Not so long ago, financial advertising meant filling the company pages of the national and trade papers with drab-looking consolidated results, announcements of annual meetings or tombstones touting an investment bank’s latest accomplishments. These uninspired forms still exist but the style and content are changing, with US companies on the cutting edge.
Occasionally you will see a balance sheet from a bank put straight onto the page, but that is the exception rather than the rule, according to an advertising sales representative from a US national newspaper. ‘Most have not published their results in pro forma form in years. Instead, they opt for corporate branding, which incorporates the quarterlies, dividends or tombstones as well as their mission statements, objectives and outlook. The goal is a full picture of their operations, and not just a snapshot.’
Changing message
Corporate brand advertising, however, is not just the rage Stateside. Increasingly, this holistic approach is making waves in the UK and slowly taking hold on the Continent, especially in France and Belgium. The combined forces of the euro, globalization and consolidation mean the marketplace is becoming crowded, and corporates are having to fight harder to get noticed by shareholders. Financial advertising enables them to try to boost their share price and to tell the story their way – without the journalist’s spin.
As a result, ‘UK companies are spending more time and energy on building and managing their reputations,’ says Robert Moser, partner at London consultancy Merchant Group. ‘They are using financial advertising not only to highlight their results, but to build strong corporate images and convey the messages they want about the company. It is all part of the wider corporate communications plan.’
Main driver
Traditionally in the UK, IR officers or the finance director, particularly in smaller companies, had sole responsibility for financial advertising, while the company secretary oversaw the legal aspects and other technicalities. The main driver behind this is the London Stock Exchange’s requirement that a company has either to send its results to shareholders, make copies available for the public or put a paid advertisement in one national newspaper.
Often companies opted for the latter because it was the cheaper alternative. Research from Merchant reveals that a company with 150,000 shareholders could save roughly £110,000 via the advertising route. This assumes a cost of roughly £1 a copy to print and mail a booklet, against £40,000 for a quality ad page.
‘The smaller companies did it to save money, while the larger companies published their results mostly out of habit,’ says one UK-based financial advertising executive. ‘However, instead of plonking something down on the page, companies are thinking more about the messages they want to convey and the audiences they want to reach. As a result, we are seeing less of those turgid and boring consolidated results and more creative and interesting corporate advertising. The investor relations departments are still in the loop, but we are talking more to the communications side as well as external agencies.’
Moser compares the increase in UK companies turning to external agencies for annual report advice to their growing use of outside specialists on the advertising side. ‘The investor relations officer or finance director is still having a say over the results,’ says Moser. ‘But increasingly companies are pulling in specialists to help with the corporate branding.’
Reverse story
Ironically, in France, where companies rely heavily on agencies, the reverse is beginning to happen in larger companies. The Paris Bourse requires companies to advertise results in a well-known national newspaper.
‘Historically, the IR department would be in charge of institutional investors; the financial communications group for retail investors and financial advertising,’ says Fabienne Bothy-Chesneau of French communications consultancy Omnium. ‘They would also often call in people like us. The change we are seeing in some of the larger companies is that we are working with the IRO as well as the financial public relations department on these ads.’
As in the UK, it ‘is more than just pure figures and a blurb on how well the company makes cookies,’ notes Bothy-Chesneau. ‘The ads have become more sophisticated and fun. Companies in France, and in general on the Continent, are also trying to raise their profiles overseas to attract investors, which is why there is a growing number advertising in foreign newspapers such as the Financial Times.’
Paris-based food and management group Sodexho’s recent ads in the Financial Times are a case in point. It straddles the two worlds of financial and corporate advertising by featuring a color picture of a smiling family as well as text on the nuts and bolts of its operations and its future. The numbers are there, but they are not the main attraction.
The same is true of Belgian power company Tractebel’s recent eye catching full page ad in the FT. Set against a photo of a woman’s eye, the figures accounted for about only 10 percent of the ad. The rest was corporate, promoting its strengths and successes.
Although more staid and low key, Austrian-based technology and engineering group VA Technologie’s ad was in the same mold. The numbers were boxed off; the company’s objectives and outlook were highlighted. A company spokesperson says that its IR and communications functions have historically been under one umbrella, working with the CFO on all financial advertising. She says the FT ad specifically sought to reach both a wider shareholder base and the investment research community.
Booklet choice
Dutch companies like electronics giant Phillips also use the FT to reach their overseas investor base, but the ads can be formulaic and old fashioned. On their home ground, companies which operate under a bearer shareholder system are obliged to publish dates of their annual meetings and dividend proposals. However, they tend to prefer publishing booklets or sending out press releases to financial advertising.
‘It is very easy to get editorial into the press,’ says one Amsterdam-based communications consultant. ‘It is a small market, and there is often plenty of room for a release. Typically, the IR department tends to the needs of the investment research community, while the public relations side deals with the press, publications and financial advertising.’
One of the biggest trends sweeping the corporate scene in the Netherlands, according to the consultant, is the development and growth of financial advertising on the internet. ‘Companies across the board are developing web sites and putting their numbers, visions, strategies and outlook on the net rather than in the newspaper,’ he notes.
German companies, on the other hand – except for the global players – are not only behind in financial advertising style and panache, but are only just beginning to catch onto the investor relations culture. ‘Corporates are required to publish their results, but the form is dictated by the stock exchange and only includes the basic figures,’ says Robert Breen, head of international advertising at Handelsblatt. ‘However, companies are slowly taking these ads more seriously. They are beginning to realize that shareholders are an important target group and are slowly starting to include more information and be more creative.’
Germany is still in the process of developing a shareholder and investor relations culture, according to Thorsten Rohe, deputy managing director of ABC Frankfurt, a communications consultancy. ‘Companies now have to publish their results quarterly instead of every six months. Many used to put the numbers in the newspapers with a chairman’s brief, but now we are seeing the growing popularity of brochures or booklets which have the figures as part of the bigger package. More emphasis is given to the company’s strategy and message, but it is still the financial communications department or chief financial officer along with an agency that puts it together.’
