Investors reward companies
with a strong brand franchise.
Capitalize on Your Brand
Interbrand
284 King Street East
Toronto, Ontario
M5A 1K4
Telephone: 416 366 7100
www.interbrand.ca
The Annual Report
September 2003
If you’re inclined to think that there is little
connection between investor relations and corporate
branding, we encourage you to think again.
In its simplest equation, a strong brand promotes
higher sales to more loyal customers and, over time,
that leads to improved profitability and higher share
prices. Interbrand, which pioneered the evaluation
of brand worth in the late 1980s, has consistently
shown that brands generate substantial shareholder
value by securing long-term cash flows. In fact,
the August 2003 BusinessWeek / Interbrand annual
survey of the best global brands concluded that,
on average, brands accounted for more than a third
of shareholder value.
What implications does this hold for the annual
report? Broadly speaking, as an IRO, you want to
communicate messages about your company’s
performance and prospects that are differentiated
from competitors, relevant to your stakeholders,
speak to your strengths and are credible with
investors. That’s branding in a nutshell.
Unfortunately, many companies fail to align
the messaging of their annual reports with brand
positions – whether deliberate or default – that may
exist in the public domain. Whether this all-tootypical
oversight is due to a lack of brand definition,
organizational inertia, exclusive focus on financial
reporting or some combination of these factors, the
outcome is the same. The opportunity to capitalize
on your brand is lost.
There’s strong evidence to suggest that it’s important
to support your brand messages whenever
possible, especially if your company has a valuable
brand or portfolio of brands. Consider the following
chart, which plots the share price performance of
the Interbrand Global Brand Portfolio against
leading stock market indices. The evidence here
is compelling. Companies with strong brands deliver
significantly higher returns to shareholders.
Bev W. Tudhope
Co-CEO, Toronto
Interbrand
Capitalize on Your Brand
How do you determine
the value of your brand?
For an overview of
the BusinessWeek /
Interbrand methodology,
see the complete article
and Global Brand
Scorecard at
www.interbrand.ca
This consistent finding also suggests that if a strong
brand can attract and retain customers, it can do
the same with investors. Obviously, few companies
have the brand clout of Coca-Cola, IBM or Nokia.
But there are some things you can do to reinforce
the brand position you have created or, if it’s
desirable, the brand perception that currently exists
in the marketplace. With either of those clearly
in mind, it will make the task of aligning your annual
report messaging that much easier.
What brand messages exist already?
Many organizations already have a brand strategy in
place that positions them in the market. If your
company has a brand strategy, you should make
sure that the messaging in the annual report is both
consistent with your company’s desired brand
position and compelling in its presentation. We
suggest you work closely with those colleagues
charged with responsibility for your company’s
brand identity – most likely your brand strategy team
or branding consultants – to develop and evaluate
ideas for the report’s thematic development.
Those with a substantial investment in brand
development may want to survey analysts to identify
how they value your company’s intangible assets.
Should you find that brand valuation is not part of
their model of your company’s worth, you may want
to consider making the investment to quantify your
brand’s value. That can be an expensive proposition
involving the calculation of net earning attributable
to the brand, separating out earnings related to
other intangibles and then applying a discount rate
for the risk associated with future earnings
attributable to the brand. Communicating the oftenhidden
value of brands with an accepted
methodology – and reinforcing that value in
communications with the financial community and
shareholders – can bring your company’s hidden
brand worth to light.
But if yours is like many companies, you may not
have a distinctive brand position with which to focus
the thematic messaging in your annual report.
There are, however, a variety of ways investor
relations professionals can work towards compelling,
credible messages without either a clearly defined
brand profile or the expense of creating one.
Here are a few suggestions:
• Survey buy- and sell-side analysts to discover
their perceptions about your company’s brand
position. Ask about the methodology, if any, they
use to value intangible assets such as your brand.
• Interview your CEO for his / her views on your
company’s brand profile, both actual and
desirable. Published values statements can also
provide insights into senior executives’ views of
an ideal corporate brand position.
• Review speeches and presentations by senior
executives to determine if there is an actual or
implied corporate brand position that is already
being communicated.
• Talk with your colleagues in marketing to identify
the messages that they are attempting to
communicate to customers. Be sure the messages
are credible and deliverable. Do the same with
your human resources group with regard to
employee messaging.
• Make the case internally for a balance of messages
in the annual report; investors need to understand
your positioning for the future as well as your
performance in the past. For more perspective on
making this case, ask for our June 2003 paper,
Look Both Ways in Your Annual Report.
• Work with your strategic design partner to
develop thematic storylines for the annual report
based on what you’ve discovered about your
company’s actual or implied brand position. Try to
ensure that the messaging is consistent with
messaging to other stakeholder groups.
One of the more
important jobs you and
your colleagues could
accomplish this annual
report season is to form
brand messages into
an integrated strategic
communication.
• Longer term, get involved in branding exercises –
especially corporate branding – and take
responsibility for communicating the worth of
company brands in terms the investment community
and shareholders can understand and use.
More likely than not, the messages you want to
communicate are already in the public domain. One
of the more important tasks you and your colleagues
could accomplish this annual report season is to
form those messages into an integrated strategic
communication – that is, one that is differentiated,
relevant and credible. Think of your report as an
annual, high-profile opportunity to communicate
your brand in a way that will raise investors’
understanding of your company’s real value,
and possibly increase your market value as well.
Bev Tudhope is Co-Chief Executive of Interbrand’s
Toronto office.
Founded in 1974, Interbrand serves the world with 34 offices in 22 countries. Working in close
partnership with our clients we combine the rigorous strategy and analysis of brand consulting with
world-class design and creativity.
We offer a range of services including brand valuation, research, strategy, naming and verbal identity,
corporate identity, packaging design, retail design, internal brand communications, investor
communications and digital branding tools.
We enable our clients to achieve greater success by helping them to create and manage brand value. |
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