NEW YORK (AdAge.com) -- You can pretty much bet on this: If consumers are looking for insurance these days, they're not going to AIG.
Even PR pros are shaking their heads at the blundering giant insurer, which is fast becoming not only the poster boy for financial-industry greed, but also a company seen as too arrogant or stupid to keep out of its own way.
First, in October, the company -- having just received an $85 billion taxpayer-funded bailout -- decided to go ahead with a planned executive retreat at a luxury resort California, a move called out by Barack Obama from the campaign trail during a presidential debate as ridiculous behavior. Then last week it came to light that AIG handed out $165 million in bonuses funded by taxpayers, earning it a pummeling last Sunday on morning news shows and a fresh rebuke from Mr. Obama.
AIG's response: The bonuses are meant to help retain top talent and had to be given because they were part of a contract. Even more damning to the company was news today that the insurance provider served up bonuses of more than $1 million to 73 people -- 11 of whom no longer work for the company (and one of whom received a $4.6 million bonus).
Aside from the fact that it's playing with the public's money, AIG also has a business that needs to retain consumers. Eric Dezenhall, CEO and co-founder of Dezenhall Resources, a communications consultancy, said all the negative coverage of the bonuses absolutely stands to negatively affect AIG's consumer business. He said the bonus issue is too "incendiary," and most consumers are not going to be able to see past it, or even want to listen to the company's reasoning.
"I've seen people make the argument about retaining people and giving them bonuses, and it's not an insane argument," Mr. Dezenhall said. "The problem is the timing is such that there are no audiences that are going to be receptive to that message."
No easy PR fix
In other words, in a business built on trust, such as insurance, there's no easy PR fix for AIG's consumer business -- and maybe no fix at all. "There is a spillover from the general image problems to their consumer business, because it makes consumers wonder about the viability of the company," Mr. Denzenhall said. "Insurance generally is such a visceral thing that if you thought the chances were one in 100 that your policy wouldn't be there, why wouldn't you just play it safe and go to another provider?"
Mr. Dezenhall said this is not a typical situation in which a company can go out and hire a PR firm and launch a campaign and website. "This is so beyond that and so much more at a strategic and policy level that before you can even think about tactical outreach, you have to remove the malignancy first," he said.
He said a marketing campaign of any sort is not the answer. "Contrary to what my compadres in the crisis sector will preach, an ad campaign featuring little girls with flowers and talking about how much AIG cares about the consumers is a complete waste of money," he said, "especially in a climate where your fundamental survival is the main topic of debate every night on the news."
Not everyone agrees. Torod Neptune, senior VP-global public affairs at Waggener Edstrom, said AIG needs to do something and that research the agency recently conducted backs that up. "Our research showed that it was consistently clear that consumers are looking to hear from financial-services institutions, and they are not," Mr. Neptune said. The agency polled 1,000 consumers, many of whom said they are not even hearing from their own banks. "So this is something AIG needs to be getting in front of pretty aggressively."
Mr. Neptune said the research showed that 44% of consumers polled said they had heard something from financial-service institutions but felt more negative about the industry afterward; 38% said they heard nothing at all; and 11% said they felt better about the industry after hearing from it.
"Aside from AIG, the industry needs to be communicating what it's doing and for organizations like AIG who are the recipients of taxpayer money the bar is much higher," Mr. Neptune said. "They need to be communicating what it is they are doing with those funds, and beyond that, where there are these business-practice questions, there's an even higher bar in terms of articulating what they are doing with taxpayer funds, and it seems there is a fairly consistent lack of appreciation for that reality."
AIG also did not respond to questions sent via e-mail regarding its strategy and current PR agencies.
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