2000 Platinum PR Honorable Mention
The Case
When Hotmail debuted the concept of free, Web-based email in 1996, it quickly became a smash hit with Internet users. When Microsoft bought the start-up, Hotmail traded its
underdog reputation for the software giant's resources, and the baggage that came with it.
As a result, whenever MSN Hotmail hit snags, whether performance- or growth-related, or just perceived, users and industry critics were quick to blame Microsoft. And there were
problems, from slowdowns and brief crashes to security holes. Because of the corporate connection, the media covered the problems extensively. The product began to suffer in
reviews.
"Hotmail is such a great concept, everyone fell in love with it - it had very interesting founders, it was a hot young startup [with] a great story to tell. As they grew, there
were bumps in the road that folks were willing to let go," says Robin Foster of Shandwick International. "When Microsoft bought them, there was a magnifying glass on them...I
think Hotmail would have faced a lot of these things even without the acquisition."
Originally, Shandwick's Silicon Valley office had planned to undertake an image campaign to keep the public in love with the software. But it quickly shifted to devising a
crisis communications plan, to apply some perspective to Hotmail's operational challenges. "I don't think it ever occurred to anybody that free email could have a crisis," Foster
says. The goals: to decrease the amount of negative coverage, ensure that media coverage was accurate and balanced, and begin to win over reviewers.
The Structure
As an independent startup, Hotmail had not had much exposure to dealing with the media. Shandwick and Microsoft recognized that Hotmail employees all needed a crash course in
media relations, particularly how to deal with potentially troublesome situations.
The first thing was to create a small team (four to five people) of Shandwick and Hotmail employees. "Two or three people can easily create [a crisis plan], but it can't be
done outside alone or internally alone," Foster says. Shandwick had the objective knowledge of what had to be done, while Hotmail knew the people and organization.
The team brainstormed crisis alternatives, ranging from minor to catastrophic, anticipating where the first signs of trouble would come from, who should be notified and what
kind of response the company would make. The team produced a detailed plan that walked everyone who might get involved through the elements of crisis management. Key sections
included:
Crisis levels. The team identified three problem categories: developing incidents, serious incidents and disasters. They established generic definitions, examples, and
procedural guidelines for response to each. It stressed that any minor problem could escalate to higher levels without prompt action.
Actions. The plan laid out steps for every employee in every crisis scenario. One fundamental rule: Whoever first received notice of a problem, whether through a user
complaint or a press call, should gather all the facts possible about the issue, promise to report the matter to someone to look into or comment on, and notify the crisis
team.
Once alerted, the crisis team would review the problem with the appropriate Hotmail employees, determine if it was local or widespread, notify other Hotmail and corporate staff
as needed, and decide whether the PR strategy should be proactive or reactive. Then the best communications methods and channels could be identified and appropriate messages
developed.
Recipients and messengers. Anyone - from receptionist to customer service representative to high-level manager - could be first to find out a problem was brewing. So the
team identified possible contact points and established a response protocol geared toward each level of responsibility. Because Hotmail is an international product and problems
can crop up 24/7, the team also provided a modified plan for overseas operations. "Most of the calls came in to the West Coast, but sometimes it was London. Are we going to make
them wait nine hours?" Foster asks rhetorically. Media training was provided to key spokespeople and the company enforced policies regarding media contacts during potential
crises.
The Payoff
Within a few months, media coverage of problems had subsided and the tone of the articles had changed, Foster says. While it would have been unrealistic to expect zero coverage
of problems, "we saw the coverage turned from sensational and hyping the problem to more factual, what we were doing to fix the problem."
As the volume of criticism died down, Hotmail began to win product reviews, which further strengthened the crisis plan. "If you're winning reviews, it's a little harder to take
potshots," Foster says. "You have to always be thinking of your reputation - a crisis plan is to help defend your reputation, not build it."
(Foster, 202/585-2057)
Shandwick is no longer handling the Hotmail account for Microsoft, though the agency still has work with the company, particularly out of its Seattle office. Hotmail is now
being handled by Waggener Edstrom, Microsoft's primary PR firm. Foster says she misses working with the folks at Hotmail. "They were a great client - so savvy about marketing and
PR, they really valued what we did."
Shandwick Silicon Valley
Founded: 1986
HQ: San Mateo
Staff: 55 (now) (40 then)
Revenues (1999): $6.8 million
Clients: Microsoft, H-P, Agilent, IBeam
Campaign players: Robin
Foster, director; Peter Ross, supervisor; Dave Reddy, Sr. AE.
Foster is now group VP, based in Northern Virginia, Ross is group director in the London office, and Reddy is now supervisor in the Silicon Valley office. Robin credits the
work all three did on Hotmail in part for their promotions. "Dave [Reddy] is a good example. He had just moved into PR from being a sports reporter...It gave him opportunities to
shine, and he did."