How bad is it at Bank of America?

You know your company is in trouble when the chief marketing officer gets more press than the CEO.   And it’s in really, really deep trouble when the CMO is seen distancing herself from the company’s strategic blunders.

That’s what we saw over the weekend in the New York Times piece on Anne Finucane, “chief image officer” for Bank of America.  According to the Times, Finucane “warned against” Bank of America’s acquisition of Countrywide, whose bad loans and legal troubles remain a continuing source of pain for the bank.

But it’s an odd choice by BofA to have the CMO profiled at a time when the bank’s business structure an performance are under fire.   But then, perhaps CEO Brian Moynihan simply won’t talk.

That certainly was the case in a recent Wall Street Journal article, which suggested he was prepared to retreat from some banking markets because of the severity of the bank’s problems.  Moynihan was not quoted, nor was any bank official aside from a spokesperson, who weakly offered a bland statement that didn’t address the article’s main contention.

Even without making Moynihan available, the bank should have had a much stronger response to a story that relied entirely on anonymous sources.   (As ever, the WSJ helpfully provided cover for a senior executive or board member with an agenda, like promoting a preferred successor to Moynihan.)

Give Finucane credit for at least understanding that the bank’s image (and stock price) won’t rebound until it addresses its business issues.  No amount of creative image-making can substitute for that.

 

BofA: Advertising or Action?

The new ad campaign unveiled this week by Band of America faces an uphill battle to restore the bank’s battered reputation.  Advertising alone can’t do the job, really.  For the message to stick, it will take a coordinated effort across many communication channels (see a related post here).  More important, a lasting improvement in the bank’s standing will only come if there is demonstrable progress on fixing the business issues that are at the root of BofA’s image problem – debit-card fees, home foreclosures, small-business lending and executive compensation, to name several.   Until those issues are resolved, advertising and other marketing techniques won’t accomplish much.

3 Rules for public companies when attacking a critic

Bank of America’s shot at Henry Blodget is a measure of how influential the blogosphere has now become in the financial markets.  It’s also a reminder of the pitfalls of taking on critics publicly in any forum.

For every company that has seen its stock price plummet, the scene within BofA is a familiar one:  Shareholders are distraught, the board is urging the CEO to take action, the PR people are under pressure to staunch the bad ink – so the company decides to take a swipe at a critical analyst.

Not so long ago, a public shooting was reserved for analysts at big-name firms or the occasional hedge fund.   But today, some of the most insightful – and opinionated – voices are found online, and they’re reaching a wider audience than ever before thanks to the rise of online news sites and social media.  So they’re drawing fire from companies in crisis, too.

Blodget, a former internet-stock analyst, is now a prolific blogger who heads Business Insider, a popular business-news website.  His remarks questioning BofA’s asset valuations and capital requirements aren’t that different from what other analysts have said, but his platform gives them greater visibility.   They clearly stung BofA, and the bank decided to release a statement in response.

There are three principles for public companies to follow if they decide to go after a critic. BofA’s response failed on all counts.

First, don’t make it personal.  It’s tempting to attack the analyst but it ultimately undermines your argument and makes you look petty.  BofA’s statement included a reference to Blodget’s well-publicized ban from the securities industry in 2003 as part of an SEC enforcement action.  That’s simply not relevant to the issue.

Second, be specific.  A good response shouldn’t be merely a general complaint – that’s whining.  It should call out the analyst’s error and provide data to back it up.  BofA called Blodget’s comments “exaggerated and unwarranted” and offered only general data.  That’s just not convincing.

Third, be ready for more.  Critics seldom go away once attacked.  They respond to the response, and often see allies join their cause.  A response also makes the dispute more newsworthy, bringing the issues to a wider audience.  The BofA-Blodget fight is now a top story in the New York Times.  There has been no further comment from the bank.