PR Squared: Good Ol' Fashioned PR

IStock_000002919936XSmall It ain’t all about Social Media, folks. It ain’t all about PR 2.0. Sometimes it is just about smarts, tenacity and diplomacy.

Since I abandoned the Good Pitch Blog project a year ago, I haven’t had a forum to highlight good ol’ fashioned PR work – and using this blog to flog for SHIFT has never been my intention.

However, the work below is just plain kick-ass. It’s a li’l long for my taste, but the dialogue is so cogent, compelling & fact-filled that it allowed one of our Account Execs to nail down TWO Wall Street Journal opportunities for one of our clients.

All personal and company names have been changed.

Note: again, this is a long post, but I think it’s worth reading for PR pros – especially those who are charged with media relations. The editing I’ve done is minimal, and was done strictly for length and to protect identities.

From: SHIFT
To: WSJ REPORTER
Subject: The Sky isn't falling, XYZ stock prices are

XYZ. The name once conjured images of a retail giant. Now its name simply registers as another organization that has put its customers at risk of information theft. The ramifications XYZ is facing are beyond measure as the trust of their customers is fading and their stock price is dropping. One needs only to look a few years back to see the potential for XYZ’s future: CardSystems was a billion-dollar company before its widely publicized security breach compromised 40 million consumer accounts. After that, the company was acquired for $47 million. Does this same fate await XYZ?

After a data breach, organizations are forced to spend time and financial resources to regain consumer trust. A damaged reputation can cost an organization in decreased brand value, reduced share price, lost customers, etc.

I would like to put you in touch with “Joe Blow,” CEO of SHIFTClient, an expert (etc.) …

From: WSJ Reporter
Sent: Friday, March 23, 2007 3:15 PM
To: SHIFT
Subject: RE: The Sky isn't falling, XYZ stock prices are

I'm not sure the sky is falling. The stock at about $27 a share is still much higher than the $22 a share it traded at last July. It even hit $30 after the bad news came out in Jan. Do you have any reason to believe that shareholders are expecting worst things to come?

From: SHIFT
Sent: Friday, March 23, 2007 4:45 PM
To: WSJ REPORTER
Subject: RE: The Sky isn't falling, XYZ stock prices are

I see where you are coming from. What I’m looking at is the drop the stock took from the time the news of the breach took place in late January/ early February, versus the price of the stock during the actual attack where no one was aware of what had actually happened.  Although, XYZ may not fall as hard as CardSystems – it is looking like a strong example of the operational risks involved in security breaches. Below is a further timeline of how the event has unfolded.

•          January 18^th is the day press began to report XYZ’s security breach.

•          XYZ’s stock price dropped from a little less than $30 a share to a close of about $29.50. By the next day, the stock price had recovered its losses and climbed beyond $30 a share.

•          A week later, further articles followed reporting on the widening credit card fraud and possible link to the XYZ breach - driving XYZ stock back down below $29.50, where it closed Jan. 30.

That 1.7% decrease in XYZ’s stock price is in line with the percentage price drops for other companies that have announced similar security breaches. A study by the Ponemon Institute found that when a company announces a security breach, its stock price drops between 0.6% and 2.1%. Although it may not be the biggest dip, it is the beginning of the decline.

•          As February began, XYZ stock closed down more than $1 – another 3.6% – to $28.49 a share, on volume that was three times the daily average. The drop was attributed to a class action lawsuit filed the day before by AAA Bank against XYZ, and to a call by U.S. Rep. Joe Blow for the Federal Trade Commission to investigate any negligence by XYZ.

•          Over a five day period, XYZ fell more than 5%. Now we’re talking about some serious money. This is where the true problems will boil up – will investors question the Company as a whole? Will Banks no longer be willing to shoulder the costs associated with the data loss?

It’s this very dip in stocks and possible loss in future sales leads and partnerships that even pushes some companies to delay announcing their breach – which of course isn’t the answer.

But it may explain why about one in six companies admit to not complying with California’s 4-year-old security breach notification law even if they are require to do so, according to the Global State of Information Security survey conducted by PriceWaterhouseCoopers.

Now, to my original comparison - will XYZ be the next CardSystems and feel the full force of the industry’s wrath? Honestly, we’ll have to wait and see. I’d like to put you in touch with SHIFTClient CEO to talk through this further…