In an era when products increasingly are becoming commodities, the points of true differentiation between them disappearing, the reputation of the company behind the brands can be an important factor in a consumer's decision making. Yet corporate advertising spending actually fell in 1991, the first year it had not increased in more than a decade.
There are several possible explanations for this reversal. The recession has caused even large companies to assess their spending, to eliminate everything that does not relate directly to the bottom line, and in many companies corporate advertising is approached as a corporate ego trip. For that reason it is not convincingly tied to strategy, it is not executed well, and little effort is made to value its impact.
Yet experts insist that when it is done right, corporate advertising can be a powerful tool with a wide variety of applications.
Although experts argue over classifications of corporate advertising, it falls into two broad categories: image advertising, which is designed to build reputation over the long-term; and issue advertising, also known as advocacy advertising, which is designed to address a specific problem, generally within a specific time frame.
One of the problems is that too many corporations believe they can do the latter without investing in the former; another is that when they do the former they do not do it well.
The disadvantage of corporate advertising as a vehicle to help companies overcome the commodity product problem is that all too often corporate advertisers send messages that make the corporations themselves look like commodities. Peter Townsend, president of U.K. creative shop New Focus, describes the resulting uniformity as "The Great Corporation In The Sky."
"The typical corporate advertising brief calls for an ad that should convince all employees—existing and potential—customers, suppliers, shareholders, civil servants, politicians, journalists and an opinion formers that we are a huge company with vast resources, but flexible and adaptive; innovative but reliable; diversified but single-minded; pragmatic but with a clear sense of direction; ahead of the competition but deeply traditional; global but patriotic; expanding but ecological; paternal to our beloved employees but fanatical about productivity; profitable but humane, and even human."
David Ogilvy, former chairman of Ogilvy & Mather, writing in his classic text Ogilvy on Advertising, punctured the pomposity of most corporate advertising even more succinctly: "The copy in most corporate advertisements is distinguished by a self-serving, flatulent pomposity which defies reading, and agencies waste endless hours concocting slogans of incredible fatuity."
He even came up with a list of slogans: "People Building Transportation to Serve People" (General Motors); "Serving People's Needs In A Hundred Basic Ways" (Toyota); "Siemens Turns Ideas Into People"; "The Best Ideas Are The Ideas That Help People" (ITT); "100 Years Of Progress For People" (General Electric); "We Make Things That Bring People Closer" (Western Electric).
Do we detect a theme here?
One of the problems, says Guy Smith, svp at Hill & Knowlton, is that corporate advertising decisions tend to be made by committee. Smith was head of corporate communications at Philip Morris through two high-profile campaigns, the first stressing the company's broad product portfolio at a time when it was thought of primarily as a tobacco company, the second heralding PM's support of the Bill of Rights bicentennial.
"The finance guy wants to stress the investment community," says Smith. "The marketing guy wants to concentrate on product. The head of human resources wants to put employees first. Someone has to be able to look at what the company's strategic objectives are, and make sure the ad matches a communications strategy."
That's what Philip Morris did, particularly with the Bill of Rights campaign, which linked the company's right to promote and market its most controversial product to the freedom of speech and action issue.
Lou Capozzi, evp at Manning Selvage & Lee, was involved in two of the best known corporate ad campaigns of the `80s while heading public relations at Aetna: "Aetna I'm Glad I Met Ya" and "Work With The Best In The Business." He agrees that corporate ads are often vague and bland, but believes image advertising is a tool more public relations professionals should employ.
"If you look at the pages of Fortune or The Economist, it's true that corporate ads are very generic," he says. "The words and the visual metaphors are cliches: airplanes in the sky, pictures of corporate headquarters, globes, people pictures. But corporate advertising is a very useful tool. It's poorly utilized and it's under-utilized."
It is evidently less utilized today than in the recent past. James Foster, president of New York's Brouillard Communications, says that in the early `80s about half of the Fortune 500 used corporate advertising; today the figure is less than a third. PR Journal recently reported that corporate ad spending dropped 13.2% in 1991, after several consecutive years of gains.
Meanwhile, Foster says, foreign-owned companies in the U.S. have increased their corporate advertising by 30%: companies like Daimler Benz, Toyota, BP, Hitachi, Fujitsu and Daewoo are joining the list of the nation's largest corporate advertisers while spending by U.S. companies declines.
"The point isn't that overseas companies are working aggressively on their reputations. They should be," Foster says. "The point is that many American companies are abandoning the battlefield. Once familiar names are becoming strangers in their home markets. An indication of this comes from a summary of figures from The Wall Street Journal's Corporate Report Card. The average familiarity of the 800 companies surveyed dropped from 47% in 1985 to 39% in 1990. That's a loss of reputation and of credibility."
Capozzi suggests several circumstances in which corporate ads can be helpful. The first, he says,
is when the corporate name is very closely connected to the brand name in consumers' minds. Companies such as IBM, Aetna, AT&T and even Kraft can use corporate advertising to let consumers know what the corporation behind the product stands for. (This does not always help less well-known companies, however. Capozzi points to a now-notorious Beatrice corporate ad campaign that had almost zero impact on that company's brands, because the Beatrice name was simply not relevant to consumers.)
Corporate advertising is also important to large companies that have to deal with diverse publics, he suggests.
"If you are a large corporation, advertising your values, communicating what you stand for can have a tremendous influence, particularly on your employees," he says. "Our research at Aetna showed tremendously high awareness and understanding of what our corporate ad campaigns were about. The `Work With The Best In The Business' campaign generated enormous pride. Employees felt it was a promise Aetna was making to its customers, one that they had to help the company live up to."
Of course, Capozzi says, the company must have a clear idea of what it stands for, and it must be sure that the personal experiences of its audiences do not contradict the message.
Clearly, companies boasting about how they maximize the potential of their people should not be caught discriminating against minorities; companies shouting about buying double-hulled oil tankers to protect the environment should not be profiled as the country's worst polluters by environmental groups.
Research conducted several years ago by a team from Northwestern University showed that corporate advertising could also have a significant impact on stock performance. Studying more than 730 corporations, researchers found that corporate advertising had a positive influence of two per cent on share price. That may not sound like much, but for companies valued at billions of dollars it can be extremely significant.
Another good reason for corporate advertising is a change in identity, either through merger or acquisition. Hoechst Celanese was created in 1987 by the merger of American Hoechst and Celanese Corporation, and had undertaken no corporate advertising in the first three years after the merger. The result was low awareness among the general public, little financial media coverage (the company is not traded on the U.S. exchange).
"Competitive companies were dominating in terms of name recognition," says vice president of communications Horace Webb. "Employee morale and pride was affected by the lack of identity, recruitment efforts were more difficult, salespeople spent more time explaining the company than selling its products, and the company did not receive the same business accolades as competitors."
Research indicated the company's major strength was its responsive customer service and ability to forge problem-solving partnerships with customers. It also indicated that Hoechst Celanese's customers were well known, so the theme for the campaign became "The Name Behind The Names You Know" and the ads featured partnerships with big name customers like Coca-Cola.
"The campaign was exceptionally well received by employees and customers," says Webb. "Employees from all over the country have told management they never felt so proud to be part of their company. The Coca-Cola company was so pleased with the creative they suggested running it themselves in tandem with their own commercials. Other customers have asked if they too can be featured."
Unfortunately, too much corporate advertising seems vague and indistinct. There is a tendency to concentrate on projecting the kind of "all things to all people" image discussed above rather than on achieving measurable results. Says corporate advertising consultant Thomas Garbett: "CEOs should tell their agency people, "This is what I want to happen.' Not, `This is what I want to say."'
Richard Sardelli, director of corporate advertising at Burson-Marsteller, agrees. He says 80% of the clients who come to B-M and say they want a corporate ad campaign, cannot clearly articulate what they expect such a campaign to achieve. That is often the first task of the ad agency or PR firm hired to implement such a campaign.
"One of the things we try to do is rather than looking at the big, global picture, we look at a specific situation, a single individual and the influence the company may have had on their lives," says Sardelli. "It's very difficult to be credible when you are talking about how friendly and helpful a big corporation is in the abstract, but if you can show how it touches people's lives you can make it relevant and credible."
The "Dow Helps You Do Great Things" campaign takes this approach; so do several recent campaigns for insurance com panies, featuring individuals and families the companies have helped. Burson-Marsteller used this angle for the Mexican Government recently, in a series of ads that showed how the drug crisis had impacted Mexican families in an attempt to convince Americans that Mexico was committed to fighting the drug trade.
Corporate ad campaigns that know what their specific objectives are tend to work best. Waste Management Inc. has used local corporate advertising on local cable stations to persuade local communities to trust the company with its disposal problems; Philips Petroleum doubled the amount of stock in the hands of individual investors following a campaign in Better Investing, a monthly publication of the National Association of Investment Clubs.
Having said that, such short-term objectives cannot be achieved without a long-term commitment to laying solid foundations, and corporate advertising in particular requires constant repetition to have an impact. It also helps if such campaigns are part of a coordinated communications program that includes public relations, and other techniques that reinforce the advertising message through third party endorsement.
"The majority of corporate advertising campaigns are aborted too soon to achieve any measurable objective," says David Ogilvy. "You cannot rely on short-term advertising to turn the tide of hostile public opinion in your favor, to boost the price of your stock or to put a halo around your reputation."
That is one reason for the failure of the recent cable industry campaign to turn the tide of public opinion against reregulation. The industry argued that reregulation, intended to stop cable monopolies overcharging, would actually result in higher cable bills, and featured an image of a man standing under an umbrella so full of holes he ended up soaked.
Unfortunately, the industry had done so little to invest in its reputation prior to the ad campaign, and communicated so little in the way of hard facts that the audience had no reason to believe its claims or spring to its defense.
This lack of credibility is a final reason why much corporate advertising does not work, but a long-term commitment to corporate advertising and a genuine candor can overcome even the most skeptical public, as Chrysler Corporation found out in the '80s. The company was receiving considerable bad press and met it head on, with ads headed "Doesn't everyone know that Chrysler cars get lousy gas mileage?" and "Aren't Chrysler's big cars too big?" and "Is Chrysler management strong enough to turn the company around?"
Chairman Lee Iacocca signed his name at the bottom of all the ads—which were unusually long on copy, short of slogans and visual images—because, he said, he wanted to make it clear that he was taking responsibility for the company. He credits the campaign with turning public opinion around and with convincing Congress to finally approve loan guarantees that helped the company stay in business.
"One surprisingly devious way to ensure that your advertising is credible is to tell the truth," says Richard Sardelli. "Obviously, advertising that contradicts the audience's experience of your company is not going to work."
That is one reason Sardelli, and others, believe that public relations people are better placed to oversee corporate advertising campaigns that advertising or marketing professionals. Dealing with ideas rather than tangible products, and going to the heart of corporate strategy, corporate ads do not lend themselves to creative excess.
The successful corporate advertising campaign will be research-based, with its roots in the corporate culture and values; it will be developed with a specific objective in mind; it will be a reflection of reality; it will focus on an aspect of the organization that is genuinely unique or special; it will make that aspect relevant to its audiences or audiences; and it will be sustained over a lengthy period of time.
When those criteria are met, corporate advertising can be a powerful weapon in the public relations arsenal.