But the remedy is itself in sharp debate, particularly the question of whether advertising can play a real role in rehabilitating the country's image.
The issue picked up urgency last week after Newsweek's retraction of a report of Quran abuse that sparked riots and published photos of an imprisoned Saddam Hussein in his underwear stirred up anti-American sentiment.
The U.S. must act quickly to shift the world's view of America, according to a new report from the Council of Foreign Relations, which proposed a $1 billion advertising push over the next decade as part of the solution.
The study found U.S. brands are being battered along with the country's image. "Attitudes toward America are marked by ambiguity and ambivalence but they have become more negative in recent years," said the report. "This hostility is spilling over into negative attitudes toward American people and brands."
Based on focus groups of college-educated people in Egypt, Indonesia and Morocco, the report proposes that terrorism can be combated and the country's standing improved via an outreach effort that "agrees to disagree" about highly inflammatory issues, and instead talk up similarities and the ways America helps each country.
In addition to advising better branding of the country's foreign-aid efforts, the study calls for $100 million to $200 million annually to be spent on advertising for up to 10 years. It also calls for the U.S. to adopt a humbler and less confrontational tone.
While the report said people are growing angrier at America for its Iraqi and Israeli policies, it also said they still find America "a trend-setter" and associated with such brands such as Coke, McDonald's and Superman despite mixed feelings about those brands' U.S. heritage.
It found that people who strongly question U.S. policies on Israel and Iraq still use U.S. brands and admire the country's health care, education and economic leadership. "Muslims still respect, if somewhat grudgingly, America's economic strength, education and legal system and work ethic," it said.
But what's lacking is knowledge of America's development assistance, which the report said "has become all but invisible to the populations it benefits." Greg Charney, of Charney Research which did the study for the New York-based council, said, "When we went through a list of American foreign-aid programs in the three countries, people had a hard time believing it."
Suggesting that local residents "don't take seriously" U.S. government media such as Radio Sawa, al-Hurra TV and Hi magazine as information sources, the report urged the U.S. government to advertise in local media.
"Turning information and initiatives into communications that are heard requires more actively engaging local media, including the controversial al-Jazeera-as well as paid advertising, effective spokespeople and logos and labels on aid," the report stated.
The Bush administration launched a branding effort that included paid advertising before the Iraq war, when advertising veteran Charlotte Beers was undersecretary of state for public diplomacy and public affairs. That effort was criticized as ineffective and an inappropriate use of government funds.
But the report said more such efforts are needed. "To be heard, the United States has to go where the audiences are," it said. "This means large-scale use of paid advertising on popular media rather than relying on unpopular U.S. government media. It is the people who are not watching al-Hurra that America needs to reach most."
Mr. Charney said there are three keys to success. "America needs to adopt a humbler tone, focus on local initiatives and there needs to be a sustained commitment." He said if America acts, it can make a difference. "The problems didn't emerge in a day. They won't go away in a day."
But Tamara Wittes, a research fellow for the Brookings Institution's Sabon Center for Middle East Policy, questioned some of the study's conclusions.
She said that while the study reported correctly that American-sponsored media was viewed with suspicion, American advertising on local media would also be viewed with suspicion. Moreover, she questioned how realistic it was to promote American aid given the type of aid now common.
"In the 1950s and 1960s we were building bridges and offering food; a bag of food was a tangible asset. But we have been shifting projects to technical assistance. How do you say, `This trade minister is brought to you by the U.S.?' "
Joshua Muravchi, resident scholar at the American Enterprise Institute, blasted the report's recommendation to adopt a humbler perspective. It "is exactly the wrong advice," he said. "We should be looking Arab Muslims in the eye and telling them the truth as we see it."