‘Never judge a book by its cover’ is one of the most ridiculous proverbs around, defying both human nature and common sense. Of course you should judge a book by its cover. That’s what covers are for. Otherwise – taking the proverb’s inane rationale to its logical extreme – you could open a brazen, top-shelf, gentlemen’s ‘special interest’ magazine and be justifiably surprised by the contents. Annual report designers are wise to this, rejecting this asinine platitude in favor of eye-catching, attention-grabbing covers. Provoking judgement is now a cover’s chief raison d’etre. But it’s not the only one.
‘The front cover has to do a lot of work,’ explains Nancy Fuller of Addison in New York. ‘Its traditional role is to attract attention but now it’s becoming even more important. Analysts often cover around 40 companies so it can be hard for them to keep their minds focused. You need to try to set the background of the company for them as soon as they look at the cover.’
David Kohler, a designer at Addison, agrees that time is a factor. ‘People are overloaded,’ he says. ‘So the cover of the report has to tell a story very quickly.’
But it isn’t just time constraints that annual reports are pitted against. There’s the competition to consider, too. Frank Hawkins, chairman and CEO of Hawk Associates in Florida, explains that, given today’s volume of reports, the ‘coffee table test’ has to be passed. ‘You’ve got to make your annual attractive,’ he says. ‘If there were 20 different ones on a coffee table, you want it to be yours that gets picked up and flicked through. You have to ask yourself what you are trying to do with the cover. What is its purpose? I think it should be a device for enhancing image. It’s a great opportunity to really showcase your company properly. And you should use it.’
Image is everything
Image is at the forefront of most designers’ minds. And the shift toward online reporting is eroding the content value of annual reports even further. ‘These days the financials are available online,’ remarks Fuller. ‘The hard copy of the annual report is more about branding.’
Richard Taylor of Boston-based Gunn Associates agrees that image is replacing substance. ‘Annual reports are being downsized as companies try to direct people toward the web,’ he comments. ‘But I think the role of the annual report will be retained, albeit with less depth. They’re becoming more of a capability brochure. And there’s certainly much more interest in front covers now. Obviously, it depends on the individual company, but covers can be the way to get across confidence.’
‘The influence of the web and the amount of information available has led to a shift in thinking,’ observes Fuller. ‘Rather than being a historical document, annual reports are being used to convey vision and strategy. And front covers are being used to communicate that. The IBM annual report is a good example of that. Its front cover just showed its ‘new blue’ and didn’t even feature the company name.’
So there’s a clear departure from covers with an inward-looking, navel-gazing bent to those with a more forward-thinking, visionary design. ‘We try to tie the design into the momentum of the company and reflect the theme for the coming year,’ says Taylor. Along with the chairman’s statement, the cover is probably the most important page of the report but it shouldn’t bear too much of the responsibility. ‘Covers grow from the inside,’ avers Peter Lord of GCI Group in New York, ‘not the other way round. More people are recognizing this and are designing covers that intrigue, that push people into picking the annual up.’
‘Front covers often pose questions,’ concurs Kohler, ‘or they make some sort of statement to draw the reader in.’ He points to the reports of Hershey Foods (‘Remember your first Kiss?’) and Buckeye Technologies (Buckeye’s secret ingredient is not cellulose) as front-cover copy that encourages you to dip in.
Keeping in vogue
In an investment community that is increasingly bereft of personality, it’s easy to forget that annual reports are borne from a creative process. As such, they are subject to the shifting whims of fashion. But some observers don’t see fashion as a driving force. ‘We talk about changing imagery and more strategy,’ remarks Fuller, ‘but if you look at annual reports over the last ten or 20 years, there really is very little change. They’ve remained very consistent.’
‘Fashion is a difficult word for annual reporting,’ adds Jeff Nichol of UK designers, Navy Blue. ‘I think the idea that front covers are subject to fashion is quite frightening. Designers should be looking at the company’s unique selling point.’
But it seems that new trends are emerging. The team at Addison sees humor being used as an increasingly powerful tool. ‘There’s a much greater use of humor these days,’ Kohler maintains. ‘The Southern Company [the US power company] really pushes the edge. When there was talk of whether the big power companies would survive, it had a picture of an enormous gorilla with the caption: We’re the 900lb gorilla. Another of Southern’s front covers just said So? SO is the company’s stock exchange code.’
Kohler recalls another past report cover, this time for a company that produced thickening agent. ‘Its cover had the line, You have to be pretty clever to be this thick.’
‘I think we’re seeing a greater emphasis on the bigger picture,’ suggests Christopher Doyle of Annual Reports Inc in Franklin, Indiana. ‘Rather than selling components, companies are using the front cover to show that they’re selling solutions. If the company makes a part for a train, for example, it won’t have a picture of the part. It’ll show a train station and a caption like, Helping transport 3 mn people a day.’
Kohler agrees that we’re seeing a change of focus. ‘We used to see in covers a review of what the company has made, such as Coke cans or a factory,’ he argues. ‘That’s changed. I think people are becoming more visually literate. They can understand images and at the same time companies are learning how people read images.’
Stick to your guns
Companies are also coming round to the idea that effective branding requires consistency. ‘I think one thing you used to see was annual reports that appeared to be from a very different company from one year to the next,’ says Kohler. ‘We’re now seeing more consistency.’
And consistency can take two forms: consistent reporting year-on-year and a consistency across all forms of company communication. ‘We’re moving toward corporate reporting suites,’ says David Bickerton of London-based Pauffley. ‘That means that annual reports will share a single theme with the company’s data booklets, environmental report and corporate response. Companies such as Novartis, Electrolux and Railtrack are already doing this. It means that there is a single, consistent corporate voice in the look, feel and message that the company is giving out.’
Illustrating the cover with a single theme that will permeate the entire annual report is also in vogue. ‘I remember a report in which the chairman’s statement used several sporting references,’ says Kohler. ‘We gave the report the title, Playing to win and illustrated it with a boy holding a soccer ball. There were sporting references running through the entire report.’
‘BP Amoco is a good example,’ adds Bickerton. ‘The cover had a picture of a frog leaping. ‘The rest of the report was full of pictures of birds and animals flying or leaping.’
The actual aesthetics of an annual report require a lot of thought. ‘I personally believe that really good photography is important. It seems to me to be so fundamental,’ says Hawkins. ‘There was a Knight-Ridder cover that was really startling. The company owns the Miami Herald and the cover had a photo of Miami in the aftermath of Hurricane Andrew. The photo was of a newspaper boy just delivering papers. You had to look at it. With computers now, all sorts of styles and images are possible but, at the end of the day, some fundamentals just don’t change. And I think the best covers show interesting people doing interesting things.’ Doyle is another fan of powerful photography. ‘I remember the TransFinancial annual report,’ he recalls. ‘It had a dynamite photo of a truck going at 80 miles an hour. The angle suggested speed and movement which is what the company wanted to convey.’
Look at me
More imaginative designs can pose a quandary, though. At what point does a truly original front cover turn into a cheap gimmick or a garish distraction? And is it wiser always to err on the side of caution? ‘There is an increasing battle for attention,’ accepts Bickerton. ‘But, I think you have to be careful. People are very sensitive about gimmickry. And many investors are cynical and hard. There is such a thing as a sophisticated private investor.’
‘I think that sanity has now been brought back in,’ reckons Doyle. ‘Companies have realized that the annual report is actually a business publication.’ Annual Reports Inc’s clients are not going for any art awards, he notes. ‘The annual report isn’t the place for that. Its main job is to communicate; anything beyond that is just window-dressing. That doesn’t mean reports have to be like Model T Fords. In fact, designing within certain parameters can, I think, actually raise the standard of the design. It calls for really imaginative thinking.’
And that means dropping the crutch of technology, Doyle suggests. ‘There’s a shift away from thinking, Look, we can do this in Photoshop or Quark! It looks funky! Because these days it isn’t really a question of being trendy or conservative. It’s about getting back to what works. Some people like avant-garde designs but the vast majority of people don’t want the weightiness of the report to be lost.’
However, not everyone shirks from gimmickry so easily. ‘The Duracell report was really good,’ says Kohler. ‘The company was getting to be big news in China and India. Its front cover was of a passport which was really effective. You couldn’t help but think global.’
‘Tuppaware had a report with two front covers,’ adds Bickerton, ‘one at the front and one at the back. The theme was good news and bad news, with one message on each side. I wish my clients would consider designs like that.’
