A hundred years from now, when historians characterize the early 21st century, they will undoubtedly mention the role that image played in politics, culture and economics. ‘It was a time when image was everything,’ a future historian will write, ‘a time when virtually every facet of public and private life was tainted by image consciousness.’ From political celebrity wars to the way a CEO’s personality influences the success of a corporation, image is beginning to monopolize and often manipulate public perception.
Media analysis of the last series of US presidential debates is a classic example of this culture’s obsession with image. Rather than compare each candidate’s stance on issues and policies, political commentators were focused on their body language and facial expressions. Luckily the financial world has thus far escaped this level of denigration – where real issues take a back seat to popularity contests. However, as IROs will attest, image-obsession is beginning to invade corporate culture as well.
Image invasion
Ten years ago, it didn’t matter so much what your CEO looked like on CNBC. Nowadays it does. Relatively new terms like corporate branding indicate a trend toward highly sophisticated communications strategies designed to market a company’s image. ‘Corporate branding is really nothing more than a euphemism for a core business of integrated corporate communications,’ says David Weiner, senior managing partner at National Public Relations in Toronto. ‘In the past companies were mainly concerned with reputation management; these days brand, reputation and image have become virtually synonymous.’
This image consciousness is drawing investor relations and corporate communications closer together. ‘It’s extremely important to have a strong corporate brand image in investor relations,’ says Jim Seines, director of investor relations at Leap Wireless. Having a strong corporate identity helps the investor relations role by giving analysts, investors, and the media something to remember. When the company’s symbol, mascot or CEO is well-known, the investor relations officer automatically has a one-up on competitors. ‘The key to corporate branding is to differentiate your identity among shareholders,’ he adds.
‘It’s very important from an investor relations point of view to be able to take part in the process of developing the corporate brand,’ Seines continues. As the conduit between the investment community and the company, investor relations practitioners know what kind of image stakeholders are looking for. In the corporate branding process investor relations officers can, therefore, identify gaps between the image the company wants to project and what shareholders want to see.
Magical world
Wendy Webb, senior vice president of investor relations at the Walt Disney Company, understands how a successful corporate brand can translate into earnings. In fact, Disney’s infamous Mickey Mouse caused some accounting problems when his almighty image kept shareholders from cashing their dividend checks. ‘We used to put Mickey on our dividend checks until we found that some shareholders with smaller checks wanted to frame them,’ says Webb. Mickey’s image is still used on a number of Disney’s corporate materials including the annual report, letterhead and business cards. ‘Mickey is also on the cover of an invitation to a financial presentation we are doing in London in early December.’
For a company like Disney, corporate branding is a world unto itself; in this case a magical world with castles and talking animals. ‘Certainly we use our characters to create a little excitement on our written materials and on our web site; they’re very pervasive and well-known.’ The only time the corporate brand is not used is on materials which are only about money, she says. ‘For something that is strictly financial like the DIP (Disney Investment Plan), we use a swooshy kind of D for Disney rather than using Mickey to promote dividend reinvestment.’
Having a well-recognized corporate brand has helped Disney attract retail investors. Currently, around 50 percent of the company’s shares are held by individuals, many of them young children. ‘For investment clubs like the NAIC (National Association of Investors Corporation) and retail investors, the brand is an attractive component,’ says Webb. ‘And for a lot of grandparents, our stock is a great way to introduce a minor to the stock market.’ On the institutional side, having a strong brand is simply part of the equation that helps differentiate the company. ‘The brand and the products provide a cushion in terms of financial performance.’
Online branding
Sometimes online corporate branding can take the place of other types of corporate materials. Apple Computer, for example, recently stopped producing a traditional annual report in favor of stronger online corporate branding. When an investor logs onto Apple’s web site, there is no question of where they’ve landed – the site is laden with the company’s eponymous logo.
For companies that are not e-businesses, online branding is still part of the communications strategy. ‘Probably the most significant impact of the internet is timing,’ says Oliver Landreth of Addison Branding and Communications in San Francisco. ‘There is a sense of unnecessary urgency and it’s putting agencies in a tough spot because there is less time to create the brand.’
Another part of online corporate branding has to do with choosing a URL for a company’s corporate web site. For example, new companies will often choose a name based on whether they can secure a domain name under that same title. It’s all part of building a consistent and coherent marketing campaign.
Weathering the storm
‘All firms are well advised to invest in their reputational capital at all times,’ suggests National’s Weiner. It has been proven time and again that having a strong corporate brand helps companies weather adverse situations. A new study from the University of Western Ontario’s Ivy Business School shows that a company with strong brand assets pulls through a crisis situation better than a company with a lower brand valuation. As Weiner says, ‘When you look at the great corporate crisis situations like Tylenol, the companies that came out best were the ones that had taken the time and invested in their corporate brand.’
There are many examples of companies using corporate branding in order to reinvent themselves. Sometimes, re-branding is used to correct a tarnished image. For example, Nike Corporation changed its signature swoosh symbol to a plain old Nike shortly after the sportswear company was hit with bad press about poor labor practices. And after being hammered in the courts, big tobacco player Philip Morris toned down its rugged Marlboro Man image in favor of socially responsible advertising aimed at getting children to stop smoking.
Over half of the name changes for companies are driven by mergers and acquisitions. When Bell Atlantic finally acquired GTE in June 2000, a major re-branding effort kicked into gear resulting in a new name and identity. ‘We obviously did a lot of research to change our name,’ explains Dominic DiBucci, director of investor relations for Verizon. ‘We tested thousands of names and Verizon tested well.’ According to DiBucci, Verizon is an invented word made up of veritas, meaning truth, and horizon, implying forward-thinking.
For Verizon, it was out with the old standard white and blue Bell Atlantic logo and in with the new red, black, and white logo – a new image for an old player. Part of the reinvention process was identifying which parts of the old Bell image should stay. ‘We didn’t want to lose our identity as the old, reliable telephone company, and, on the other hand, we didn’t want to be limited,’ says DiBucci. ‘We want people to think of us in terms of a much broader range of services like data, DSL, video, wireless, ISP and internet.’
Communicating change
Changing the name is one thing; communicating the change is another game entirely. Luckily for Verizon, by the time the company officially started its re-branding campaign in early August 2000, the new name was already known. ‘We had a strike which really helped get the new name out there; Verizon was in the news every night,’ says DiBucci. Even before Verizon workers went on strike, the new brand name made its debut on the internet chat rooms: ‘It was misspelled as Vorizon.’
In their official effort to communicate the new brand, Verizon sent out a notice attached to customer bills and paid for a two-week television advertising blitz to promote the new identity. On the shareholder side, Verizon sent out a letter to registered shareholders in July to announce the merger and the new brand. But the process of re-branding continues to this day. ‘Once you get the new name out there, the physics of re-branding takes a long time; some of the pay phones still say Bell Atlantic and we are still trying to convert our 60,000-plus trucks.’
For smaller companies, which might find a media campaign a little bit too expensive, there are plenty of other ways to introduce a new image. ‘You don’t have to do the $100 mn media blitz with smaller companies,’ counsels Oliver Landreth of Addison Branding Communications. ‘You can look on this as more of a public relations opportunity and approach a very targeted audience and simply say, This is who we are and this is what we are doing.’
Celebrity CEOs
Another sign of how important image has become in the financial world is the recent cult of personality surrounding senior management. For many companies, the CEO has come to personify the company; think Jack Welch, Bill Gates, Jacques Nasser, Ted Turner, Rupert Murdoch, and so on. The reason they embody their companies’ corporate identities is the same reason political campaigns turn into personality wars: it’s just easier to understand. ‘Corporations have become so strategically complex that’s it’s very difficult to have a tangible image of the firm other than to elevate the chief executive to almost folk hero dimensions,’ says Jeff Sonnenfeld, adjunct professor at Yale School of Management and president of the Chief Executive Leadership Institute.
For many investors, the chief executive has become the distinguishing factor when it comes to making investment decisions. As technology gets better and cheaper, virtually everyone can afford to do beautifully designed presentations to the Street. But the faith of the investment community lies in its belief in the business plan and its trust in senior management. ‘What we are seeing now is more chief executives taking a more prominent role, becoming more communications savvy, and that includes communicating with the investor community,’ says National’s David Weiner. For an investor relations officer, having star-studded senior management is a double-edged sword. When investors are banking on a personality it’s a risky proposition for the organization. What happens if the CEO resigns, gets fired, is accused of some nefarious activities, or dies? In short, while trust in management is key, it’s also important to keep perspective. For investor relations contacts working for a god-like CEO, it’s important for them to establish individual credibility so has not to fall prey to a cult of personality. In other words, when the tides turn, it’s good to know how to swim.
Corporate soul
A company’s brand is its public face, its personality, its soul. ‘A corporate identity projects the values, culture and attributes of a company and, ideally, at the same time, makes you stand out from the rest of the noise in the market,’ says Addison’s Landreth. And so in order to identify and communicate the archetype for the brand, everyone in the company must work together.
‘All the moving piece parts – be it media relations, investor relations or internal communications – must take part in supporting the corporate brand,’ says Leap Wireless’s Seines. ‘Once established, there is a distinct equity within that brand that companies can leverage.’
While many companies spend millions of dollars reinventing themselves (or their CEOs) the effectiveness of a re-branding campaign is extremely hard to measure in dollars. What is known is that for the change to be a success it has to be done for the right reasons. ‘A name change as an abstraction or as a stunt to court investor community attention is bound to fail as the lessons of benchmarking and best practices will confirm,’ warns Weiner.
However, if the reinvention is matched by a significant change in direction or strategy, Weiner concludes, ‘That’s a whole different issue.’
