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In America, what matters more? Reality? Or the public's perception of reality?
Come on folks, you know the answer. Why do so many of you watch Jersey Shore?
It's all in the perception, stupid. Facts are facts, but they're so dull. We love Hollywood. We love a good story.
That's what GM CEO Ed Whitacre is trying to give us — a turnaround tale that every American can believe in.
In spite of today's profits victory lap, it's still not clear whether GM will be viable over the long-term. But give Whitacre credit. He's winning the PR battle.
And if you're a government-owned, recently-bankrupt car maker, isn't that the battle you have to win before you can worry about the war?
Earlier today, GM announced that it earned $865 million in the first quarter. GM only made a profit because the government wrote off $50 billion in debts—that conveniently took GM's interest expense down by a lot. How much? Ummm?$863 million.
But were these facts in the headlines? Of course, not. There's isn't enough room. “GM Reports First Quarterly Profit Since '07” said The Wall Street Journal. “GM Posts First Profit in 3 Years,” said the New York Times.
Certainly, in Whitacre, we have a CEO who knows a thing or two about how to sell America on the “new GM.” Sure it's great to earn a profit. But it's even better to brag to America's politicians and prospective car buyers that GM turned a profit.
So what if it's not exactly the whole story. Whitacre spent two decades running telecom companies that flogged a commodity service. This guy knows his marketing.
That's why GM launched a gimmicky 60-day money back guarantee last autumn. That's why GM has saturated the TV with all those hokey ads showing Whitacre walking and drawling his way across the floors of the GM design center. And that's why Whitacre penned a WSJ editorial, “The GM Bailout: Paid Back in Full” a month back.
Whitacre really got my attention with this last gesture. It's downright crazy to say GM paid back its loans in full – given that GM took $50 billion. And it's even crazier to run an ad campaign around it. In fact, the claim was so misleading and outrageous – “nothing more than an elaborate TARP money shuffle” said Senator Grassley -– that I figured Whitacre had to get his comeuppance.
But I was wrong. GM's shareholder, the U.S. Treasury, backed Whitacre. And the public barely noticed. GM's image is still on the rebound.
Or at least that's what a recent WSJ/NBC news poll says. In the poll, the public's “favorable rating” of General Motors more than doubled over a year to 37%. In the same poll, Toyota's rating stood at just 31%. Goldman Sachs was at, gulp, 4%.
You shouldn't place much stock in the finding. The poll was a classic politics-oriented survey with four dozen multi-part questions covering the economy and election. The one itsy-bitsy question on GM also covered the Tea Party, Charlie Crist, and BP.
But that's the beauty of image-making. The poll details don't really matter – it's all perception. And already the perception is on the move. CNBC ran the story of GM's “high” poll rating and Goldman's “low” rating all day.
Of course, you can't buy this kind of advertising. Just as you can't buy the kind of PR you get for turning a profit at a once-bankrupt company.
But as GM will learn, all the good press is nothing more than a big Botox treatment. Eventually, it goes away and you end up being seen for what you are –- not what you want to be.
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