Siemens Polishes Image; Big Outlay Planned To Try to Mend Scandal's Damage

Abstract
The "Siemens answers" campaign, which is being launched in major markets around the globe over the next several months, began last month in Germany with print ads featuring a black-and-white photograph of Werner von Siemens, who founded the company in 1847. The ads announce that Mr. von Siemens asked the pressing questions of his time, such as whether streetcars would be better than horse carriages, and answered them with important innovations.
Subsequent newspaper and magazine ads, rolled out in the U.S. starting this month, ask readers questions such as "How can disease be detected before it strikes?" and then highlight technologies being developed by Siemens. The ads feature health-care, energy and industrial automation, the three areas of focus for Siemens under a new restructuring program.
Siemens is also swinging into action after some of its rivals launched new marketing campaigns in recent years. General Electric Co.'s "ecomagination" campaign publicizes the U.S. company's search for "innovative solutions to environmental challenges." Philips Electronics NV of the Netherlands has a campaign called "sense and simplicity" highlighting how it is developing products that make sense and are easy to use.
Full Text
With its most extensive advertising campaign, Siemens AG wants people to remember the company's past -- but also to forget its past year.
The German engineering conglomerate, still grappling with a massive corruption scandal that emerged last year, is hoping that the image campaign will shift the public's attention back to Siemens's technological prowess. It plans to shell out more than 100 million euros ($148 million) annually over the next three years on the campaign, a big shift for a company that has long spent heavily to develop medical scanners and high-speed trains but traditionally has set aside little for advertising.
It also represents a gamble that the expensive marketing effort can reverse -- rather than become overwhelmed by -- a stream of negative publicity as the corruption case continues to unfold.
The scandal triggered the departures of Siemens's chairman and chief executive, and last month, the company paid a 201 million euro fine in connection with bribes paid in Nigeria, Russia and Libya. Prosecutors in a number of countries are still pursuing allegations that company managers paid off officials in those places to win infrastructure contracts in recent years.
Ronald Focken, an executive at the independent German advertising agency Serviceplan Gruppe, believes Siemens was wise not to launch the campaign earlier this year, when the bribery case was almost daily fare. "If you have lots of negative headlines, people will believe the press reports more than the advertisements," he says.
The "Siemens answers" campaign, which is being launched in major markets around the globe over the next several months, began last month in Germany with print ads featuring a black-and-white photograph of Werner von Siemens, who founded the company in 1847. The ads announce that Mr. von Siemens asked the pressing questions of his time, such as whether streetcars would be better than horse carriages, and answered them with important innovations.
Subsequent newspaper and magazine ads, rolled out in the U.S. starting this month, ask readers questions such as "How can disease be detected before it strikes?" and then highlight technologies being developed by Siemens. The ads feature health-care, energy and industrial automation, the three areas of focus for Siemens under a new restructuring program.
The campaign, developed by WPP Group's Ogilvy & Mather, makes no mention of the bribes-for-business probes. That represents a departure from how some other companies have addressed scandals in the past, most famously Johnson & Johnson's decision in the 1980s to tackle the bad publicity from the Tylenol-tampering incidents head on.
Advertising executives say bribery cases require different tactics because they don't have as obvious an impact on the end-consumer.
Siemens has been able to point to some good news in recent months, helping to blunt some of the impact of the scandal. Sales for the fiscal year ended Sept. 30 rose 9% to 72.45 billion euros. Operating profit leaped 70% to 6.56 billion euros. The company's share price has risen more than 30% since the scandal erupted in November of last year. This fall, the company hired a new general counsel and chief compliance officer as part of a broader overhaul of its compliance system.
The company says it was working on the new global campaign -- its first since 2001 -- before the bribery scandal. It later put the plan on hold for a few months as the scandal developed and a new chief executive joined the company in July.
The new campaign will also utilize the Internet, including keyword- based marketing through search engines and banner advertisements, as well as television and outdoor ads. Management says the campaign will help Siemens regain the public's trust.
"It does give a more balanced and broader perspective of Siemens at a time when the editorial focus might be on one issue," says Jack Bergen, a company spokesman in New York.
Siemens says that it is hard to measure the impact of the scandal on its reputation, but acknowledges that there has been damage. The company's image already had been slipping in Germany as management sold money-losing businesses and slashed jobs. In the three years before the scandal, Siemens fell from the No. 1 most-respected company in its home country to No. 10, according to an annual study by the market-research firm GfK.
Siemens is also swinging into action after some of its rivals launched new marketing campaigns in recent years. General Electric Co.'s "ecomagination" campaign publicizes the U.S. company's search for "innovative solutions to environmental challenges." Philips Electronics NV of the Netherlands has a campaign called "sense and simplicity" highlighting how it is developing products that make sense and are easy to use.
(c) 2007 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.

