We are a creative integrated marketing consultancy specialising in 4 business areas: Business Services, Financial Services, Automotive Aftermarket and Recruitment Advertising. These blogs tell of some of our experiences working in these business areas.
11 December 2013
Companies can no longer rely on strategy and performance alone to build and secure meaningful relationships with investors. Dynamics and relationships are often more complex these days - sometimes even hostile. Companies with an engaged investor relations brand have an advantage because they can deliver a more focused, consistent message that enables a more meaningful connection with investors.
Drivers of change
Greater scrutiny, investor scepticism, regulation and public interest have contributed to a significant shift in investor relations planning and management. Take private equity for example, most IROs will confirm their approach has markedly changed over the last two fund cycles. This has been driven by changing investor attitudes and expectations related to how asset managers structure their businesses, make investment decisions, own up to mistakes and missed targets, and how employees are incentivised for example. Governance and perceived operating processes and standards, are all important.
Why branding matters in investor relations
Branding is about creating perceptions among stakeholders about a company and its employees in terms of business focus, the direction senior management are heading, attitude to risk, and confidence in procedures, operating standards and decision making. Historically, brand wasn't an essential tool in investor relations and companies often let numbers and overall financial performance do the talking. These days however, business performance must necessarily be presented within the context of a story, or brand. IROs recognise they need to project what the company stands for, what its core value proposition is, and why investors should ultimately support it or recommit. In short - what is the brand, how does it relate to what investors are interested in, and how does it facilitate decision making internally for investors?
B2C verses B2B - key differences in brand development
Not all brand strategies are interchangeable. Among consumer-facing businesses for example, brand strategies may not neatly translate across for investor relations purposes. These companies may need to create a separate investor relations brand. Take a large tyre wholesaler and retailer business for example. To the private equity owner, this business is about the strength of the management team, a wholesale business generating millions in recurring revenue through tightly protected margins, and a retail operation to leverage the stock and buying power of the company. It's a "cash cow" with barriers of entry through its scale. But it doesn't have a huge brand because it is essentially a re-seller and sells multiple brands like Pirelli, Dunlop, Michelin, Avon, Toyo etc. Not terribly exciting for institutional investors. Instead, the private equity firm needs to work hard to develop a separate brand for investor relations - one that institutional investors can relate to and value and that says something about what the asset manager has brought to the table. To institutional investors, this same business is the country's largest and most successful tyre logistics and supply chain business. It shifts millions of tyres annually and services tens of thousands of customers with little gearing and a super efficient, highly automated business infrastructure. It's a business service operation with long term prospects and little financial risk. The presentation is necessarily different.
For B2B businesses, often the corporate brand and investor relations brand are closely related. Take a fund administration business for example. It's a technology enabled business services operation in the financial services sector. It's highly regulated space, with blue chip clients (fund managers, financial institutions etc). It is growing fast, it's truly international and clients rarely change fund administrators. The same business attributes and descriptions relate both to the corporate brand and work for institutional investors.
When investor communications align with the corporate brand
If you look at the Home page of most company websites, you'll discern an identity, colour pallet, visual language and key messages (company focus, reach and mantra for example) which don't change regardless of audience. However, it is important to "map" individual messages to individual audiences to create a functioning and plausible brand and take stakeholders (investors, employees, centres of influence ...) on a journey.
In the case of the fund administration business for example, technology advances, systematic and timely reporting are pre-requisites. For institutional investors (silent shareholders in the business), this business is about timely and proper disclosure of financial information and how results are derived and interpreted. The notion of systematic and full, timely reporting stems from the same core brand. However, it is necessarily "mapped" in two different messages to two different audiences.
Another way of adapting messages is to present a company brand for investor relation marketing based on the marketplace need - and how the product or service meets that need. For example in life science investments, therapeutic and medical diagnostic solutions can be technical in nature and hard to understand or appreciate or get excited about. Institutional investors are not scientists, doctors or clinicians. However, present an investor relations brand case about how home dialysis would help 10 million in the UK and US alone and is worth $2 billion annually with a fairly straightforward path to a FDA and CE approval, and you have a compelling investor relations brand strategy.
When investor communications do NOT align with the corporate brand
When the corporate brand doesn't easily fit with investor communications, as is often the case with B2C companies, a separate investor relations brand strategy is often required. This begins with research to understand and fully appreciate audiences' perceptions and needs, the creation of an “umbrella” positioning and company proposition for institutional investors, and supporting messages which substantiate the proposition.
Once the investor brand is in place, the usual tools for deployment are required to bring it alive and communicate it - strategic advertising, literature, investor road show, IR website, transaction or investment write up, eVideo etc. This kind of effort is necessary to demonstrate why the investment has been made in the first place, why it fits into the investment thesis institutional investors associate with you and why the business is an attractive one in the portfolio.
Historically, private equity firms were nervous about this kind of marketing because it required nailing their colours to the mast. This kind of thinking is increasingly outdated because drawing down capital is a two-way business requiring more time, attention and detail on the part of the asset manager or stock picker if they are to develop and enjoy a long term relationship with institutional investors.
This is even more important for asset managers spinning out, or restructuring and becoming completely independent or these seeking to broaden their investor base, or increase funds under management by growing the business, moving in to new territories etc.
Sometimes being less obvious can make sense
I visited a global asset management client recently with $20 billion under management for hundreds of institutional investors around the world. Some invested in equities, some in Alternative Assets including Hedge Funds and some in FX and exchange-traded commodities. As a financial institution, its traditional focus had been on bringing in talent, opening offices around the world and tracking the market to be able to devise bespoke investment thesis solutions for individual clients or “pool” products into funds. Not much attention had been given to its corporate brand or how to demonstrate their people had “a view” on everything from Shale gas, to agribusiness and car manufacturing in Australia – and everything in between. The solution – emphasise expertise and insight via peer articles bound together in a book and reinforced in keynote addresses. Not everything retains the same punch or impression if served entirely digitally.
Chris Abraham leads AEP advertising – a brand and strategic marketing communications agency based in London. We work with companies across multiple sectors including financial institutions and asset managers who, at critical inflection points, require alignment of corporate brand and investor relations story-telling to influence institutional investors, employees, “centres of influence” or to build communities. For more, go to www.AEPadvertising.com.