When I last wrote about corporate advertising (Investor Relations, March 2000), it wasn’t difficult to find examples of companies executing campaigns with an eye toward investors as well as customers. Most obvious were the dot-coms, engaged in exorbitantly expensive self-promotion without actually identifying what products or services they were in the business of providing. The formula was simple – announce that you have a web business, and both consumers and investors would flock to support it regardless of what you were selling.
Chapter two of this story is well known. There are few surviving commercials featuring flying gerbils, talking puppets or otherwise offensive, repulsive and utterly confusing images promoting this or that internet company. There are few left because there’s hardly any money to produce and air them because, of course, nobody is interested in irrational internet investments anymore.
But it would be wrong to pretend that dot-com companies were the only ones promoting – indirectly, of course – their stocks. Many companies, including some of the most successful, engage in advertising that focuses on the entire corporate identity: the business; the financials behind the business; and ultimately the stock. The nuances differ, but the premise remains the same: Create or promote corporate brand awareness that benefits the corporation at all levels.
Companies such as Coca-Cola and McDonald’s, for example, boast brand recognition that extends far beyond soda or hamburgers. The companies have come to represent ideals like reliability and quality, not withstanding some rather negative sentiment emanating from French farmers and anti-globalization protesters. Those ideals have, at least in the past, helped send the companies’ valuations higher.
Branding as usual
But the real point is not that companies promote a corporate brand but that, in doing so, they increasingly provide more direct references to financial issues – an ad talking about quarterly profits and a ticker symbol thrown in to make sure the audience links the company to the stock. Tyco International was running a national television ad in the US that featured rugby players discussing it as an investment.
That was then. Today the most recent era of ‘irrational exuberance’ is probably gone forever (my mailman tells me tech valuations are still too high). But while the environment for corporate advertising has changed, companies remain wedded to the concept.
‘I think, if anything, people are more aware now than ten years ago of the importance of branding. It is an intangible, much like goodwill,’ explains Don Black, vice president of marketing at Barron’s. ‘People have religion about branding, but they may be less aggressive now. The amount of advertising has dropped off with the market, but not as much as would have been the case ten years ago. It’s a pure expense that is cut, but there’s a more realistic sense of the benefits of corporate branding.’
Randy Kilgore, executive director of sales and marketing at WSJ.com, says he’s still receiving requests from companies looking to place corporate advertising. But he says there’s less focus on trying to attract investment, especially since investors, including VCs, are being stingier with their money. That’s cut down on the number of start-ups advertising, which reduces the competition for the older, more mature companies. ‘The dot-com advertisers who were using us to reach investors are gone. There’s no question, the clutter is down.’
Down but not out
Some things clearly have changed. For one, internet advertising itself has contracted. Gone bust is the concept of capturing as many cyber eyeballs as possible at any cost. According to one estimate, banner click-through rates are floundering at around 0.1 percent. Rates have dropped to below $50 per 1,000 page-requests and continue to fall.
But corporate advertising on the internet isn’t extinct just yet. The Street.com, a company intimately familiar with falling prices (as of late March, its stock was in the $3 per share neighborhood), continues to pull in buyers for its investor relations advertising – a paid sponsored section that talks about the potential of a given industry in order to attract investors to it.
‘Companies are as committed as ever to corporate brand advertising. In a tougher economy, advertising is a vulnerable expense. But there are a lot of companies with tighter budgets looking to get the greatest efficiencies out of their corporate brand effort, and the internet offers efficient ways to communicate their corporate story to very targeted audiences, whether it’s investing audiences or not,’ says Jason Young, VP of advertising sales for the financial news site.
But Young agrees that fewer companies are aggressively selling their stock in a way they might have in 1999. ‘If a company is letting their identity be defined in the value of their stock, then a lot of them are suffering. That was actually a problem a few years ago, because the Intels and Ciscos of the world didn’t see the need for corporate advertising because of all the exposure they were getting. Now they don’t want their identity tied to their stock price.’
Despite the dismal prices afflicting stocks, particularly those once-vaunted US technology Goliaths, the US remains the ripest market for corporate advertising – especially advertising aimed at investors. This is largely due to the increasingly blurry line between customers and shareholders (witness my mailman who knows more about valuations, sector weightings and IPOs than the new postage rates).
‘In terms of financial advertising, we do very little here in the UK, though the half-year results appeared in the Financial Times. The requirement here is that the results have to appear in two broadsheets,’ says Peter Hall, BP’s director of investor relations for the UK and continental Europe. ‘In the US, we do a lot more advertising in the trade press. Much of it is aimed at individual investors, rather the institutions. That’s much more common in the US, since there are more individual shareholders.’ The company’s US ads, which have appeared in Fortune, Business Week and Forbes, for example, don’t talk specifically about financials, but rather point to the tremendous size of the company, just hinting at financials.
Still, it seems the environment in the US looks more favorably on a company using ads to address its financial performance than elsewhere in the world. Indeed, when BP CEO Sir John Browne spoke to US investors recently, he quipped that it was great to be in New York where you can talk about financials and not be embarrassed to say that you’ve made a lot of money. On the other hand, Terry Lamore, BP’s vice president of investor relations for North America, says, ‘The corporate advertising we’re doing now is really about our new corporate identity following the merger [with Amoco].’
The rebranding effort
BP is typical of a new trend in corporate advertising that is based on rebranding. Some of the effort reflects the tremendous rash of consolidation that has swept most industries. Companies need to reintroduce themselves and establish a new relationship with customers, suppliers, employees and investors. But rebranding efforts go beyond simply addressing recent M&A activity.
‘The degree of rebranding is at levels never seen before. The marketplace is changing rapidly, and that forces changes in corporate identity. You want to align everything, therefore, behind the values that drive the brand. So I think what we’re seeing is a movement away from superficial, very glossy, cliché ridden corporate advertising to something much more subtle,’ says Milorad Ajder, divisional director at ORC International, a London-based market research and consultancy firm.
One company that has successfully created a brand identity that the public – all stakeholders, in a way – links to the lofty promise of ‘piece of mind’ is Federal Express. To create that identity, Ajder says the company needs to achieve above average investment in IT, infrastructure and customer service, and then convey that through ads. ‘These are things all closely related to the values that represent the essence of the brand – piece of mind.
If you don’t have a clear sense of what your values are, you’ll say, Sure we invest in IT, infrastructure, training, etc, but you may say you invest in other things that aren’t pertinent to your brand promise.’
San Jose, California-based BEA Systems embarked on this sort of rebranding effort, with the campaign kicking off in the spring of 1999. Kevin Faulkner, vice president of investor relations, says that the e-business infrastructure provider had previously advertised exclusively to technical developers in technical journals. ‘We expanded to advertise in more mainstream publications to reach the business decision-makers. Before that, we talked about the company in a technical way, so we started focusing more on our business value. The next step, last fall, was a new campaign to talk about how we were the market leader in the web applications software market, based on revenues, partners and clients.’
Faulkner says that highlighting financial information is part of the rebranding effort. While not directed specifically at investors, he admits there is some crossover. ‘The key is to sell product. We believe if we manage the company well and keep customers satisfied and improve profitability, stock price will follow. But the ad strategy has been geared toward our goals of rebranding. It’s about where we want to go rather than reacting to the market.’
The point of advertising size and financial strength? In this case, to give customers a sense of ease. ‘The choice [of software] will affect your applications for a long time, so we want to prove we’re a safe choice. We compete with IBM, Sun and Oracle. These are huge companies with big presences. People know they’re choices that will be around. So we need to show we’re financially viable and that we’ll be around,’ explains Faulkner.
To Ajder, however, the biggest shift in corporate advertising is that companies are engaged in less ‘chest thumping’, turning instead to communicating the essence of the company and the values that drive that essence (see sidebar, Conoco: Fast cat).
‘The audience is much more sophisticated now. Simply saying you’re the biggest isn’t enough. So companies are focusing on their values, and how these values bring benefit to their customers, to their employees, and ultimately, to their investors. This is a new facet of corporate advertising.’
Conoco: Fast cat
In 1999, Conoco was embarking on a corporate branding effort that was, in the words of Thomas Henkel, vice president investor relations, ‘directed at investors, not consumers.’ Two years later, the audience remains the same. ‘It is virtually all investor-oriented. We only do consumer advertising at the local level where we have a large retail presence.’ Then, as now, the Houston, Texas-based energy company is working to introduce itself to the market, following its IPO and split from DuPont. ‘It’s been quite successful. The public’s awareness of Conoco has gone up, their interest has gone up, their understanding of our global nature has gone up. One of the themes we’ve used is this fast cat concept. We have this black and white cat that is featured in quite a few of our ads. It’s really taken off. People call and ask for copies of the ad all the time. Even the jaded institutional investors have come up to me and told me what great ads they are and asked for copies for their kids.’
The feline-oriented campaign features the admittedly cute cat outflanking a fatter, slower, frankly less adorable cat, overlaid with the slogan, ‘Conoco, think big, move fast.’ In another ad, Fast Cat becomes Global Cat, and is shown in various locations around the world. ‘It’s a brand image concept. The idea being that Conoco as a smaller company can move more quickly than some of our bigger rivals, that we’re a global company, and that we have certain competitive advantages. But we don’t include a lot of financial statistics,’ says Henkel.
Despite the sputtering markets, the company is sticking to its branding strategy. The advertisements appear nationally during Sunday morning news programs and on the major financial channels, as well as in business publications like the Wall Street Journal. ‘We’re much better known by the institutional investors than we were three years ago, and now we’re focusing on certain concepts that we want them to be more aware of.’
Symbolism
The numbers are underwhelming – flip through most advertisements, at the corporate or consumer level, and you won’t notice many companies displaying their stock symbol. Companies such as DaimlerChrysler and ITT Industries do. So does Siemens. Why? Earnest Thompson, director of marketing and brand communications at Siemens, says it’s a stock branding approach. ‘We listed in the US on March 12 this year, so all the ads that came out after that, on TV and in print, call attention to this US listing.’
Thompson says that listing the stock symbol (the ads appeared in all the major US newspapers, along with leading business publications) was aimed at investors, customers and employees. He notes that the company will probably stop listing the symbol, given that its brand is well-established in both the US and Europe. But he agrees that with so many active individual investors, it’s more important today than ever before to give the stock visibility. ‘I think it’s an essential way of introducing a brand. So many of the audiences are investors, so to know the stock symbol is key to getting them to think about you.’
