On the heels of the 10K-wrap revolution, another permutation of the annual report is making the rounds. Inspired by the e-proxy rules that went into force in January 2008, the video annual report (VAR) is advertised as a logical and superior successor to both traditional glossy books and their abbreviated cousins, offering an efficient and cost-effective ‘YouTube Generation’ means of delivering the corporate message.
The VAR is a short presentation intended to replace the glossy stuff at the front of the annual report, found on the company website nestled alongside the 10K financials and proxy materials. Its alleged benefits are cost savings and a more ‘impactful’ delivery of corporate messages than photography and/or text.
Opinions vary widely, from ‘you’ve got to be kidding me’ to ‘what a great idea for adding value.’ Some ask whether this is news or entertainment; others suggest it’s impractical. ‘We are not considering it because our retail shareholder base is quite elderly and many don’t have access to computers at all,’ points out Kathie Rogers, manager of IR at Ohio-based RPM International. RPM was recognized for its 2006 annual report at the IR Magazine US Awards 2007. Based on a recent shareholder survey, an overwhelming majority still prefer to receive the printed report, says Rogers.
Not all on board
IRC, a global financial communications company, has created VARs on behalf of half a dozen clients in diverse industries. IRC co-CEO Thomas Ryan highlights the cost savings, shortened production windows, branding opportunities, ecological soundness and opportunities for tracking and reporting, and fervently believes VARs are the wave of the future. ‘Within the next three to five years, no one will print an annual anymore,’ he predicts boldly. ‘It will all be on the internet.’
Others beg to differ. Indeed, many maintain that rumors of the death of the print annual – to paraphrase Mark Twain – have (yet again) been greatly exaggerated. ‘I’ve heard this all before,’ says Eliott Saltzman, senior vice president at creative services firm Addison. ‘I remember annual reports on videotape that were mailed to shareholders.’ An expensive flop, he recalls. Following that, the CD-ROM annual report made its debut. Then, the internet emerged, prompting bold statements that it would strike a death blow to the annual report. It hasn’t.
Saltzman defends the printed annual report as an ‘invasive medium’ compared with the internet, which is passive. ‘You can’t force shareholders to go online and watch a video, but chances are good they will open an envelope that arrives in the mail,’ he points out. ‘Also, video is totally linear. There’s no way to skim it or bookmark it.’
A VAR can become anachronistic just as rapidly as any printed document. ‘I endorse the concept in that I feel any form of communication is better than none,’ Saltzman concludes, ‘but it wouldn’t be the first place I’d put my budget dollars.’
‘We do a lot of videos, but they’re more along the lines of corporate video,’ says Gary Baker, president of Baker Brand Communications. Many land on the company website, he explains, but typically as a supplement to – not in place of – the annual report. ‘Our products combine video, searchable HTML and flash. It’s really multimedia,’ he adds.
Greg Radner, senior vice president of corporate communications services at Thomson Financial, believes video is ‘a natural progression’, reflecting a confluence of technology, communications and regulations: broadband is getting cheaper and faster, and e-proxy will drive traffic to websites. Still, shareholders should be able to order printed reports if they wish, Radner believes.
Ken Balog, vice president of product management and marketing at PrecisionIR, is at work on a new video product called the video investor presentation, due to launch in early 2008. It will feature a scrolling, printable transcript and a resource tab for calling up materials. For example, an individual perusing financials might also be viewing a video clip of the CFO explaining the story behind the numbers. ‘We’re taking the printed annual report and bringing it alive online,’ explains Balog. Thus PrecisionIR is creating an ‘annual report with video’, as opposed to a VAR or stand-alone video.’
Film fans
One VAR enthusiast is Nicole Miller Regan, a senior research analyst at Piper Jaffrey, who covers the restaurant sector. ‘I think it gives analysts and shareholders an opportunity to meet the CEO – that’s better than just reading a letter,’ she says. She thinks VARs are a good way for shareholders to get a feel for the company, and that they reflect a degree of forward thinking that might even be reflected in the stock price.
A consumer products analyst at CIBC, however, confesses: ‘I haven’t actually ever heard of these. My initial take is it wouldn’t be that valuable to me unless it was in conjunction with printed text. The details I’m interested in would be difficult to communicate through the medium of video.’ Additionally, he points out that it’s hard to multitask while watching a video, and the noise from it could be annoying to those in the immediate vicinity. ‘Colgate’s website has a recording that goes off automatically when you enter the site,’ he says. ‘I always mute it.’
