainers.  As I often state, a $1M (or even $500K) PR client is one that any PR firm in the US would chase endlessly, whereas a $1M advertising client is one that very few top 100 ad agencies would pay a minute of attention to.  It’s a disparity that I very much hope will change in the future.  But for now, PR simply remains the overlooked bastard step child. 

While reading about the recent scandal surrounding Brunswick, a highly-specialized financial public relations firm, I wondered why PR firm employees don’t earn what bankers earn, despite the fact that PR professionals shape messaging, create public perception, and move stock markets en masse.  It’s because the fees corporations pay PR people simply aren’t in the millions.  (Although a firm like Brunswick does charge a stiff hourly rate, compensation doesn’t come anywhere near to what a top lawyer or banker makes).

Despite The New York Times’ statement that financial PR agencies “are often as deeply embedded in deals as the bankers and lawyers who negotiate them,” PR firms simply aren’t huge businesses like banks or law firms.  For anyone who wants to work at a PR firm, there simply aren’t more than a handful of options.

Ronn Torossian

5WPR

I just left a meeting with the CMO of a major consumer brand who spoke of networks calling him offering free advertising (zero fee or commitment at all). Essentially the dialogue was, “Try us and if you like it then we will chat.” Confidence or desperation?  My guess is in this environment, it’s more likely to be desperation.  How will this offer affect advertising on this station in the future ?

Which leads to the question: how important is brand integrity when it comes to marketing or PR?  While certain luxury flagship stores will never “officially” discount (Louis Vuitton, Hermes, etc.), choosing to burn their goods rather than discount them, other brands discount heavily and readily. Neiman Marcus stepped up discounts and promotions after dismal same-store sales.

During times such as these, brands have many questions and concerns vis a vis brand integrity.  Do we lower prices and cover costs, or do we go deep into our pockets in hopes of a better tomorrow?  It’s an interesting dialogue, and one I’m sure we’ll hear more of.

Ronn Torossian

5W PR

Being a boss and owner of a company is a huge responsibility, one which requires being tough and making difficult decisions regularly.  To this day, employing 75+ people is major pressure.

Today I received a call from a major crisis client, one who pays us a major fee solely to keep his company out of the media.  He urged me (to put it mildly) to tell a reporter in no uncertain terms to screw off.  This reporter was poking around endlessly, telling people half truths and straight-out lies about our client in an attempt to get sources quoted for a story.  A previous story by this same reporter had no named sources and many allegations.  I understood why this client was very upset.  So, of course, I harshly approached this reporter, instantly turning into “the bad guy.”  He was poking around in a kind way, and once we got tough, we were the “bad guys.”

Whether it’s (soon to be) President Obama banning reporters who didn’t endorse him from his plane, or the Fox News PR machine being harsh on critics, often times tough PR people are portrayed as not knowing how to deal with the media.  But in fact, these “tough guys” are perhaps the most effective PR people when it comes to difficult issues.

Same goes with owning a business and running a company: being tough isn’t easy.  But it doesn’t mean that there isn’t a modicum of fairness.  Being fair is vital to being tough, both as a business owner, and particularly when it comes to issues and crisis PR.

I complain sometimes to my closest outside business advisor about how difficult it is to run a business.  He reminds me, “If it was easy, everyone would do it, and everyone would be successful.”

Ronn Torossian

5W PR