05 December 2015

Investor Brand

What makes the shares of one company trade on higher multiples or ratings than its peers and competitors in the same industry or sector? Management, financial discipline, asset quality, governance, corporate responsibility and quality of market interaction all play their part. However, connecting with investors is more than organisational performance alone.

Investor Relations Officers (IROs) must balance responsibilities in finance, communications, marketing and compliance – and now there is increased pressure to really connect with key stakeholders. IROs are constantly contemplating the key question: how can I help investors form a meaningful, long-term investment view of my company?

Designate believes that effective communication is best achieved in the context of a well-defined overarching story, or Investor Brand.

For the brand to play its role, it is vital to ensure that it is intrinsically connected to the business strategy and how the company creates value. This is a challenge to traditional investor relations that can be often time-constrained and inclined towards compliance: quarterly, half-yearly and annual reporting, ASX and media releases, AGMs, roadshows and conferences, plus the occasional misstep in corporate performance or a crisis to deal with. The messages conveyed at these events can tend to be one-off in nature, with little or no time devoted to reminding the audience about the company’s long-term value proposition, apart from perhaps the annual investor day or strategy briefing.

In today’s investing environment, where fewer analysts are covering more companies, your company can be easily lost in the crowd, particularly if it’s a small cap.

Branding can help your investor audience understand and remember your company. Creating key messages that sum up a company as a whole and present it in a way that is instantly identifiable does this. Successful investor branding tells a company story that is compelling, clear and that stands out from the crowd.

‘Brands resonate with people – the more that analysts and investors can understand a company as a brand concept, the more it will help them comprehend the longer term opportunities available to the company, with less emphasis on the short term ups and downs that every company experiences.’ (John Palizza, Branding and Investor Relations).

So, how can an organisation build an effective Investor Brand? Where do we start? Understanding the alignment, or conflict, between your Investor Brand and Corporate/Operating Brand(s) is very important.

‘Traditionally, IROs had little to do with branding; they let a company’s numbers do the talking, supported by presentations of management’s strategy. But in a more complex and occasionally even hostile investor environment, a company’s performance and strategy must be presented within the framework of an overall story: what does the company stand for? What is its core value proposition? In short, what is its brand?’

Howard S. Breindel, Investor Communications and Your Corporate Brand: To Align or Not to Align?

Communicating to investors is often different to communicating to consumers. In the same way, a consumer or corporate brand doesn’t always convey the company clearly to an investor. These companies should consider creating a separate, clearly-defined Investor Brand highlighting the issues unique to their investment message as opposed to the retail consumer message of product, price, convenience and the like that is central to the Corporate Brand.

For many business-to-business companies situations the Corporate Brand and Investor Brand are well aligned, and therefore work for both investor and customer. The financial and operational strength, management expertise, sustainable competitive advantage, corporate strategy and governance are often the main focus of each.

Complexity is introduced where there are multiple operating brands, and the Investor Brand shares the same name and visual system as one of the operating brands. This is where the strategy of the brand architecture system; Monolithic, Endorsed or House of Brands, begins to impact.

This affects numerous larger companies in the ASX 100, many of which have grown by acquisition over the last fifty years. Think about the Australian banking sector for example. While for most in the sector, the Investor Brand shares the same name and visual system as the bank name and Corporate Brand (classic Monolithic architecture) these banks also own other financial businesses and brands. Closer inspection reveals that most employ all three architecture models – Monolithic (for investor and major banking brand), Endorsed (such as a broking house) and House of Brands (funds management and standalone branded regional banks).

There is nothing wrong with a company focusing on its main retail brand – the retail site looks and behaves like a corporate (Monolithic) brand. But the issue is that hybrid brand architecture models can also make it harder for investors to see the big picture Investor Brand that showcases the quality of the group’s brand portfolio and business.

So how can companies clearly communicate the entirety of their business models and strategy to the investment community?

One Top 20 company shares its name with its key retail brand but also owns many other high-profile brands. That company has a clearly defined visual distinction between the retail brand and the Investor Brand that helps easily identify the magnitude of the listed entity. It created a separate Corporate / Investor visual brand identity by employing a dedicated investor centre site (with a separate URL from the retail site), that clearly shows the group’s brand portfolio, providing a powerful snapshot of the business that creates clarity for investors and ease of access to the information they need.

Similarly, a Top 100 industrial company has created a corporate website for investors to separately identify it from its multiple industrial brands including its signature consumer brand that shares the name as the corporation.

Yet another major Top 20 company employs a House of Brands architecture that allows it to acquire and divest brands without any consideration of the impact on other brands within their portfolio or on the parent, which has a completely separate corporate brand that does not share a name with any of its retail or B2B brands. In other words, that company’s brand architecture is an inherent part of its business strategy.

Does all this matter? After all, it would be very difficult to prove that this is specifically affecting share price performance. But dismissing the Investor Brand concept means not taking advantage of everything that effective investor communications can achieve. A key driver for business is to find sustainable competitive advantages, and brand has always been a powerful tool for providing differentiation.

Telling the corporate story effectively begins when the investor branding structures are clear and messages are totally aligned and consistent with the long-term corporate strategy and outlook. Combine this with management, operational and financial performance and a well-articulated sustainable competitive advantage and you’re well on the way to creating your company’s identifiable Investor Brand that will help investors understand what the company stands for and its long term value proposition.

Speak with the brand and communications specialists at Designate Investor who can help you understand, develop and enhance your Investor Brand.

Roger Lindeback
Director, Brand & Strategy

Michael Roberts
Investor Communications Director